Why Bitcoin Cash is Better than Bitcoin

Bitcoin experienced its first hard fork during the summer. The hard fork was as a result of a disagreement between Bitcoin’s core developers and miners. The dispute continues and is ultimately an attempt by Bitcoin’s mining cartel to hold on to all of the hashpower for Bitcoin mining, while the core developers are looking to decentralize away from the mining cartel.

The entire ethos of Bitcoin is for decentralization. The removal of a centralized control over Bitcoin’s future has been what many within the Bitcoin community have called for. Bitcoin may have removed control away from governments and central banks, but as Bitcoin evolved, the capabilities of miners have also advanced and with it has a new battle has born, control over the mining of Bitcoin.

Things have become more complicated since the cancellation of the SegWit2X hard fork that was scheduled for this month. The Bitcoin world has been left with the choice of three as a result of the fork cancellation. The original Bitcoin and Bitcoin’s offshoots, Bitcoin Cash and Bitcoin Gold that have come about from the much talked about hard forks.

Bitcoin Gold supports the desire to prize away from the hashpower monopoly held by the Bitcoin mining cartel. Following Bitcoin gold’s collapse in recent days, however, it’s clear that the cryptoworld and Bitcoin’s world, in particular, has decided which are to face off against each other. It’s now down to Bitcoin Cash to fight off Bitcoin’s superiority over the cryptoworld.

Bitcoin VS Bitcoin Cash: It’s a Mining Competition

The Bitcoin civil war has now truly started and the choppiness in the pair’s prices is a clear indication of how the Bitcoin world has been repositioning in recent days.

We saw Bitcoin Cash surge to a record high over the weekend, touching a high $2,799 before the great retreat. On the day, Bitcoin Cash not only moved above Ethereum into second place by the market cap, but Bitcoin Cash also saw more hashpower than Bitcoin.

It’s quite a monumental shift considering the fact that Bitcoin’s hashpower was estimated at more than 5 times that of Bitcoin Cash before news hit of the cancellation of SegWit2X.

So, what’s the difference between Bitcoin and Bitcoin Cash and why is there so much focus on Bitcoin’s first offshoot?

To fully understand, it’s important to recognize the rationale for the Bitcoin Cash fork back in August of this year.

It has ultimately been down to capacity issues, with Bitcoin transaction times having slowed for as long as 10 minutes. How to address capacity has been a battle between the miners and the core developers. The miners looking for both an increase in blockchain capacity as well as transaction timesץ For the core developers, the desire is to make the necessary improvements to Bitcoin, whilst looking to remove the concentration of the hashpower that sits with a handful of miners.

With neither side willing to concede, Bitcoin Cash was created through the hard fork. The weekend surge in Bitcoin Cash price and the increase of the hashpower came as mining for Bitcoin Cash became more profitable, the faster transaction times being the key. On Saturday, it was reportedly 69.4% more profitable to mine for Bitcoin Cash than for Bitcoin and miners are ultimately only interested in one thing…

The shift in hashpower and miner preference for Bitcoin Cash came as a result of the price spikes seen in Bitcoin’s offshoot. Ultimately, those favoring Bitcoin cash are in favor of a payment-efficient Bitcoin version over the master cryptocurrency Bitcoin, but not the miners.

The Sunday spike was as a result of particularly high trading volumes on one of South Korea’s largest exchanges, Bithumb.

Since the Sunday anomaly, Bitcoin’s hashrate superiority has returned and as at the time of writing, Bitcoin’s price has managed to recover to $7435 at the expense of Bitcoin Cash, which has fallen further back to $1,050 from Sunday’s $2,799.

Bitcoin’s superior hashrate and price recovery suggest that the market has decided to stick with the original Bitcoin and shift away from the hard forked alternative.

From a mining perspective, the chicken and egg question in the cryptoworld is whether hashrate rises are followed by price gains, or whether price gains are followed by hashrate rises.

If we look at the events over the weekend, there was a material shift in hashrates for Bitcoin Cash that resulted from a price spike. As a result of the price spike, Bitcoin’s price suffered and mining became less profitable, leading to smaller miners either turning off their mining operations or mining Bitcoin Cash.

Miners are unlikely to stop mining a particular cryptocurrency, if there is no decline in price or more profitable alternatives. The latest prices moves have ultimately led to a recovery in Bitcoin’s hashrate. At the time of writing, Bitcoin’s hashrate stood at 9.2459E compared with Bitcoin Cash’s 1.4632E, making Bitcoin’s hashrate more than 6 times that of Bitcoin Cash. This is in stark contrast to November 12th, where Bitcoin Cash’s hashrate stood at 5.825E, compared with Bitcoin’s 4.8777E.

Bitcoin/Bitcoin Cash Hashrate
Bitcoin/Bitcoin Cash Hashrate

The chart below shows the hashrates for the pair over the last 3-months, and it’s worth noting that the November 12th shift was the 2nd occasion that Bitcoin Cash saw higher hashrates since its existence.

Assuming Bitcoin Cash does not experience a similar fate as Bitcoin Gold, we can expect miners to shift between the two. Bitcoin is unlikely to go anywhere anytime soon, with Bitcoin likely to find plenty of support on the dips. Price recoveries would then see miners return to Bitcoin, assuming the Bitcoin Cash had reaped the benefits of Bitcoin’s demise.

Bitcoin Cash may have the larger block size that allows faster transaction times, but it will always boil down to profitability. It’s a money game after all and with miners having invested significant capital into mining centers, they’re unlikely to be particularly interested in their true beliefs on decentralization and how Bitcoin should evolve. The ability to anticipate price moves between the two will be key to miner profitability and the more successful miners will likely be more focused on what to mine and when rather than why.

Bitcoin Cash, Litecoin and Ripple Daily Analysis – 16/11/17

Bitcoin Cash – Losing the Battle against Bitcoin

For now, Bitcoin looks to have won the battle for the miners, with Bitcoin’s price recovering to $7,430 at the time of writing. Bitcoin’s recover comes at the expense of support for Bitcoin Cash, which has tumbled 11.86% today to $1,043.

Hashrates that reflect where the miners are have returned to normal levels, with Bitcoin Cash’s moment in the limelight over the weekend, where its hashrate was higher than that of Bitcoin, a distant memory.

With the latest stumble, we will expect Bitcoin Cash to find some support, though Bitcoin’s return to the top of the food chain will likely limit any material upside in Bitcoin Cash for now.

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Things could go from bad to worse if investors look to lock in gains and get out, which suggests that further declines may be on the way as Bitcoin Cash’s resilience gets tested. Sub-$1,000 before the end of the week is not an unreasonable forecast as things stand.


Litecoin Pulls Back into the Ranges

Things have not been particularly spectacular for Litecoin this morning, down 1.17% at $62.55 at the time of writing.

Attempts to break free from its current ranges on Wednesday failed, though the positive for Litecoin has been its price stability through the week, suggesting that there is possible upside ahead once the volatility eases.

Continued movements across the cryptocurrencies in the wake of Bitcoin Cash’s rally and the release of Bitcoin Gold have been a factor through the week and only now does it seem as through the dust is settling from the cancellation of the SegWit2X hard fork last week.

We will expect Litecoin to hold at current levels through the day, with direction titled slightly to the upside from its current value.


LTCUSD 161117

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Ripple – Going nowhere for now

Ripple also failed to break free on Wednesday, having made a run at $0.22. At the time of writing, Ripple was down just 0.23% at $0.2081.

As we have seen with Litecoin, it’s proven to be a challenge for Ripple to make a move out of its ranges towards $0.30, with Bitcoin grabbing all the attention in recent days on its rally back to $7430.

Despite today’s declines, the outlook continues to remain relatively upbeat and demand for Ripple is likely to build as the dust settles from the Bitcoin forks.

Any moves by Ripple beyond $0.21 levels will give it a fighting chance to have a good run at $0.30, with there likely to be strong support at $0.20 in the event of further declines through the day.

XRPUSD 161117

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EURUSD Daily Fundamental Forecast – November 16, 2017

EURUSD Thursday

The EURUSD pair was flat at the time of writing, with the markets looking ahead to today’s finalized October inflation figures out of the Eurozone and possible comments on monetary policy by ECB President Draghi.

The bounce in the EUR has been substantial this week and, while inflation figures are unlikely to have any material upward impact on the EUR. Soft numbers will be a negative however, with the markets looking for the ECB to do more than just the tapering to the asset purchasing program in the New Year.

Positive inflation figures out of the U.S and some hawkish FOMC member commentary has failed to reverse the EUR’s gains, with the Dollar under pressure ahead of today’s Senate vote on tax reforms.

EURUSD Finds Support as Risk Appetite Wains

Added upside for the EUR through the week has been the risk off sentiment that has seen the major indexes falling back from record or decade highs. The combination of positive economic data out of the Eurozone and the risk off sentiment is something that Draghi may want to pour cold water on, with the ECB keen to maintain a weaker EUR.

Asian markets in the earlier part of the day managed to shake off the negative sentiment and carry trades could ease pressure on the EUR through the European session, though with the markets focused on tonight’s vote, any material moves will likely be on hold.

FOMC members speaking later today include voting members Brainard and Kaplan. Hawkish commentary from both and a senate vote in favour of the tax reform bill could see the EUR move back to $1.16 levels. If it goes horribly wrong on Capitol Hill later today, $1.18 levels are more than likely and Draghi won’t be able to hold the EUR back.

It’s all down to the data, central bank commentary and ultimately the tax reform bill today. The markets have been so focused on the bill that Merkel’s troubles in forming a coalition government in Germany have largely gone unnoticed. Things could change tomorrow, with Friday having been set as the deadline for the parties to reach an agreement. The threat of a re-election would certainly be a negative for the EUR.

