NOTABLE MOVES
As of Wed, Jan 10, 08:00 Singapore Time Zone UTC+8
USDJPY, -0.52%, $108.18
EURUSD, +0.98%, $1.1554
GBPUSD, +0.63%, $1.2799
USDCAD, -0.46%, $1.3213
AUDUSD, +0.48%, $0.7175
NZDUSD, +1.00%, $0.6790
S&P500, +0.41%, 2,584.96.
Nasdaq, +0.87%, 6,957.08
Nikkei Futures, +0.13%, 20,247.0
CURRENCY MARKET WRAP
- In FOMC minutes, the Fed revealed a view that the path of U.S. monetary policy is “less clear” than before, and a contention that the Fed can “afford to be patient” about future rate hikes. The message underscores a sense that the Fed is nearing the end of its rate-hike cycle. It also syncs broadly with the view of Fed Chair Powell, who last week eased market concerns that the Fed was ignoring signs of an economic slowdown and assured markets he would be patient and flexible in policy decisions this year. U.S. Treasury yield curve steepened a bit on Wednesday, undoing the prior session’s flattening. The 2-yr yield decreased four basis points to 2.55%, and the 10-yr yield added one basis point to 2.73%. The U.S. Dollar Index fell -0.8% to 95.13.
- The BOC held interest rates steady as expected (1.75% vs expected 1.75%) on Wednesday, but said more increases would be necessary even though low oil prices and a weak housing market will harm the economy in the short term. Governor Stephen Poloz said the challenges were temporary and he still believed the economy would at some stage be operating at full capacity, with inflation on target and with interest rates in a zone where they are no longer stimulating or contracting aggregate demand.
STOCK MARKET WRAP
- The S&P 500 gained 0.41% on Wednesday, helped by softening trade tensions, easing anxieties over U.S. monetary policy, and rebounding oil prices ($52.20/bbl, +$2.54, +5.1%). The S&P 500 briefly fell into negative territory (-0.2%) in the early going, but ultimately rebounded before running into some resistance as it approached the 2600 level shortly after the release of the FOMC minutes from the December policy meeting. Within the S&P 500, the energy (+1.5%) and information technology (+1.2%) sectors led the broader market higher. Conversely, the defensive-oriented consumer staples (-1.0%), utilities (-0.7%), and real estate (-0.4%) sectors underperformed. The Philadelphia Semiconductor Index (+2.5%) was a notable outperformer on Wednesday, despite Apple (AAPL 153.31, +2.56, +1.7%) supplier Skyworks Solutions (SWKS 67.69, +2.50, +3.8%) lowering its fiscal first quarter guidance. Some catalysts that underpinned the group’s performance included (1) the positive price action in Skyworks despite the bad news, which was interpreted as a sign that the bad news was already priced in, (2) Bernstein upgrading Micron (MU 35.44, +1.70, +5.0%) to ‘Outperform’ from ‘Market Perform’, and (3) optimism over the trade discussions with China.
France’s Yellow Vests Plan Bank Run to ‘Scare State Without Violence’
French grassroots political movement the Gilets Jaunes, Yellow Vests is planning a bank run similar to Bitcoin’s (BTC) Proof of Keys. Dubbed the “Collectors’ Referendum,” the latest demonstration by the movement calls on supporters to withdraw all their savings and other deposited cash from financial institutions on Saturday. As local magazine Capital notes, the potential disruptive element of the Referendum could technically be considerable. The eventual turnout, however, is likely to be low enough so as to not spark a crisis. Further, those in Bitcoin circles will be drawing parallels between the Referendum and last week’s Proof of Keys event organized by a sole investor, entrepreneur Trace Mayer. Fiat bank runs have in turn contributed to the appeal of Bitcoin before, with Cyprus’ financial crisis in 2013 appearing to boost the price of the cryptocurrency.
Crypto Platform Tron Hires Former SEC Attorney as First Chief of Compliance
Blockchain platform TRON has hired a former United States Securities and Exchange Commission (SEC) supervisory attorney as its first chief compliance officer. David Labhart, who previously worked as an attorney for the U.S. regulator, will also take on the role of co-general counsel at the company. TRON, along with its associated TRX token, has built a major presence over the past year, in part due to the continued, and at times controversial, publicity efforts centred around CEO Justin Sun. Designed to offer an alternative platform for decentralized applications (DApps) to Ethereum, TRON celebrated its one millionth user account last month. TRX has risen 6.4 percent in the past 24 hours, making it the best daily performer in the top twenty cryptocurrencies by market cap.
Venezuela Introduces Crypto, Foreign Fiat Operations Taxation
Venezuelan government has published a new decree that introduces taxation for operations with cryptocurrency and foreign fiat. All citizens who deal with cryptocurrencies or foreign fiat currencies are now obliged to report their income and pay taxes in the same currency they have operated in, and not in the sovereign bolivar, Venezuela’s national currency. The decree states that Venezuela’s tax and customs duties regulator (SENIAT) will soon provide guidelines, describing how to report and pay crypto and foreign fiat taxes. In its own turn, local banking sector regulator (SUDEBAN) will create a regulatory framework for the country’s banks and other financial institutions so that they can comply with the new decree. Although the regulatory framework for the new tax has not yet been fully defined, the document published in the government’s newspaper has already come into force, and penalties for failing to comply with it have been announced. Venezuelan Ministry of Economy and Finance is designated to be responsible for the implementation of the decree.