NOTABLE MOVES
As of Thu, Jan 24, 08:00 Singapore Time zone UTC+8
USDJPY, +0.15%, $109.54
EURUSD, +0.20%, $1.1381
GBPUSD, +0.92%, $1.3077
USDCAD, -0.09%, $1.3342
AUDUSD, +0.29%, $0.7144
NZDUSD, +0.60%, $0.6791
S&P500, +0.22%, 2,638.70
Nasdaq, +0.08%, 7,025.77
Nikkei Futures, -0.31%, 20,497.0
CURRENCY MARKET WRAP
- As we head into day 34 of the U.S. government shutdown, the battle in Washington is heated. Trump said he plans to go ahead with delivering his State of Union Address next week but House Speaker Nancy Pelosi refused to allow him to deliver the speech from the House chamber (its usual venue) while the government is in shutdown. Today the Senate is scheduled to vote on Trump’s latest proposal and a short term spending bill from the Democrats that would help reopen the government until February 8th. Considering that neither party has a majority and both resist the other’s proposals, these votes are widely expected to fail leading to a continued shutdown. In the unlikely scenario that one passes, the Dollar will react positively.
- U.S. Treasuries ended on a lower note, although the bulk of the session saw a steady climb off opening lows. The 2-yr yield increased two basis points to 2.59%, and the 10-yr yield increased three basis points to 2.76%. The U.S. Dollar Index lost -0.2% to 96.12. WTI crude lost -0.8% to $52.63/bbl.
- BoJ kept its QQE with yield curve control and its forward guidance unchanged. At the same time, it cut the inflation outlook significantly by 0.5pp in the fiscal year (Apr-Mar) 2019. The growth outlook was also cut but only for the current fiscal year whereas the FY 2019 and FY 2020 forecasts were revised slightly upwards. On the recent global development, the BoJ kept the sentence ‘overseas economies have continued to grow firmly on the whole’. This highlights that the BoJ expects the current global slowdown to be temporary and the recent weak Japanese export figures to bounce back once a trade agreement has been reached between the US and China.
STOCK MARKET WRAP
- The S&P 500 gained 0.22% on Wednesday in what was an uneven day of trading. The benchmark index was up as much as 0.8% shortly after the start of trading, lost as much as -0.8% by midday, and teetered around its flat line for most of the afternoon. Most S&P 500 sectors finished higher with consumer staples (+1.2%) and utilities (+1.1%) outperforming. Conversely, the energy (-1.0%) and material (-0.7%) sectors underperformed the broader market and were the lone sectors ending with a loss.
- Stocks had rallied at the open on some earnings beats and reassuring guidance from Dow components IBM (IBM 132.89, +10.37, +8.5%), Procter & Gamble (PG 94.84, +4.40, +4.9%), and United Technologies (UTX 117.04, +5.98, +5.4%).
BLOCKCHAIN & CRYPTOCURRENCY NEWS
UK Financial Regulator Releases Consultation Paper on Crypto
The United Kingdom’s financial regulator has published a consultation paper titled “Guidance on Cryptoassets”. The stated goal of the Financial Conduct Authority’s (FCA) paper on cryptocurrency is to provide more regulatory clarity on the subject for market participants. The consultation period on crypto, which the paper initiates, is scheduled to end on April 5, 2019, after which a policy statement with final guidance is set to be released. In its introduction to the paper, the FCA declares that the final version is meant to “help market participants to understand whether the cryptoassets they use are within the regulatory perimeter.” In the paper, the FCA outlines various possible definitions of crypto assets and applicable U.K. laws. In particular, the guidance paper notes that crypto assets could be considered “Specified Investments” under the state’s Regulated Activities Order (RAO) or “Financial Instruments” regulated by the Markets in Financial Instruments Directive II. The FCA’s crypto asset guidance places cryptocurrencies into three potential categories, namely exchange tokens, security tokens and utility tokens. So-called exchange tokens, the regulator writers, are those “not issued or backed by any central authority and are intended and designed to be used as a means of exchange.”
Hong Kong Hardware Manufacturer Releases Mining GPU for New Privacy-Oriented Coin
Hong Kong-based computer hardware manufacturer Sapphire has announced a new graphics card for mining the recently-launched GRIN Coin, according to an official press release published on Jan. 22. GRIN, which was released earlier this month, is a privacy-oriented token that is touted as a fully decentralized and democratized digital asset. The token is based on mimblewimble technology, which in theory grants users in the network with solid anonymity, by encrypting the value of a transaction using “blinding factors.” The new graphics processing unit (GPU) from Sapphire will purportedly be able to solve the Cuckoo Cycle algorithm which forms the basis of Grin’s proof-of-work (PoW). The GPU is not currently available for sale, but will eventually be released on the company’s website.
US: Pennsylvania Rules That Crypto Exchanges, ATMs Are Not Money Transmitters
The American state of Pennsylvania has clarified that cryptocurrency exchanges do not fall subject to the Money Transmitter Act (MTA), according to a Department of Banking and Securities (DoBS) document. The document clarifies crypto exchanges thus do not require a license to offer their services to Pennsylvania residents. The MTA — otherwise referred to as the Money Transmission Business Licensing Law — provides that “[n]o person shall engage in the business of transmitting money by means of a transmittal instrument for a fee or other consideration with or on behalf of an individual without first having obtained a license from the [DoBS]. According to the document, digital currencies such as Bitcoin (BTC) are not deemed to be “money” under the MTA — which is defined as being “currency or legal tender or any other product that is generally recognized as a medium of exchange.The document also clarifies that in regard to crypto kiosks, ATMs and vending machines — regardless of whether they enable one-or two-way deposits and exchange of crypto and fiat — no money transmission is deemed to be involved, as there is no transfer of money to a third party.