Commodities Daily Forecast – November 16, 2017


Gold has been under pressure through the early part of the Asian session, down 0.1% at $1,276.80 though direction through the day will be hinged on today’s Senate vote on the tax reform bill and whether the European and U.S equity markets can shake off the negative sentiment and follow the Asian markets into positive territory through the European and U.S sessions…Read More


Silver fared somewhat better than gold through the Asian session, up 0.02% at $16.98 as it looks to recover to $17 levels, though being able to hold on will depend on market risk appetite through the day, not to mention Capitol Hill…Read More


WTI Crude Oil

Oil prices have steadied following the steep declines this week as the markets now look towards OPEC’s November meeting. U.S shale production forecasts have been quite damming on crude this week, with last week’s inventory and production numbers out of the U.S also bearish. With the IEA revising down demand, whilst revising upwards its outlook in U.S production, OPEC and Russia may need to do more than just extend the agreement…Read More

Natural Gas

Gas eased slightly through the early part of the day, down 0.16% at $3.08. Weather conditions continue to keep prices range bound, with any upside now dependent upon the forecasted cold weather in the U.S arriving within the next week. Should the cold front miss, it’s likely to be quite negative with warmer weather on the horizon. It’s a long time for the markets to wait and there are unlikely to be any major moves between now and next week …Read More

Bitcoin and Ethereum Price Forecast – Bitcoin Breaks free of Bitcoin Cash

Bitcoin finally managed to recover from its recent woes that stemmed largely from the anticipated SegWit2X hard fork and its cancellation. At the time of writing, Bitcoin stood at $7,344.99, still shy of its all-time high, but certainly well clear of the sub-$6,000 levels hit less than a week ago.

For now, the markets have decided that the future lies with Bitcoin, with Bitcoin Cash’s weekend rally seeming to have come to an end, as Bitcoin’s offshoot struggles to hold on to $1,000 levels. Bitcoin Cash is down at $1,084 at the time of writing and selling pressure could well build as Bitcoin Cash investors look to get out in the money.

Hashrates have returned to relatively normal levels, with miners moving back to Bitcoin as profitability returned with the price recovery. We can expect the shift back to Bitcoin to continue through the day ahead.

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Bitcoin Looking to hit new Levels

What a difference a day makes. Just on the weekend, Bitcoin Cash stood as the number two in the cryptocharts by market cap, with hashrates surpassing that of Bitcoin for only the second time in its history. It’s a fickle world and, while the battle between Bitcoin’s core developers and mining cartel continue, the Bitcoin world is likely to return to some order until there is talk of another hard fork. The battle may be won, but the war is far from over.

Those who went in over the weekend, with Bitcoin at sub-$6,000 levels will be sitting on a tidy profit at the time of writing, with only one question to ask and that is whether there is a chance of Bitcoin hitting $10,000 before the end of the year.

Bitcoin Cash’s stumble has certainly made it more possible, though there is a big difference between moving into unchartered territory and retracing losses. We can expect Bitcoin holders to be a little jittery as Bitcoin moves north, but on the plus side the failings of both Bitcoin Cash and Bitcoin Gold will provide some comfort.

Bitcoin 4H
Bitcoin 4H

Interestingly, while Bitcoin Cash and Bitcoin fight for the intention of miners and investors, Ethereum is locked in a battle against Bitcoin Gold. Ethereum prices have eased in the early part of the day, down 2.09% at $324.98, while Bitcoin Gold has rallied 14.3% to $187. We will expect the pair to continue to tussle, with Bitcoin Gold out of the race to become Bitcoin’s leading currency, but not out of the battle to draw miners away from Ethereum.


Barring any unforeseen events through the day, we will expect Bitcoin to continue making ground as it looks to break into unchartered territory and take a run at $8,000 levels. Such a move will certainly raise the chances of $10,000 before the end of the year and could see increased demand as a result, with investors not wanting to miss out on another 30% gain. For Ethereum, we will expect prices to remain range bound, tilted slightly to the downside as the cryptoworld adopts Bitcoin’s alto currencies.

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Gold Treads Water in Spite of the Equity Market Selloff

It’s been a slow start to the day for gold, with spot gold down 0.17% at $1,276.02. FOMC member commentary has managed to peg back any upside for gold, with U.S inflation figures for October also considered to have been good enough for the FED to make its move next month. This week, members Rosengren and Harker have both talked of the need for a hike next month, with voting member Harker also suggesting that there would need to be three further hikes next year.

The risk on sentiment through the Asian session this morning eased demand for the safe haven asset, though there were obviously no material declines with market focus being on Capitol Hill.

Gold Stuck in a Rut

There are multiple drivers for gold at the moment, some positive and some negative. The combined effects have left gold range bound for some time, though the day ahead may bring an end to the recent ranges. It’s all about U.S tax reforms. While gold has shown little interest in the recent negative sentiment towards reforms, the Dollar and the Equity markets have been more responsive. Gold may well play catch up later today, with the senate vote on the tax reform bill scheduled for this afternoon.

Today’s vote may not mean that it’s a done deal, but will at least take the bill one step closer and that’s likely to be a positive for risk and the Dollar, which will likely weigh on gold.

Elsewhere, concerns over the future of Theresa May and the Tory Party continued to linger and then there are rising concerns over the outlook for the Chinese economy, with recent data suggesting that the 4th quarter may be on the softer side. Staying on the political front, we also have rising tensions in the Middle East and North Korea to also consider, either of which could flare up at any time.

Voting FOMC Members Brainard and Kaplan will be speaking later today, which could provide further guidance on whether the FED will make a move next month. A combined yes vote in the Senate and hawkish commentary from the two voting members could finally take the gold bulls out, though with geo-political risk still a concern, we won’t expect gold to fall to sub-$1,250 levels.

Gold daily chart, November 16, 2017
Gold daily chart, November 16, 2017

Oil prices steadied through the early part of the day, the recent declines over last week’s inventory and production numbers out of the U.S having done the damage this week. The IEA’s monthly report was also more bearish than OPEC’s on demand for crude, not to mention anticipated shale production. This does complicate matters for OPEC and Russia who have been delivering on their promise to rebalance crude. While an extension to the agreement is a positive, questions will continue to do their rounds on how much more production will OPEC and Russia be willing to cut and will it ever be enough to offset rising shale production. Until the volumes reach levels that are too sizeable for U.S producers to offset, any major upside in crude is likely to be limited. Added to this is the recent negative sentiment towards the Chinese economy. WTI and Brent were up 0.07% and by 0.23% at the time of writing.

Silver was having a slightly better time of it than gold in the early part of the day today, down just 0.04% at $16.97, having pulled back from $17 levels following the latest inflation figures out of the U.S. Direction for the day ahead will be hinged on how the tax reform bill progresses on Capitol Hill.

Tax Reforms to Drive the USD, with the GBP and EUR also in Focus

Earlier in the Day:

The Aussie Dollar was back under the microscope in the Asian session today, with October employment numbers being rolled out. Following Wednesday’s disappointing wage growth figures and falling commodity prices, there’s been very little support for the Aussie Dollar at present. When you consider market sentiment towards the Chinese economy and an expected slowdown, it’s looking particularly bearish and the RBA’s unlikely to be making any moves any time soon.
This morning’s figures provided some much needed respite for the Aussie Dollar however, with the Aussie Dollar moving from $0.75841 to $0.76036 upon release of the numbers. Australia’s unemployment rate fell from 5.5% to 5.4%, a four-and-a-half year low, with the labour market adding 24.3k full time jobs in October. The negative was a softer than forecasted increase in all employment, which was attributed to a 20.7k fall in part-time employment in the month. Despite the decline in part-time employment, a fall in the participation rate assured a better than expected unemployment rate.

At the time of writing, the Aussie Dollar stood a $0.7595, up 0.08% through the session.

While there were no other material stats released through the Asian session, the Asian major indexes managed to shake off the recent negative sentiment today. The Nikkei rallied 1.62% to eat into its current week’s losses, with the ASX200 closing the day up 0.16%. The Hang Seng and CSI300 were also in positive territory at the time of writing, the gains coming in spite of the concerns over China’s economy. Tencent’s earnings, which were released after the Hang Seng’s close on Wednesday contributed to the Hang Seng’s gains this morning.

The Day Ahead:

It’s a busy day ahead and for the EUR, key macroeconomic data scheduled for release this morning includes October’s finalized inflation figures. It’s been a strong week thus far, with the EUR finding support from the German GDP numbers released on Tuesday and the pullback in risk appetite that leads to carry trade unwinds.

Focus will be on the core inflation figures, which have continued to fall well short of the ECB’s target. ECB President Draghi had recently said that he expected inflationary pressures to begin building, but to date there has been little evidence in spite of rising oil prices.

We won’t expect the data to have a material impact on the outlook for monetary policy just yet, but the EUR will certainly find some direction off the figures, particularly following a relatively uneventful Wednesday. Outside of the data, ECB President Draghi is scheduled to speak, any comments on monetary policy are not expected to be EUR positive judging by the ECB’s desire to maintain a softer EUR. Draghi has surprised the markets on numerous occasions however, so he will need to be watched closely.

Interestingly, outside of the data, there’s been relatively little noise over Merkel’s troubles in forming a three party coalition with the FDP and the Greens. There have been rumours that a Friday deadline has been set on ironing out differences over Germany’s relationship with the Europe, the Greens being pro-Europe, while the FDP are considered Eurosceptic. There may be some jitters should negative news begin to hit the wires and threats of a re-election become more than a possibility. With Merkel having come in 2nd in the state elections, the real threat is Merkel’s CDU coming in 2nd.

At the time of writing, the EUR was up 0.02% at $1.1793, as the markets look ahead to stats and events through the day.

For the Pound, it’s another important day from a data perspective. October retail sales are scheduled for release this morning. If the forecasts are anything to go by, it’s doesn’t look too good for the Pound, which has managed to stand its ground in the wake of Monday’s decline. October’s BRC Retail Sales Monitor that was released last week was also a disappointment. The gap between wage growth and inflation may have narrowed in October, but it may well take some time for consumers to loosen the purse strings. The economy may have continued to perform through the year, but Theresa May’s instability and uncertainty over Brexit remain an influence.

