Pound Hits Highest Level Since Brexit

The pound touched its highest level since the Brexit vote on Tuesday ahead of EU-UK negotiations this week.

Sterling edged up 0.1% in early Asia trading, touching $1.4354, its highest intraday level since the June 2016 UK referendum and moving past the prior post-Brexit high, hit on January 25.

The British currency, which has gained since the UK and EU last month forged a conditional agreement on the terms of a Brexit transition, on Monday crossed above the $1.43 mark for only the second time since the Brexit vote but it is still well off the $1.49 level it traded at just prior to the vote.

While the pound has gained more than 5 per cent against the dollar this year, analysts remained cautious heading into the EU-UK trade talks this week

This year has been a good one for the pound: It has climbed 5.8% against the greenback, leaving it as the top performer among the G-10 currencies. The gains have come after the UK and EU forged last month a conditional agreement on the terms of a Brexit transition.

 

Oil Prices Sink as shale concern lingers and Syria fears subside

Oil prices dropped and government bonds weakened on Monday, after the US and Russia avoided any direct military engagement during an American-led strike in Syria.

Having last week breached the $73 a barrel mark for the first time since late 2014, Brent crude fell as much as 2% in London trading. US Treasuries — an asset that investors typically turn to during periods of geopolitical tension — were also under pressure, with the yield on the two-year note touching the highest in 10 years.

The oil price had risen nearly 10% in the run-up to the strikes, as investors bulked up on assets, such as gold or U.S. Treasuries, that can shield against geopolitical risks

The prospect of the US and its allies launching a military strike against the Syrian government helped drive the oil price higher late last week. Investors feared a strike risked a clash with Russia that is supporting the government of Syrian president Bashar al-Assad, who is accused of a chemical weapons attack.

Seems like the market hope is that the fact that the Syrian air strikes were targeted and that Russia haven’t further inflamed the rhetoric so far, means that we can slowly move on.

The yield on the two-year Treasury note rose 2 basis points to 2.38%, the highest level since 2008. That was echoed across other major government bond markets, with the yield on the 10 -year German Bund rising 3bp to 0.54%, the yield on the equivalent 10-year UK gilt up 4bp at 1.47% and the French 10-year yield climbing 3bp to 0.77%.

The speed with which the oil price on Monday relinquished gains made in the run-up to the military action on Saturday reflects a broader pattern of how crude has reacted to tensions in the Middle East over the past two decades, analysts say.

All Quiet on the Western Front: Financial Markets seem to ignore the geopolitical tensions for now

The US-led military strike against Syria’s alleged chemical arms infrastructure was a one-time move according to the UK Foreign Secretary Boris Johnson even as the US signaled it’s ready to punish the Middle Eastern country again if it keeps using banned weapons. The announcement made seems to be highly pro-market oriented, as western leaders do realise that actions against Syria might seriously shock the markets especially the commodities ones.

For now, traditional risk markets left unmoved but worries persist as US likely to ramp up Russian sanctions. The lack of a flight to safety is most apparent on short-dated US government debt, where sustained selling took the yield on the 2-year Treasury to its highest since September 2008, at 2.3867%.

European bourses are holding their ground after a steady showing in much of Asia and investors are not moving into haven assets, in a measured market response to the weekend’s US-led military strikes against Syria. European equity markets opened flat to +0.25%, traditional safe haven currencies the JPY and CHF were little changed while oil edged lower after last week’s bullish surge. European macro-calendar is empty on Monday shifting focus on sentiment and the US retail sales data due on Monday afternoon.

The conclusion in general: The US-led military intervention in Syria did not yet spur any massive currency market reaction as it is seen as being unilateral and once-off action. Oil prices are coming off last week’s three-year highs as investors hope that the conflict will not escalate.

Russia: Russian assets are looking exposed on expectations of sanctions from Washington on Moscow, where President Vladimir Putin remains an ally of Syrian leader Bashar al-Assad.

The rouble is weaker by a further 1.5% to Rbs 62.9930 per dollar, leaving it around last week’s intraday nadir of Rbs 65 — a level it previously traded at in late 2016.

Sources:

https://www.ft.com/content/5c993d18-4116-11e8-93cf-67ac3a6482fd

https://www.investing.com/news/stock-market-news/european-shares-steady-after-usled-strike-on-syria-wpp-falls-1395715

https://www.fxstreet.com/analysis/european-fx-outlook-life-after-striking-syria-sees-us-dollar-little-changed-201804160557

https://www.dailyfx.com/forex/market_alert/2018/04/16/Markets-Brush-Off-Geopolitics-Gold-Nears-Strong-Support.html

 

Mark Zuckerberg’s conference call with reporters aims to calm down the markets

Shares of Facebook (NASDAQ:FB) gained around 2% in pre-market trading on
Thursday, after CEO Mark Zuckerberg held a conference call with reporters after the prior session’s close. Facebook CEO says he remains right person to lead company despite privacy scandal. “When you’re building something like Facebook that is unprecedented in the world, there are going to be things that you mess up,”
Zuckerberg said, adding that the important thing was to learn from
mistakes.

