As of Wed, Dec 06, 08:00 GMT (UTC +08:00)
USDJPY, +0.20%, 113.01
EURUSD, +0.04%, 1.1349
USDCAD, +0.77%, 1.3363
NZDUSD, -0.53%, 0.6892
Nikkei Futures, -0.53%, 21,919.33
CURRENCY MARKET WRAP
- US business optimism has fallen in recent weeks amid uncertainty over tariff disputes, rising interest rates and continued labor shortages, the Federal Reserve said Wednesday. The Federal Reserve’s latest Beige Book showed most districts’ economies expanded, though at least four signalled growth cooled. The impact of President Donald Trump’s punitive import tariffs has become more widespread, with cost increases felt by manufacturers, retailers and restaurants, restraining demand. Even so, most regions of the US showed modest or moderate growth, and there were continued reports of companies increasing wages and benefits to attract and retain qualified workers, the report said.
- The US 10-year bond yield fell to its lowest point since mid-September. A string of comments from the Chinese authorities, however, lifted market sentiment in the early morning Asian trading session. The comments indicated that the trade meeting at the G20 meeting was ‘very successful’, that China will implement specific items agreed upon as soon as possible and that the US and China will proactively push forward negotiations within the 90-day time frame. The Chinese currency strengthened the most since 2005 after the weekend’s trade discussion, but weakened somewhat overnight.
- GBP Markit/CIPS UK Services PMI NOV AT 50.4 vs expected 52.2. This was the worst reading in 15 months with business optimism weakest since June 2016. “A sharp deterioration in service sector growth leaves the economy flatlining in November as Brexit concerns intensified… suggest that the pace of economic growth has stalled…November saw the worst performance since February 2013… The surveys are so far consistent with 0.1% GDP growth in the fourth quarter, thanks to the expansion seen back in October, but growth momentum has since been lost and risks are clearly tilted to the downside”, noted by economist at IHS Markit, which compiles the survey.
- Early yesterday, the European Court of Justice ruled that the UK can unilaterally revoke the Article 50 notification (which started the Brexit clock), as long as it has parliamentary backing (given the notification itself required approval in the House of Commons). In the House of Commons, PM Theresa May lost three votes. With more power given to the House of Commons, it will be closely watched if May’s deal falls through on Tuesday, which seems very likely at this point. Theresa May is planning a final attempt to win over Tory opponents of her Brexit deal by raising the prospect of Parliament being able to veto her controversial Irish backstop plan before it comes into operation.
- The Bank of Canada (BoC) held its benchmark interest rate steady at +1.75% as it warned that low prices for oil from the western province of Alberta could affect the pace of future rate increases. Though it was expected for the central bank to leave interest rates unchanged, what caught everyone off guard was their comment that there may be more room for non-inflationary growth. Back in October when they raised interest rates, the monetary policy statement was adjusted to suggest more aggressive tightening in 2019 but they took on a more cautious tone today in recognition of slower growth momentum in Q4. The decline in oil prices is becoming a bigger problem for the central bank because it not only impacts trade but also inflation and overall growth. The BoC admitted today that the energy sector may be materially weaker than they had previously thought. Governor Stephen Poloz will deliver a speech in Toronto Thursday (08:35 EST), which will likely provide more clues on the central bank’s outlook.
STOCK MARKET WRAP
- US markets were closed to mark former President George H.W. Bush’s death, but the effect of Wall Street’s turmoil in the previous session, when New York-listed shares tumbled more than 3 per cent, was felt in Asia and Europe.
Ripple, NEM & Two Others Launch ‘Blockchain for Europe’ Association
Four major blockchain companies have formed a “Blockchain for Europe” Association which seeks to promote the understanding and proactive regulation of blockchain and other distributed ledger (DLT) technologies across the continent. Those companies are Ripple, the NEM Foundation, Emurgo – which supports commercial ventures based on the Cardano blockchain – and “smart ledger” development firm Fetch.AI. The newly-formed association will aim to educate those in EU and member state institutions about the technology’s potential and advocate for future “smart” regulation that will be conducive to innovation and help the continent “shape the global agenda” on blockchain. On Nov. 27, the Association hosted a Blockchain for Europe Summit at the European Parliament (EP) in Brussels, together with the four largest EP groups: The European People’s Party group (EPP), The Alliance of Liberals and Democrats for Europe (ALDE), European Conservatives and Reformists (ECR), and The Progressive Alliance of Socialists and Democrats (S&D).
Overstock’s Medici Ventures Acquires Stake in Agricultural Blockchain Firm
Medici Ventures, the blockchain venture arm of Overstock.com Inc., has purchased $2.5 million in equity in agricultural blockchain project GrainChain. Allegedly, the firm’s system provides a platform, by which small- and medium-scale farmers can conduct business outside of their immediate geographic area and cut out middlemen. With the purchase, Medici Ventures now has 10 percent ownership in GrainChain, with the option to further acquire an additional 10 percent. The acquisition will purportedly allow GrainChain to expand its market share in Central and South America. Medici Ventures has also invested in Israeli-based technology company VinX to develop a blockchain-powered wine futures platform. VinX plans to develop a token-based digital wine futures platform based on the Bordeaux futures model, that will enable the trade of wine futures on a blockchain platform.
Top Cryptocurrencies See Slight Gains, Bitcoin Hovers Under $4,000
Most of the top twenty cryptocurrencies are in the green, having overcome yesterday’s losses, with Bitcoin (BTC) hovering under the $4,000 mark. During the day, Bitcoin has been trading in a narrow corridor between $3,768 and $4,091. On its weekly chart, BTC has reached a low of $3,755 before touching a high of $4,404. Today, the CEO of Japanese fintech firm and crypto exchange operator Quoine predicted that BTC will “surpass” its all-time price highs by the end of 2019. The second largest crypto by market capitalization Ripple (XRP) is trading at around $0.352, having gained 0.83 percent. The coin dipped to its lowest price point of the week at $0.349, while the intraweek high of $0.399 was reached on Nov. 28. Ethereum (ETH) is maintaining its position as the third largest coin by market cap, which is over $11.4 billion. ETH is trading around $110, up 1.68 percent. The main losers in the top 20 cryptocurrencies are Bitcoin Cash (BCH) and EOS, which are down over 6 percent on the day and are trading at $149 and $2.43, respectively.