British politics and Brexit continue to be two key negatives for the Pound and until Theresa May is able to steady the Tory Party ship, the possibility of a vote of no confidence and another General Election remain.

At the time of writing, the Pound was up 0.11% against the Dollar at $1.3182, holding on to Wednesday’s gains, though we can expect the Pound to be under pressure ahead of the stats. Outside of the stats, there are a number of BoE speeches scheduled this afternoon, with BoE Governor Mark Carney and MPC members Broadbent and Cunliffe speaking. Any monetary policy talk will provide further direction for the Pound late in the European session. With inflation the BoE’s major concern, there’s no real need for any of the speakers to be talking down the Pound…

For the Dollar, it’s another day of wait-and-see. The equity markets have run out of patience, but the Dollar has managed to hold up in the face of adversity. It’s all about the tax reforms and apparent lack of progress and the markets will be looking for some news later today on whether the Republican standoff continues. News hit the wires late in the U.S session on Wednesday that Republican Sen. Ron Johnson would not be voting for the Bill. Any more Senators coming forward will be a negative for the Dollar ahead of Today’s House vote, which is anticipated to be in favour of the Bill and the Dollar.

While focus will be on Capitol Hill, economic data out of the U.S will be a factor to consider. Key stats due out this afternoon include the weekly jobless claims figures, October Industrial production and import and export price figures and the Philly FED Manufacturing PMI for November. While the stats will provide some direction, none of the data is likely to have a material influence on market sentiment towards next month’s interest rate decision.

October’s inflation figures, released on Wednesday, we’re considered good enough for a December rate hike, with FOMC member Rosengren and Harker having been hawkish this week. Members Mester and Kaplan are due to speak through the U.S session today and if the pair are of a similar view, then the Dollar will find some support.

At the time of the report, the Dollar Spot index was up 0.04% at 93.851, with plenty for the markets to consider through the day.

Bitcoin Cash, Litecoin and Ripple Daily Analysis – 15/11/17

Bitcoin Cash – Steadier but not out of the Woods

It’s been a better start to the day for Bitcoin Cash, which looks to be in recovery mode from Tuesday’s fall to sub-$1,300 levels.

As things stand it looks like the two camps have made their moves, with the supporters of the cancelled SegWit2X fork siding with Bitcoin Cash, the shift having pulled back Bitcoin as news hit the wires of the cancellation last week.

While the support remains in place for Bitcoin Cash, it looks to be a far different story when taking a look at Bitcoin Gold. The decline in Bitcoin Gold is certainly a cautionary tale for investors looking to jump on the Bitcoin bandwagon. Hard forks and blockchain splits that result in new cryptocurrencies does not always guarantee exponential gains.

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Bitcoin Cash was the first offshoot from Bitcoin and the gains are likely to be sustained, though the unknown will be what impact the SegWit2X fork would have had on support for Bitcoin Cash. What might have been…

At the time of writing, Bitcoin Cash was up 2.93% at $1,289.7, easing back from $1,320 levels hit earlier in the day. We will expect volatility to continue to persist through the day, with any moves to below $1,270 likely to lead to a more material decline. Despite early gains, the outlook remains bearish and Bitcoin Cash holders may begin to ponder on whether the rally as now come and gone as prices continue to fall well short of the weekend high.


Litecoin Looking to Break Free

There’s been some progress for Litecoin, which has managed to pull away from the $60 mark, currently up 1.36% at $63.19.

The fact that Litecoin has managed to break free of the ball and chain that had left it range bound since the mid-October rally, suggests that there may be more upside on the horizon, though how far a rally will be allowed to run remains to be seen, with Litecoin likely to face selling pressure as it moves through the $70 barrier.

The dip buying continues to be an issue for Litecoin and others and until there is stronger support at current levels and more sustained moves northwards, the trend will likely continue over the near-term.

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Litecoin holders are likely to sell-out should there be a move to the lower end of recent ranges, which would then really test those holding on, with upper ranges likely to come down further.

At current levels, it looks relatively positive for the day ahead, though there’s unlikely to be a breakaway rally.

LTCUSD 151117

Ripple – Still in a Rut

Ripple’s coming in behind Bitcoin on the day on the performance side, up 2.73% at $0.20920 at the time of writing. Despite the gains, there seems to be little buying interest and Ripple has barely made a splash since its October rally.

Litecoin and Bitcoin cash have had more noteworthy moves in the last week, suggesting that interest for Ripple remains limited for now, buyers finding stronger gains elsewhere.

Despite the stuck in the mud feeling, any moves beyond the top side of the range could see Ripple make a move towards $0.30 levels, beyond which there will likely be strong resistance. Should we see current ranges persist, Ripple could well fall back towards $0.18 before support kicks in.

As things stand, Ripple looks like it’s ready to break out though whether a sustained rally is on the cards remains to be seen as buyers look to take profits rather than take a longer term hold.

XRPUSD 151117

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A Big Day ahead for the Dollar and the Pound

Earlier in the Day:

Following the Kiwi Dollar’s slide on Tuesday, it was the turn of the Aussie Dollar to take a hit this morning. Wages grew by 0.5% in the 3rd quarter, according to figures released this morning. The numbers fell short of a forecasted 0.7% increase, pulling the Aussie Dollar down from $0.76284 to $0.75925 upon release.

The RBA has continued to raise concerns over soft wage growth and the likely impact on consumer spending and the effects on the economy. High household debt and soft wage growth is certainly a bad combination, the only silver lining being the soft outlook on inflation.

It’s not just the economic data that’s hurting the Aussie Dollar today, with the risk off sentiment also weighing. The Asian markets continued to see red this morning, with commodities also in decline.

The ASX200 slipped 0.58% on the day, while the Nikkei ended the day down 1.57%. While both were hit by falling commodity prices, the Nikkei was also hit by the weaker Dollar. There was little support from Japan’s 3rd quarter GDP numbers released this morning. Japan’s economy slowed in the 3rd quarter, though growth was better than forecasted year-on-year. The economy grew by 1.4%, which was better than a forecasted 1.3%, whilst significantly softer than the 2nd quarter’s upwardly revised 2.6%.

While inflation continues to be the Bank of Japan’s bugbear, Abenomics seems to be working. Japan’s economy has enjoyed its 7th quarter of growth, driven by exports. The next area of focus for Prime Minister Abe will be to drive wage growth that will be needed to support consumer spending. Soft consumer spending continues to peg back growth and weighed on the 3rd quarter GDP numbers. Consumer spending accounts for more than 50% of GDP, leaving the economy heavily reliant on global demand at present.

The Day Ahead:

Following the big moves by the EUR on Tuesday, coming off the back of solid economic growth figures out of Germany, the only major data out of the Eurozone this morning is France’s finalized October inflation figures, which are unlikely to have a material impact on day. European equities felt the full force of the bounce in the EUR on Tuesday. ECB President Draghi didn’t come to the rescue and the EUR’s looking to push to $1.18 levels, though any major moves north through the day will be dependent upon how the Dollar performs.

The EUR stood at $1.1794 at the time of writing, down just 0.03% on the day.

Across La Manche, it’s another big day for the Pound. Economic data out of the UK this morning includes October’s earnings figures and September’s claimant count change. While inflation remains the BoE’s key consideration, stability in the labour market is also a major factor, with a negative outlook on employment having held the BoE back from any moves earlier in the year. Consumer spending has been plagued by wage growth lagging inflation. The UK’s inflation figures released on Tuesday suggests that inflation may now have peaked, which is good news, but forecasts are for wage growth to soft and that would be the bad news. Weak numbers today will certainly weigh on the Pound, particularly as the markets see the BoE standing pat on monetary policy until late into next year.

At the time of writing, the Pound was down 0.12% at $1.3149, with any weak numbers likely to see the Pound drop back to $1.30 levels. The political environment is a negative and that suggests that the outlook for Britain’s departure from the EU will also be a negative. The UK Prime Minister’s falling support is leaving the government on a weaker footing at the negotiating table. Outside of the data and the rising concerns over Theresa May’s position at the top, BoE Monetary Policy Committee members Haldane and Broadbent are also scheduled to speak after the release of the labour market numbers. Any talk on monetary policy will be influence.

Across the Pond, the Dollar will also be under the microscope this afternoon. Stats out of the U.S include October’s retail sales and inflation numbers, with September’s business inventories and November’s New York Empire State Manufacturing Index figures also scheduled for release.

Focus will be on the inflation and retail sales figures. Soft inflation numbers could influence the market’s outlook towards December’s monetary policy decision and the rate path for next year, while there will need to be strong consumer spending to support 4th quarter growth in the U.S and maintain the upbeat sentiment towards the U.S economy. On Monday, FOMC voting member Harker had talked of 3 rate hikes next year, providing support for the Dollar. If inflation continues to lag, the doves will more than likely temper any hawkish rate projections for next year.

While focus will be on the stats, the markets will need to keep an eye on Capitol Hill. Noise on the tax reform bill will likely be the key driver through the day, despite the relevance of the data due out of the U.S this afternoon.

At the time of writing, the Dollar Spot Index was down 0.01% at 93.813, with direction on the day hinged on the Republicans and this afternoon’s data.

Central Bankers and Economic Data to Drive the Majors

Earlier in the Day:

The Kiwi Dollar was the victim of the Asian session this morning, tumbling to sub-$0.69 levels at the start of the day. Risk sentiment was on the softer side and a fall in commodity and dairy prices added to the woes of the already sensitive Kiwi Dollar. At the time of writing, the Kiwi was down 0.61% at $0.6861. A shift in the political landscape continues to be an added negative, while the markets are also less convinced of the RBNZ’s optimism over the economy and monetary policy.

Macroeconomic data through the Asian session didn’t help the Kiwi Dollar or the Aussie Dollar’s cause. Key stats included China’s industrial production, fixed asset investment and retail sales figures for October. The numbers were disappointing and softer from September numbers, weighing on market risk appetite. Concerns over how China’s economy is likely to perform in the final quarter have been brewing. Last week’s release of China’s October fiscal spending was also a negative for the 4th quarter.