Shares in Facebook closed down 0.6% on Wednesday to $155.10. They have tumbled more than 16% since the Cambridge Analytica scandal broke. Other tech companies have improved their standing for a bit: Facebook (O:FB), Amazon (O:AMZN), Alphabet (O:GOOGL), Netflix (O:NFLX) – collectively known as the “FANG” group – were up between 1% and 3%.

“Knowing what I know today, clearly we should have done more,” said CEO of Facebook.

Facebook was taking steps to restrict which personal data is available to third-party app developers, he said, and it might take two more years to fix Facebook’s problems.

Sources: 

https://www.ft.com/content/eacc29fa-38b6-11e8-8eee-e06bde01c544

https://www.investing.com/news/economy-news/top-5-things-to-know-in-the-market-on-thursday-1379422

https://www.investing.com/news/technology-news/facebook-to-revise-terms-of-service-to-include-more-privacy-language-1378160

 

Forex pairs market: USD rebounds on signs of Trump flexibility

While stock markets have experienced volatility of late, in part due to trade tariff fears, currencies have taken more of a wait and see approach. The dollar appears to be rewarding the patience this morning as it makes gains on reports that the White House will be more flexible than previously thought on US-China tariff negotiations.

The dollar pairs are generally lower, with the AUD/USD and NZD/USD reversing the majority of yesterday’s gains. The EUR/USD and GBP/USD remain range bounded, with moderate losses on both pairs. EUR/USD remains under pressure within a tight range with USD slightly bid against the backdrop of rising US yields. Final Services PMIs in Euroland, US trade balance next on tap.

The EUR/GBP has stabilised, with the pair making small gains in favour of the euro this morning. The Canadian dollar is reversing some of its recent NAFTA inspired gains, with the USD/CAD slipping lower for the first time in a few sessions. The yen pairs are lifting off the lows, making gains for the third day in a row.

Japan’s Nikkei (N225) ended 1.5 percent higher. Markets in mainland China, Hong Kong and Taiwan were closed for the Tomb Sweeping Day holiday on Thursday.
U.S. S&P 500 mini futures (ESc1) rose 0.5 percent, with Wall Street set to extend Wednesday’s rebound.

Proposed 25 percent U.S. tariffs on some 1,300 industrial technology, transport and medical products from China will be subject to a public comment and consultation period that is expected to last around two months.

Market moving news today: UK services PMI at 09.30, Canadian trade balance is at 13.30, US unemployment claims and at 18.00, we have FOMC member Bostic speaking. All times are London times.

Sources: 

https://www.dailyfx.com/market-news?ref=TopNav

https://www.fxstreet.com/news/eur-usd-challenges-session-lows-near-12270-201804050520

https://www.ft.com/news-feed

 

 

 

Market casualties grow as China-US trade hostilities unleash havoc on markets

China’s planned retaliation to the string of tariffs imposed by the US hit global markets on Wednesday, knocking everything from German stocks to soyabeans, as the spectre of a trade war intensified. U.S. automakers, aero companies, grain merchants and chipmakers were the early casualties. Shares in Boeing, the biggest US exporter by value, dropped 4.6% in pre-market trading in New York.

The speed with which the trade spat between Washington and Beijing is ratcheting up – the Chinese government took less than 11 hours to respond with its own measures – led to a sharp sell-off in global stock markets and commodities. China levied 25% additional tariffs on U.S. goods earlier in the day. But unlike Washington’s list that covers many obscure industrial items, Beijing’s covers 106 key U.S. imports including soybeans, planes, cars, and chemicals.

China is Boeing’s biggest export market and the 737 is its biggest selling product. The company said in a statement in November 2017 that it planned to deliver nearly 100 737 MAXs to Chinese airlines before the end of this year. Now, the difficulties arise.

Among the casualties: Automakers Ford (N:F), General Motors (N:GM), Fiat Chrysler (N:FCAU) and Tesla (O:TSLA) fell between 2.3% and 4.4%. Grain merchant Archer Daniels (N:ADM) was down 3.3%, while Bunge (N:BG) slipped 2.2%.

The oil price was also swept up in the wider fears about what deepening trade tension mean for global growth. Brent crude, the international benchmark, fell 1.2 per cent to $67.32 a barrel while US marker West Texas Intermediate declined 1.5 per cent to $62.39 a barrel

Sources: 

https://www.ft.com/content/e8959f94-37e0-11e8-8b98-2f31af407cc8

https://www.ft.com/content/73ddbe62-37e4-11e8-8b98-2f31af407cc8

https://www.investing.com/news/stock-market-news/boeing-ford-lead-list-of-casualties-in-chinaus-trade-spat-1377132