While retail sales numbers were softer, sales were still up 10% year-on-year, with industrial production rising by 6.2%, down from September’s 6.6%.

The Aussie Dollar slipped from $0.76353 to $0.7652 upon release of the figures, giving up gains from earlier in the session off the release of October’s National Bank of Australia Business Confidence Index figures. Business confidence picked up in October, the numbers being aligned with the RBA’s positive sentiment towards non-mining investment.

The Aussie Dollar was up 0.14% at $0.7634 at the time of writing, with the Aussie managing to brush off the softer numbers out of China ahead of today’s busy European and U.S session.

For the major indexes, the Hang Seng managed to shake off the softer numbers out of China to join the Nikkei in positive territory. In contrast, the ASX200 saw a steep decline to end the day down 0.88%, joined by the CSI300 that was down 0.23% at the time of writing.

In spite of the mixed session, the Dollar managed to hold off the Yen at the time of writing, with the Yen down 0.01% at ¥113.63, though we don’t expect the pair to be range bound through the day.

The Day Ahead:

Following yesterday’s quiet start to the week, it’s certainly a busier day on the economic calendar through the European and U.S sessions.

Out of the Eurozone, key stats include finalized inflation figures for October out of Germany, Spain and Italy, 3rd quarter GDP numbers out of Germany and the Eurozone, German and the Eurozone’s ZEW economic sentiment figures together with the Eurozone’s September industrial production figures.

While Germany’s prelim GDP numbers are forecasted to be EUR positive and likely to be the key driver, ECB President Draghi is also scheduled to speak this morning. Any upside in the EUR off the stats could be reversed should Draghi take a dovish stance on policy this morning, the ECB eager to avoid a EUR rally anytime soon.

At the time of writing, the EUR was up 0.07% at $1.1675 ahead of the European open with Draghi likely to have the final say on how the EUR ends the day.

From the UK, October inflation figures are scheduled for release. The annual rate of inflation is forecasted to pick up to 3.1%, which would be a positive for the Pound, though the markets will be wary ahead of BoE Governor Carney’s speech later in the morning.

Following last week’s rate hike that was considered dovish for the Pound. Carney may look to take a more hawkish stance on monetary policy in the interest of support for the Pound, which has continued to be under pressure from noise over Brexit and Theresa May’s woes in parliament.

The Pound was up 0.01% at $1.3117 at the time of writing, with direction through the day hinged on the inflation figures and Carney’s comments. BoE Monetary Policy Committee member Cunliffe is also scheduled to speak late in the day, which could provide further support for the Pound should the two take a hawkish stance on policy. News from Parliament and concerns over the vote of no confidence letter will also be a factor to consider.

Across the Pond, economic data out of the U.S is limited to October’s producer price index figures that are forecasted to soften. We would expect the stats to play a minor role in the direction of the Dollar through the day. Focus will remain on tax reforms and whether the House of Representatives and the Senate can come to a compromise that satisfies the markets. FED Chair Yellen is also scheduled to speak this morning. Philly FED President Harker had provided some support for the Dollar on Monday, though how much upside for the Dollar there would be from any hawkish commentary remains to be seen, as tax reforms continue to hold court.

The Dollar Spot Index was down just 0.03% at 94.473 at the time of writing, with direction through the day hinged on noise from Capitol Hill and any comments from the FED Chair on monetary policy.

Bitcoin Cash, Litecoin and Ripple Daily Analysis – 14/11/17

Bitcoin Cash – Under Pressure

Following a choppy session on Monday, which came in response to the surge in price from sub-$300 levels, volatility remains though Bitcoin Cash’s price has managed to consolidate from the more than $1,000 slide from Sunday’s peak.

The slide would have put the brakes on buyers coming in and with the price currently hovering at $1,200 levels, having hit $1,500 in the early hours, there will be concerns over whether price stability will prevail.

At the time of writing, Bitcoin Cash is down double digits in the early part of the day. Investors may be eager to jump in to avoid missing out on a Bitcoins rally, but with so much volatility and uncertainty over what lies ahead, downward pressure will likely come from Bitcoin Cash holders looking to offload the free coins from the summer fork.

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It’s certainly a tough call on whether to go in or wait for a more material decline to sub-$1,000 levels. One worries that should the floodgates open and Bitcoin Cash holders begin to run for the hills, we could see quite a slump and that’s a significant downside risk that prospective buyers will need to consider through the day.

Bitcoin Cash stood at $1,225 at the time of writing, with the price volatility reflective of investor uncertainty over the near-term. In contrast, Bitcoin has made steady and sits up 0.6% at $6,757. While off record highs, the direction is a reflection of buyer demand, though, for those who missed out on the Bitcoin rally, price entry levels may be a bit rich.

We can expect more volatility through the remainder of the day and any attempts to break through $1,500 levels will likely be faced with stern resistance, with a bias towards the downside for the day.


Litecoin Holds stands it’s ground for now

Litecoin continues to hover at around the $60 mark having recovered from sub-$59 levels on Monday.

Uncertainty continues to pin back gains, with Bitcoin’s price collapse fresh in the minds of wannabe investors, despite Litecoin sitting well off mid-October’s run at $100.

While Litecoin seems to be treading water at the time of writing, down 0.85% at $60.72, we would expect there to be strong support at $59, though for now, any moves into $70 levels will likely face strong resistance.

There seems to be a lack of conviction that another strong rally is the horizon over the near-term, which has pinned back a hope of a rally. This is unlikely to change through the day.

LTCUSD 141117

Ripple – Stuck in a Rut, but for how long?

At the time of writing cryptoworld order seems to have returned. Bitcoin (BTC) has found its legs and Bitcoin Cash (BCH) is in the line of fire.

Ripple has had a good start to the day, moving to $0.20 levels though Ripple seems to have been stuck in a rut. For a more sustained rally, it will need to break free of its 2-week high of $0.2174 and break beyond $0.22.

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Ripple holders may well be on a dip buy cycle, buying at sub-$0.20 and looking to offload at around the $0.22 level, which it has failed to break above since mid-October.

At the time of writing, Ripple is up 0.78% at $0.2019, with any further upside likely to be tested through the day, though we wouldn’t expect any declines below $0.19.

XRPUSD 141117

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Apple is in the Race for a Trillion as its Market Cap is over $900bn

Apple (AAPL) has continued to make headlines through the year and for all the right reasons. The stock has surged 63.69% over one year and by 50.8% year-to-date, in what has been a record-breaking run. The Samsung Galaxy Note 7 fiasco last year may have given Apple an edge, but for the Company’s market cap to break the $900m mark, it takes more than Samsung’s 2016 woes to get there.

Last Wednesday’s intraday record high and a closing $904bn market cap came off the back of some quite impressive earnings. The Company’s 30th September fourth quarter earnings per share came in at $2.07 with revenue of $52.6bn. While the numbers came in well ahead of expectations, more impressive is the more than $260bn sitting in cash and long-term marketable securities. In fact, there appear to be no chinks in the armor at present.

Revenue numbers topped estimates, supported by strong iPhone 8 and Mac sales. Apple’s sales forecast for the current quarter is in excess of $80bn, which would be a record for the company. More importantly, gross profit margins are forecasted to widen from 38% to 38.5% The upbeat projections came ahead of the launch of the iPhone X. There are high expectations for Apple’s latest product offering to give the Company a good run at the $1tn mark. The iPhone X has sizeable orders and is expected to see strong demand well into next year. An added bonus is that the iPhone 8 Plus is also selling better than forecasted. What else is coming from the Apple core over the near-term?

News hit the wires of Apple’s pay cash system entering beta testing. The software will allow users to send and receive cash using iMessage and it’s expected to go live before the end of the year. A new iPad Pro with facial recognition is also on its way.

While there’s plenty of good news, Apple’s latest iOS bug grabbed the tech headlines. The bug caused the Apple’s ‘i’ to become an A and ? in writing. A fix has since been released. Telling your friends you had just bought the iPhone X would have been A&?Phone X. And then there are the reports of the iPhone X being the most breakable of the iPhones. None of this seems have deterred the consumer and the insatiable appetite for Apple’s offerings.

It’s been a long road, but for Apple, it’s not just the technology and the software that has given the company the mantle of being the largest in the world by market cap. Product design and the entire ecosystem that Apple has created with iTunes, iCloud, the App Store and the rest is another major factor. Once you’ve moved into the world of Apple, it’s more than a challenge to move to an android.

Many had been a little too hasty in writing off the company following Steve Jobs’s passing. The company’s performance and continued advancement demonstrate quite clearly how well Jobs and the rest of the management team instilled the values and the vision. To put it into perspective, Apple’s market cap has risen from just under $350bn to its current $896.81bn (as at 10.11.17) under CEO Tim Cook.

Brand value and the very fact that the Company sits at the top of the pile of the world’s largest companies has given the company the image and prestige that Steve Jobs would have desired. It’s the iMac today, but soon it will be the iCar and even the iBot.

The big question that remains is whether Apple Inc. can be the first of the current heavyweights to hit the Trillion Dollar mark. Google’s Alphabet Inc. (GOOG) is the closest listed rival with a market cap of $719.48bn (as at 10.11.17). Apple looks well placed and if its earnings forecasts prove to be accurate, odds are stacked in its favor. There’s just one issue. Talk of Saudi Arabia’s Aramco IPO is still doing its rounds, with the crowned prince having put the value of the company at $2tn. It’s unsurprising that the seller would tag it on the higher side. More reasonable valuations by analysts have ranged from between $1tn to $1.5tn. There’s no guarantee that the IPO will happen, but if it does Apple could find itself trailing by quite a gap.

For now, the demand is in the iPhone X, but Apple’s shares may also get a boost for reasons outside of its revenue earnings and forecasts. Trump’s tax reform bill will be of particular interest to Apple, which has the more than 90% of its cash and marketable security holdings offshore. It’s not surprising when considering that more than 60% of Apple Inc.’s net sales come from non-U.S markets. Expectations are that the repatriation would lead to greater investment and innovation and possibly a greater dividend yield. The market sensitivity over tax reforms saw Apple’s market cap fall below $900 by Friday’s close. If Trump delivers alongside Apple’s iPhone X, it could be within touching distance of the $1tn mark by the end of the holidays.

Market Outlook- The Week that Was and the Week Ahead

Key Macroeconomic Data for the week ahead

Monday, 13th November:

  • N/A

Tuesday, 14th November:

  • China Industrial Production y/y (Oct)
  • German GDP q/q (Q3) Prelim
  • UK CPI y/y (Oct)
  • German ZEW Economic Sentiment (Nov)
  • S PPI m/m (Oct)

Wednesday, 15th November:

  • Japan GDP q/q (Q3)
  • UK Average Earnings Index + Bonus (Sep)
  • UK Claimant Count Change (Oct)
  • S Core CPI m/m (Oct)
  • S Core Retail Sales m/m (Oct)
  • S Retail Sales m/m (Oct)

Thursday, 16th November:

  • Australia Employment Change (Oct)
  • Eurozone CPI y/y (Oct)
  • Philly FED Manufacturing Index (Nov)

Friday, 17th November:

  • S Building Permits (Oct)
  • Canada Core CPI m/m (Oct)

Currency Majors

  Current Value Δ Current Week, % Δ Current Month, % ΔYTD, % ΔYoY, %
EUR/USD 1.16410 0.49% 0.16% 10.92% 7.09%
GBP/USD 1.30790 0.91% -0.65% 6.94% 5.11%
USD/CHF 0.99760 -0.46% -0.15% -2.25% 0.94%
USD/JPY 113.37000 -0.47% -0.10% -2.93% 6.27%
AUD/USD 0.76450 0.14% 0.07% 6.28% 0.63%

 Source Bloomberg as at 13th November 2017


  Current Value Δ Current Week, % Δ Current Month, % ΔYTD, % ΔYoY, %
Gold Spot 1,275.07 0.41% 0.28% 11.12% 3.86%
WTI Crude 56.74 1.98% 4.34% 5.62% 30.71%
Brent Crude 63.52 2.34% 3.50% 11.79% 41.94%
Bloomberg Commodity Index 177.83 0.49% 1.30% 0.50% 6.84%  

Geo-Political Risk                           

Spain & UK


The key risk remains the possible threat of a new election. Progress will need to be made on Monday between the three parties for the markets to avoid a panic over the near-term.

Middle East

The markets will need to keep a close eye on the Middle East as the Saudis look to take on Lebanon and ultimately Iran. Reports have suggested that the Saudis forced the resignation of Lebanon Prime Minister Hariri and Hezbollah have accused the Saudis of declaring war on the nation. All of this started from a missile fired by Hezbollah at Riyadh the weekend prior, with the Saudis accusing Iran of having supplied the missile. Any escalation will see markets go into defensive mode, whilst oil prices would be on the rise oversupply worries.


Key Benchmarks
  Current Value Δ Current Week, % Δ Current Month, % ΔYTD, % ΔYoY, %
Dow Jones 23,422.21 -0.50% 0.19% 18.52% 24.27%
S&P500 2,582.30 -0.21% 0.27% 15.34% 19.31%
EURO Stoxx 50 3,593.76 -2.61% -2.18% 9.22% 18.61%
FTSE100 7,432.99 -1.68% -0.80% 4.06% 10.44%
DAX 13,127.47 -2.61% -1.29% 14.34% 23.06%
CAC 40 5,380.72 -2.49% -2.23% 10.66% 19.86%
Nikkei 225 22,681.42 0.63% 3.04% 18.66% 30.54%
Hang Seng 29,120.92 1.81% 3.10% 32.36% 29.25%
ASX200 6,029.37 1.17% 2.04% 6.42% 12.26%
CSI300 4,111.91 2.99% 2.63% 24.22% 20.33%

Source Bloomberg as at 10th November 2017

 Eurozone Equities (DAX; CAC; EuroStoxx50)

  • Macroeconomic Data for the week ahead (Neutral)


  • N/A


  • German Industrial Production m/m (Sep)
  • German CPI m/m (Oct) Final
  • German GDP q/q (Q3) Prelim
  • German GDP y/y (Q3) Prelim
  • Spanish CPI y/y (Oct) Final
  • Spanish HICP y/y (Oct) Final
  • Italian CPI m/m (Oct) Final
  • German ZEW Current Conditions (Nov)
  • German ZEW Economic Sentiment (Nov)
  • Eurozone ZEW Economic Sentiment (Nov)
  • Eurozone GDP y/y (Q3) 2nd Estimate
  • Eurozone GDP q/q (Q3) 2nd Estimate
  • Eurozone Industrial Production m/m (Sep)


  • French CPI m/m (Oct) Final
  • French HICP m/m (Oct) Final
  • Eurozone Trade Balance (Sep)


  • Eurozone Core CPI y/y (Oct)
  • Eurozone CPI m/m (Oct)
  • Eurozone CPI y/y (Oct)


  • N/A

European equities slumped in the last week, with the EuroStoxx50 and DAX each giving up 2.61% and the CAC ending the week down 2.49%, with all three being dragged into the red for the current month. The declines in the week were the worst in 3-months and there appeared to be a lack of support at the end of the week, in spite of the losses and some apparent value on offer.

The bias was down for much of the week, with earnings and the EUR the key contributors to the downside. Financial stocks took quite a beating through the week, with Commerzbank earnings weighing on the sector through the early part of the week. ECB monetary policy continues to weigh on the banking sector, with the upbeat economic momentum doing little to boost earnings, as net interest margins remain under pressure.

Commerzbank (CBK:DE) managed to close the week in positive territory despite the earnings miss, with the bank’s anticipated turnaround this year supporting the stock.

Other gains in the sector included UniCredit Bank (UCG:MI), which closed out the week in positive territory, with BNP Paribas (BNP:FP) flat .

Gains in the EUR were limited to 0.49% for the week, but with the combined effects of poor earnings results, a stronger EUR and the shift in market sentiment towards tax reforms, profit taking was high on the agenda.

On the earnings numbers, of the 78% of companies listed on the Stoxx600, EPS growth has slowed from 26% in the first quarter of this year to 7.6% in the 3rd. In the second quarter, EPS growth was 18%. If the markets were looking for any more negative numbers on the earnings results, only 51% of companies’ earnings came in ahead of forecasts, which is the worst since the final quarter of 2015. The disappointment was attributed to exporters, where less than 50% saw earnings come in ahead of forecasts for the quarter.

On the dating front, it was a relatively quiet week. Of greatest concern for the markets would have been the fall in German industrial production in September and a decline in exports, while imports saw a larger decline leading to a widening of the trade surplus. The good news was a rise in factory orders, which suggests that September was a blip in the continued recovery.

For the markets, the EU Economic forecasts and ECB Economic Bulletin should have been positive for the equity markets, with growth for the Eurozone being revised upwards for this year and the next 2-years, particularly when factoring in the soft inflation outlook and current monetary policy environment and outlook.

Outside of Europe, other influences aside from the consensus on tax reforms included China’s trade figures for October, which continued to show strong demand for goods and raw materials, with imports surging by another 17.2%. While exports rose by just 6.9%, the markets were happy with the demand side, particularly with Trump in the region, a widening in the trade surplus is quite timely.

Trump’s positive summation of his meetings with Chinese Premier Xi did not go unnoticed, with any concerns of punitive trade tariffs being quashed on Thursday. The sell-off could have been considerably worse had there been talks of tariffs, especially when considering the fact that Trump had already singled out Germany as a nation benefiting from unfair trade terms.

Oil prices also gained through the week, with Brent up 2.34% to $63.52 as the markets begin to consider $80 plus levels, though the upside in crude was not enough for Total (FP:FP) to move into positive territory for the week.

Geopolitical risk certainly contributed to the gains in crude, with the Saudis looking ready to lock horns with Iran and the Hezbollah as the Shia Sunni divide begins to heat up. (See Political Risk section for more details).

The week ahead

It’s a busy week ahead on the data front, with key stats out of the Eurozone certainly expected to provide the EUR with some much-needed direction, following the ECB –tapering sell-off.

While Tuesday is the big day on the stats, the Eurozone’s inflation figures on Thursday will be watched closely. Draghi had recently suggested that inflation was likely to begin accelerating in the near future. Such an outcome would certainly force the markets to reconsider ECB monetary policy, with any shift a negative for the markets, particularly when considering the fact that the EUR has become a funding currency.

Data out of China will also be of relevance, with China’s industrial production number of particular relevance.

The markets will need to keep an eye on the storm brewing in the Middle East, however, with any hint of a war between the two sides likely to cause a more material pullback in the equity markets and a bounce in the EUR.

In the U.S., Congress is expected to vote on the tax reform bill and how the vote goes and noise from the House of Representatives will be key to the progress of the bill. Any negative news will again be a negative for riskier assets.

UK (FTSE100)

Macroeconomic Data for the week ahead (Negative)


  • N/A


  • UK CPI m/m (Oct)
  • UK CPI y/y (Oct)
  • UK PPI Input m/m (Oct)


  • UK Average Earnings Index + Bonus (Sep)
  • UK Claimant Count Change (Oct)
  • UK Unemployment Rate (Sep)


  • UK Core Retail Sales m/m (Oct)
  • UK Core Retail Sales y/y (Oct)
  • UK Retail Sales y/y (Oct)
  • UK Retail Sales m/m (Oct)
  • Friday
    • N/A

The FTSE100 slipped 1.68% through the week to hit a 6-week low last week, with a 0.91% gain the Pound certainly not helping the cause.

Economic data through the week was on the lighter side ahead of Friday’s production and trade figures, leaving the markets with little to do but consider where the index has come from and where it is heading over the short to medium-term.

Such an opportunity tends to be negative, especially with the uncertainty of Brexit looming large over the UK and certainly more sensitive to the direction in the Pound.

Following Friday’s manufacturing production and trade figures, which were all positive for the UK, the Pound clawed its way back to $1.32 levels for the first time since the start of the month, contributing to Friday’s 0.68% decline, though the damage had already been done.

Adding to the positive sentiment towards the UK economy was the NIESR GDP estimate for 3-months to November, which forecasted 0.5% growth, accelerating from the previous month’s 0.4%.

The negative for the markets was disappointing retail sales and house price figures released earlier in the week. The UK’s BRC Retail Sales Monitor fell by 1% in October, falling well short of a forecasted 0.9% increase, leaving the retail sector floundering. It’s going to be a tough time for the sector, with the pickup in interest rates, 3% inflation and soft wage growth weighing on consumer spending.

Next PLC (NXT) ended the week down 2.1%, with any upside from Marks & Spencer (MKS) on earnings lost by the end of the week, the stock down 2.8% for the week. If the doom and gloom is to materialize, things are only going to get tougher for the sector and holding on in hope of a rebound may be in vain.

Brexit remains a key consideration, though with Britain leaving the EU on 29th March 2019, there’s still some time before the markets need to begin searching for the panic button. See Geo-political risk section for more info.

Outside of the data, Friday’s drop in oil prices pulled BP (BP) and Royal Dutch Shell (RDS) into the red, the pair having made solid gains through the early part of the week. Should tensions continue to rise, we would expect oil to find support over concerns of supply disruption from the region, which should be positive for the pair.

Trump’s tax reform bill woes provided unnecessary support for the Pound through the second half of the week, whilst trade data out of China and Trump’s visit were both considered positive.

The week ahead

  • Stats for the week ahead are of particular importance and could have a material influence on market sentiment towards monetary policy by the end of the week.
  • Inflation is expected to continue to sit at 3%, with wholesale input prices forecasted to have risen by 1.3% in October. Any uptick in inflationary pressure could see the BoE have to take more aggressive action, though this will be dependent upon the rest of the data. UK average earnings and claimant count numbers on Wednesday and retail sales figures on Thursday will need to be upbeat for there to be any chance of another near-term move.
  • Such a shift in sentiment would certainly see the Pound begin to make a move to $1.35 levels, which will be a negative for the FTSE100 and the multinationals in particular.
  • Concerns over Theresa May’s position at the helm of the Tory Party will be another factor to consider through the week as Brexit negotiations resumed last Thursday.

Outside of the UK, industrial production figures out of China on Tuesday will influence market risk appetite, as will an anticipated Senate vote on the tax reform bill.

  • The House of Representatives is expected to be the stumbling block, so any surprise resistance in Congress will weigh heavily on the Trump rally that has inspired the markets beyond U.S borders.
  • The good news for the Pound will be the fact that Trump’s protectionist attitudes are unlikely to hurt the UK, with the U.S president likely to take a far more lenient approach to trade talks than with the likes of Germany.
  • Trump’s criticism of the WTO during the APEC CEO Summit hit the news over the weekend, with the U.S president continuing to complain about unfair trade agreements for the U.S

U.S Equities

Macroeconomic Data for the week ahead (Positive impact)


  • N/A


  • S Core PPI m/m (Oct
  • S PPI m/m (Oct)


  • S Core CPI m/m (Oct)
  • S Core CPI y/y (Oct)
  • S Core Retail Sales m/m (Oct)
  • S CPI m/m (Oct)
  • NY Empire State Manufacturing Index (Nov)
  • S Retail Sales m/m (Oct)
  • S Business Inventories m/m (Sep)


  • S Initial Jobless Claims
  • S Export Price Index m/m (Oct)
  • S Import Price Index m/m (Oct)
  • Philly FED Manufacturing Index (Nov)
  • Philly FED Employment Index (Nov)
  • S Industrial Production m/m (Oct)


  • S Building Permits (Oct)
  • S Building Permits m/m (Oct)
  • S Housing Starts m/m (Oct)
  • S Housing Starts (Oct)

U.S equities joined the rest in the red last week, with the Dow and S&P500 falling 0.5% and 0.21% respectively. The NASDAQ joined the pair in the red for the week, falling 0.2%, despite managing to avoid another decline on Friday.

That’s an end to the Dow’s 8-week rally and the person laying claim to this year’s record-breaking runs is the person contributing to the decline. Concerns over a possible delay in tax reforms until 2019 weighed heavily on the markets. The balance of power sits in the House of Representatives and, while the House is under the Republicans, there is a difference of opinion on key elements of the reform bill that could see a lengthy backward and forwards between Congress and the House. The impact of the proposed tax reforms on U.S debt have also been doing the rounds, so some tweaking is more than likely.

We will expect the markets to continue to be dictated by progress on the tax reforms and, with the U.S President back, we will expect plenty of noise on the subject.

A pickup in oil prices through the week failed to provide support and neither did some relatively upbeat earnings. Based on FactSet numbers, 73% of companies listed on the S&P500 have had better than forecasted earnings, with the tech sector being the leader in the pack.

On the data front, economic data out of the U.S was particularly light, with stats limited to September’s JOLTs job openings, the weekly jobless claims figures, and November’s prelim Michigan Consumer Sentiment and Expectations figures. The data was largely overshadowed by tax reform noise and, while consumer sentiment eased according to the November numbers, an upbeat economy, a tightening labor market and the prospect of tax reforms will continue to support consumer sentiment.

It was always going to be a choppy week with the lack of stats and tax reforms taking center stage and we are likely to see more of the same next week ahead of Thanksgiving. Pressure will be on to get the bill passed through and the rush could be its downfall.

Outside of the U.S, Trump’s visit to Asia saw the U.S President talking down the WTO, with the talk of unfair trade agreements coming up once more in the president’s speeches. Trump also said that the U.S would not be entering into any multilateral agreements such as the Trans-Pacific Pact and would instead look for bilateral agreements with countries who don’t try to take advantage of the U.S.

The comments seemed to go against the tone taken with China, so the markets will have to wait and see whether the U.S administration will begin talking up the possibility of punitive tariffs once more.

The week ahead

  • With all the big names have released their earnings results, the focus will remain on tax reforms through the week. Expectations are for Congress to vote on the bill to the House of Representatives before Thanksgiving.
  • Macroeconomic data out of the U.S will also be a factor to consider, with the economic calendar on the busier side for the week ahead.
  • Inflation figures due out on Tuesday could lead to a shift in sentiment towards December’s rate hike and the rate path projection for next year, which will be a consideration.
  • The markets need some impetus to keep the rally going and tax reforms had been expected to be the post-earnings driver. Such a void could test market appetite at such levels and lead to a correction in the more inflated sectors.

HK (Hang Seng Index) / China (CSI 300) / ASX200

Macroeconomic Data for the week ahead

  • Monday
    • N/A
  • Tuesday
    • Australia NAB Business Confidence (Oct)
    • China Fixed Asset Investment y/y (Oct)
    • China Industrial Production y/y (Oct)


  • Australia Westpac Consumer Sentiment (Nov)
  • Australia Wage Price Index q/q (Q3)


  • S Initial Jobless Claims
  • Australia Employment Change (Oct)
  • Australia Full Employment Change (Oct)
  • Australia Unemployment Rate (Oct)
  • HK Unemployment Rate (Oct)


  • N/A

Asian equities continued to move northwards last week, with the CSI300 surging 2.99% and the Hang Seng and ASX200 gaining 1.81% and 1.17% respectively.

The money’s in Asia and while U.S equities hover close to record highs, the Asian markets are at pre-GFC levels, with some seeing more room to run for the majors.

Following calls earlier in the week of the Nikkei likely to hit 30,000 levels in the next few years, a softer Dollar weighed on the index, with the Nikkei gaining just 0.63%. That was still better than the moves in Europe and across the Pond.

For the ASX200, the good news in the week was relatively positive trade data out of China, with China imports rising by 17.2% in October, together with a relatively upbeat RBA Statement as the RBA held rates unchanged this month.

There were no material stats to speak of, with the week ending with the release of the RBA’s quarterly monetary policy statement. The monetary policy statement was less hawkish than the RBA has been in recent statements, revising down growth projections for this year, 2018 and 2019. With U.S Dollar weakness contributing and the negative sentiment towards tax reforms lingering through the Asian session on Friday, the upside in the ASX200 was limited. By the close, the index held on to 6,000 levels, with Thursday’s close has been the highest since 2007.

It was a particularly strong week for the CSI300 and Hang Seng. Trump’s meeting with China’s premier will have certainly provided support. Concerns over punitive trade tariffs have certainly abated and the need for China to manage North Korea suggests that Trump will need to take a softer hand with China on trade and that’s good news for both the Hang Seng and Chinese equities.

Data through the week was on the positive side, with trade data continuing to point to growth, whilst Hong Kong’s economy grew by 3.6% in the 3rd quarter, coming in ahead of forecasts.

The bad news is the release of numbers out of China, which showed an 8% decline in fiscal spending in October year-on-year, compared with a 1.7% increase in September. The figures suggest a possible slowdown in the economy and when considering the 6.9% increase in exports, there may be some jitters over the numbers.

For the Hang Seng, the year-to-date gains have been impressive and one does wonder how much further the index can run. Soft numbers out of China will certainly test investor spirit, the index susceptible to significant volatility.

For the CSI300 it’s a different story and focus will remain on the inclusion of Chinese equities into the MSCI Emerging Markets Index, though between now and next year, data will certainly influence with investors being primarily retail at present.

The week ahead

  • For the week ahead there are some key stats for the markets to consider, including China’s fixed asset investment and industrial production figures due out on Tuesday.
  • The figures will likely impact all of the majors in Asia, as China continues to be an integral part of the global economy, with regional economies becoming ever more dependent upon China.
  • For the ASX200, business and consumer confidence figures together with employment numbers will be key drivers. The big four banks have the largest weighting on the index and any negative stats will add pressure on the 4.
  • The RBA has revised downwards its growth forecasts and the markets won’t want to see more weakness.
  • Other factors that will also influence will be news on tax reforms from the U.S, possible conflict in the Middle East and the fall in China’s fiscal spending in October.

Mortgage and Auto Loan Rates – What a Difference

It was another good week for the real estate market last week. 30-year mortgage rates eased back from 3.94% to 3.9% over the week. Concerns over the effects of rising U.S interest rates on long-term mortgage rates have been a factor in the number of refinancing mortgages over the last 24-months.

Rates are above last year’s 3.57%, but considering the fact that the FED as lifted rates on three occasions in the last twelve months, there will be some comfort in the numbers. Pre-global financial crisis rates were in the 6% range. Judging by the FED’s rate path and FOMC Member Powell’s selection as the next FED Chair, 6% is some way off and certainly better than the 4.32% mortgage rate hit at the end of last year.

While the FED’s rate path has limited impact for now, of greater interest will be whether tax reforms will have any influence on longer-term rates. Treasury yields were particularly volatile over the last few weeks. High expectations on tax reforms had seen yields on an upward trend, only for concerns that corporate tax cuts may need to be held off until 2019 to peg back yields. Interestingly, tax savings elsewhere may well have less of an impact on yields, which could be a positive for U.S households. Mortgage rates, which have a correlation to U.S Treasury yields, could hover at around current levels and with household tax savings, it could be seen as a boost to household disposable incomes.

It’s unlikely that the softer rates will influence U.S house prices, which remain influenced by supply constraints and, while there are rising concerns of a student loan crisis, until the housing sector sees a significant rise in inventories, credit conditions will likely remain favourable for the buyer and for those looking to take advantage of current rates.

While mortgage rates have been favorable, things are somewhat different in the car industry. A recent article by Bloomberg reported quite a spread on car loans and some of the rates being offered can be categorized as subprime in nature.

Lending rates in the South have hit in excess of 17%, with South Carolina seeing rates move beyond 18% in the sub-prime area. Barring a handful of States, it’s quite dire reading on the rate front. The numbers suggest that lenders are dishing the money out with little regard. A higher number of non-performing loans could begin to see a tightening in underwriting standards. Recently shamed Equifax was reported to have called the car loan credit segment to have the worst quality borrowers. They went on to classify the loan quality as deep subprime.

After the rating agencies fall from grace as a result of the global financial crisis, rating analysts have been quick to highlight the quality of subprime car loans that have been bundled for investors. It does mean that for those looking for auto loans, sooner rather than later would be wise. We would expect underwriting standards to tighten. It may contradict Trump’s intentions to deregulate, but he would certainly want to avoid an auto sector crisis.

The Securities & Exchange Commission will be on the hook this time, with banks and rating analysts raising the red flags. The advice for those looking for auto loans would be to shop around and try to find the best possible rates on offer. There is a deep need within the industry to maintain auto sales volumes, but for the buyer, it shouldn’t come at a crippling cost.

Bitcoin Cash, Litecoin and Ripple Daily Analysis – 13/11/17

Bitcoin Cash – Boomerangs from Sunday’s high

Bitcoin Cash has been on the move and it’s been a tremendous last 7-days, hitting an all-time high $2,477.65 before coughing up just over $1,000 to sit at $1,133.2 at the time of writing, down 16.8%. For a brief moment, Bitcoin’s offspring stood above Ethereum by market cap

The gains may well have come as Bitcoin investors continued to drop Bitcoin following the decision by Bitcoin’s core developers to pull support for the Segwit2X hard fork last week. Concerns over transaction speeds have left the markets pondering whether Bitcoin Cash could, in fact, become the front-runner.

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There’s a long way to go for Bitcoin Cash to catch up to Bitcoin, but if backers of Segwit2X continue to drop Bitcoin in favor of Bitcoin Cash, the gap may narrow quite quickly. Hash rate numbers support this, with reports hitting the wires that Bitcoin Cash’s hash rate has overtaken Bitcoin’s.

The sell-off from Sunday’s peak was likely to be attributed to profit taking, though the day and the week ahead will provide some more indication on whether Bitcoin cash is finding strong support or just another blip in Bitcoin’s headline domination. Bitcoin Gold’s cryptocurrency release on Sunday will have added to the mixed sentiment and possible downside to Bitcoin Cash. Investors may have also taken the opportunity to move into the cheapest of the trio. News had hit the crypto news wires over the weekend that Bitcoin Gold would be launched on Sunday.

Bitcoin Cash was free money for Bitcoin holders at the time of the fork, but with valuations now in excess of $1,000, it’s become serious money and the only question that remains is whether it can continue moving forward. Bitcoin Gold will complicate matters, but support is likely to be there through the day at $1,000 plus levels.


Litecoin Struggles for Direction

It’s unlikely to be grabbing the headlines just yet, with all the focus being on Bitcoin cash’s rally and the launch of Bitcoin Gold’s cryptocurrency. But, with one of Litecoin’s main differences with Bitcoin being the shorter time frame between adding blocks, demand could begin to rise. While Bitcoin Gold looks to become Ethereum’s main competitor, miners being able to use graphics processing units, Litecoin allows miners to use normal personal computers.

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There’s plenty going on in the cryptoworld and, following the cancellation of the Segwit2X hard fork, the appetite for Litecoin has been mixed and in the advent of Bitcoin Gold being launched, investors may well be prying for position in search of another Bitcoin sibling rally. Bitcoin Cash is also likely drawing out some Litecoin holders going into the week, following Sunday’s record run.

At the time of writing, Litecoin was recovered from intraday lows to gain 1.17% to $59.50, while coming off a Sunday high of $67.24.

LTCUSD 131117

Ripple – Low Barrier to Entry

For those looking to get into the Cryptoworld without risking the shirt on one’s back, Ripple stands out. It’s been on the ropes over the weekend, before today’s 2.9% gain to $0.19567, but when considering what Ripple has to offer, its outlook is likely to be brighter than some of its peers.

XRPUSD 131117

There are some big names behind this one and, while anchor investors such as Google, Standard Chartered, and Accenture are unlikely to be going anywhere fast, the rest have gone in search of the Dollars. We would expect Ripple to find its feet and will likely be considered attractive at current levels.

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Is it the End for Theresa May and the Pound?

Earlier in the Day:

With no material macroeconomic data released through the Asian session this morning, the markets were left to their own devices and that’s never a good thing.

In the equity markets, in spite of a slight easing in the Yen, the Nikkei took to red territory yet again as market sentiment towards Japanese exporters seems to be unravelling in the wake of U.S President Trump’s visit to the region.

The profit taking comes at a time when the U.S president returns focus on unfair trade agreements. Last week’s speech in Vietnam was quite telling and having already spoken to Prime Minister Abe of the need to renegotiate trade terms, things could be less competitive for Japanese exporters.

Concerns over tax reforms in the U.S will be the other factor driving the markets at the start of the week. A lack of progress through the week will likely weigh on risk appetite and the Nikkei will likely be among the worst hit. Today’s fall is the 4th consecutive day of declines and silences those calling for a rally to 30,000 levels. Well, at least for now.

The ASX200 also closed out the day in the red, with political woes pegging the index back, as more dual citizen politicians get pushed out. The news also weighed on the Aussie Dollar, which was down 0.01% at $0.7657 at the time of writing. It’s possibly the worst time for the Australian government to lose yet another lawmaker after the Deputy Prime Minister had to step down for the very same reason. There was some support for the Aussie Dollar, with RBA Deputy Governor reaffirming the Bank’s view that non-mining investment is on the rise, but not enough a political uncertainty spreads.

For the Hang Seng and CSI300, it was business as usual in the early part of the session, with both of the majors in positive territory at the time of writing. Chinese and Hong Kong equities are likely to be in favour following Premier Xi’s remarks last week on trade and opening China to globalisation.

With Deputy Governor of the RBA talking up the Australian economy, Philly FED President and FOMC voting member Harker spoke this morning, saying that he will be looking to vote for a rate hike next month. Harker added the he expects to see three rate hikes next year.

The Day Ahead:

It’s a quiet day ahead on the economic calendar, with no material stats scheduled for release out of the Eurozone, the UK or the U.S for that matter.

The lack of data will bring the Pound under scrutiny through the day, as Theresa May’s position at the helm looks to be a few more speed bumps. News of up to 40 Conservative MPs signing a letter of no confidence weighed heavily on the Pound through the Asian session. While the numbers are likely to be short of the total number of signatures required for a vote of no confidence, the political storm is brewing. It’s been a rough ride for UK politics. The UK referendum, Cameron’s “in tears” resignation, Theresa May’s snap election misjudgement and now a possible move to oust the UK Prime Minister. For the historians, the last time there was a successful vote of no confidence was on 28th March 1979, the victim being James Callaghan. That year, parliament was dissolved by the Queen on 7th April. It was quite a moment for UK politics however, giving Margaret Thatcher her three terms as the British Prime Minister.

The Pound may not be so lucky this time around, with the chances of a Labour Party victory likely to be significantly higher should the Tories oust May. A lack of Party unity at such a critical time for the UK will likely be enough should Tory rebels decide to pull the trigger.

At the time of writing, the Pound was down 0.53% at $1.3126 and noise from Parliament and Number 10 will be the key drivers through the day and possibly through the week. Any hint of an ousting and the Pound will be looking at sub-$1.30 levels. A shift in government will be handing the Brexit reigns to the EU and that’s with the Labour Party’s Corbyn at the helm…

Across the Pond, the lack of data will leave the markets fixated on tax reforms. Any progress will be a positive for the equity markets and the Dollar. Progress will need to be in the form of some kind of agreement between the Senate and House of Representatives on the timing and size of corporate tax cuts.

At the time of writing, the Dollar Spot Index was up 0.14% at 94.524, supported by Harker’s hawkish comments, with the EUR down 0.10% at $1.1653. While it’s a quiet day on the economic calendar, it’s a big week for the markets. A mass of key stats are scheduled for release out of the Eurozone, the UK and the U.S, though it remains to be seen whether politics will steal the show.

Trump-China Effect, Pound and Euro Hold Ahead of Brexit and the Catalan Elections

  • Trump was surprisingly upbeat during his China visit, how has this tone affected the markets? The outcome of Trump’s discussions with the Chinese Premier was certainly a positive for the markets and particularly for the Asian markets who are dependent upon demand from China and global demand for China’s goods and services.

Talk of trade tariffs would have been particularly negative for the markets and even more so with the markets already jittery over the U.S tax reform bill.

The positive news was overshadowed by the negative sentiment towards the likely progress of the tax reform bill, but Trump’s willingness to have dialogue and not just impose punitive tariffs on China is positive news. Some of the U.S. multinationals will likely be breathing a sigh of relief when considering reliance on Chinese goods, not to mention ever-increasing sales volumes in China.

It’s quite a turnaround from Trump’s campaign trail, where he had dubbed China the trade devil. One does wonder how much this has to do with North Korea. If Trump took the old tact, China could well have stepped back from dealing with North Korea during the current crisis. We’ll see whether Trump begins on talking about trade tariffs once the North Korea issue is resolved.

For now a positive effect on the markets.

  • A quieter week for the GBP this week, however with Brexit talks resuming, how do you expect Sterling to react?

It’s not looking too good for the Pound or the UK economy for that matter. The Conservative Party’s far right continue to push for a hard Brexit and some may even be looking for a “no deal” outcome. With Theresa May having lost considerable support, negotiating power has certainly weakened, giving Tory Party rebels more voice.

With the British Prime Minister has officially set the time and date of Britain’s departure from the EU, 11 pm GMT, 29 March 2019, we’re going to need to start seeing some progress in the coming weeks.

A lack of progress will weigh heavily, not only on the Pound but also on the UK economy. We will expect the Pound to be particularly sensitive to updates on the Brexit negotiations and let’s see how the UK government has progressed over the last two days.

  • Finally, here are new Catalan elections coming up in December, how do you expect the Euro to react to this?

The EUR has managed to hold up pretty well. The upcoming elections are likely to go to a pro-independence party with the parties within the coalition going it alone in these elections. Such an outcome is not going to help the Spanish government quash the continued calls for independence.

We could see a pro-independence movement rise in Spain, which would disrupt the Spanish economy, particularly if the movement becomes widespread. Calls for democracy and the growing number of parties facing the demand for sovereignty could spread beyond Spain, which would be a negative for the EUR, especially with the upcoming elections. And we’ve seen what’s happened to Merkel in Germany.

While such events would be a negative for the EUR, I wouldn’t expect too much impact until protests become more widespread.

Spain is the Eurozone’s 4th largest economy and, while the ECB is upbeat about the economy, any soft numbers out of Spain will likely impact the EUR and the Eurozone economy.

So neutral for now, but negative should we see the rise of a pro-independent movement.

Brexit and Economic Data Bring the GBP in Focus

Earlier in the Day:

The Asian session saw investor sentiment wane in response to the negative news on U.S tax reforms, with a slide in the Dollar seeing the Yen pull hit low ¥113 levels on Thursday, dragging the Nikkei deeper into the red this morning. The Dow’s slide on Thursday weighed on risk sentiment and with valuations at current levels, investors are particularly quick to take flight to safety.

At the time of writing, the Yen was up 0.09% at ¥113.37.

It wasn’t all doom and gloom in the equity markets however, with the Hang Seng and the CSI300 making further gains, with Trump’s positive comments on the Chinese Premier and trade likely to have been a boost.

While the markets were jostling for position following the news from the U.S, there was some economic data to factor into the session.

The Kiwi Dollar took another hit, with October electronic card retail sales falling short of expectations this morning. Following a sluggish 0.1% rise in September, sales increased by just 0.3% in October. The RBNZ may have brought forward their projections for the next rate hike, but there are plenty of concerns over the economy and that’s before considering what lies ahead with the new coalition government. At the time of writing, the Kiwi was down 0.09% at $0.6942, with U.S Dollar weakness being the saving grace for the Kiwi bulls.

Things were not much better for the Aussie Dollar, with the RBA’s quarterly monetary policy statement weighing on the Aussie this morning. The RBA revised down its economic growth projections, with growth for next year revised from 3.75% to 3.25% and from 3.5% to 3.25% for 2019. Growth for this year was forecasted to hit 2.5%.

With the RBA also suggesting that inflation will unlikely rise above the Bank’s 2% target until the end of next year, a shift in policy is certainly off the table for now. The softer inflation expectations come after the Australian Bureau of Statistics updated its calculation method. The ABS stated that consumer price growth was being overestimated. As a result of the revisions, the RBA has said that 3rd quarter inflation was likely to be 1.5% rather than the previously calculated 1.8%.

Wage growth and inflation continue to be the drag, with high levels of household debt pegging back consumer spending.

The Aussie Dollar slipped from $0.7683 to $0.76775 upon release of the statement, before moving back into positive territory at the time of writing.

The Day Ahead:

It’s a relatively quiet day for the EUR, with key stats out of the Eurozone limited to France’s nonfarm payroll figures for the 3rd quarter. Forecasts are for a payrolls to rise by 0.3%, shy of the 2nd quarter’s 0.4%. Barring a material deviation, the EUR’s unlikely to be particularly moved by the numbers following the ECB’s upbeat assessment of the Eurozone economy on Thursday.

At the time of writing, the EUR was up 0.03% at $1.1646, steering clear of $1.15 levels for now.

For the Pound it’s a big day. Key stats scheduled for release this morning include September’s industrial and manufacturing production figures along with September’s trade data. The UK’s trade deficit has widened of late, despite the softness in the Pound, so the markets will be looking for the deficit to narrow and for manufacturing production to see continued growth.

The UK’s monthly NIESR GDP estimate is also scheduled for release this afternoon, which could soften any negative sentiment from Brexit should the numbers impress.

Any positive numbers will provide some support for the Pound, though direction will likely remain hinged on Brexit news and how the British PM navigates through the current crisis within the Tory party. Theresa May has set the exact time and date that Britain will leave the EU and its 11pm GMT, 29 March 2019. Brexit negotiations are set to resume, but there remains plenty of opposition to Britain’s departure and that’s going to increase the uncertainty of whether politicians can find common ground to get the best Brexit deal for Britain.

At the time of writing, the Pound was up 0.06% at $1.3153, with direction through the day dependent upon the data and news from the Brexit negotiating table.

Across the Pond, stats out of the U.S. are limited to November’s prelim Michigan Consumer Expectation and Sentiment figures. While the data will have an influence, key focus will remain on the tax reform bill, with the markets having gone into a panic on Thursday over the possibility of the bill not being passed until 2019. The fact that the House Ways and Means Committee have approved the tax bill brings it a step closer to fruition, with a possible vote next week being the next major event for the Dollar.

The issue remains disagreement between the House and the Senate and even if next week’s vote pushes the bill to the house, it certainly doesn’t mean that it’s going to be a done deal in spite of both the house and the senate being in the hands of the Republicans.

At the time of writing, the Dollar Spot Index was up 0.08% at 94.519. The upside comes as market tension over a possible delay in tax reforms eased ahead of the European session.

Tax Reforms and the USD in Focus, With One Eye on the EUR

Earlier in the Day:

The main event of the Asian session today was the RBNZ’s monetary policy decision. There had been some uncertainty going into the release of the minutes and statement on whether there would be a surprise rate cut. At the last meeting, the RBNZ had turned quite dovish and since the last meeting, a number of stats had disappointed, including softer inflation expectation figures for the 2-year horizon. The saving grace was perhaps the uptick in inflation through the 3rd quarter and the softer Kiwi off the back of the recent General Election.

We saw the Kiwi Dollar move from $0.69236 to $0.69503 upon release of the minutes and statement, the pickup in the Kiwi Dollar stemming from the RBNZ’s announcement to bring forward its forecasted rate hike by one quarter to the second quarter of 2019. The more hawkish RBNZ wasn’t enough to keep the Kiwi in positive territory however, the Kiwi Dollar down 0.10% at $0.6959 at the time of writing.

On the data front, key stats through the session included Japan’s September current account figures, with the current account surplus narrowing from ¥2.38tn to ¥1.84tn in September. The stats did little for the Yen, which had been on the back foot through the earlier part of the Asian session, rising from an intraday low ¥114.07 to ¥113.57 against the Dollar at of writing.

Risk appetite took a turn for the worse, with Asian equities pulling back from record highs, leading to the bounce in the Yen. There were no stats to cause the sell-off, leaving Trump’s continued threats to North Korea to be the only reasonable cause for the markets to run for cover.

Following Wednesday’s threats, the U.S president said this morning that there is power to free the world from the North Korean menace. Adding to the negative sentiment are concerns over the tax bill. News had hit the wires on Tuesday that Republicans in the House of Representatives had a different view on reforms than their peers in the House. Today’s anticipated release of the detailed text is expected to disappoint, with the real meat of the bill likely to have been left out after 3-days of ironing out the details.

Other stats included Australia’s September home loans, which tumbled 2.3%. Concerns over rising debt have weighed on the RBA throughout the year. Efforts to tighten credit standards may be taking effect should the downward trend in home loans persist.

Despite the negative numbers, the Aussie Dollar held its ground, rising from $0.76639 to $0.76669 upon release of the numbers, with yield differentials favouring the Aussie Dollar earlier in the day. At the time of writing the Aussie Dollar was up 0.05% at $0.7682 in what has been a U-turn of a morning, recovering from an intraday low $0.7663 ahead of this morning’s data.

The Day Ahead:

Following a relatively quiet first half of the week on the data front, the economic calendar is a little busier through the European session. The key stat out of the Eurozone this morning will be Germany’s September trade figures, with the trade surplus forecasted to narrow. Trade figures have been relatively robust, but with the EUR having crossed into $1.20 levels in early September, the effects of EUR strength may be evident in this morning’s numbers.

The ECB’s economic bulletin is also scheduled for release and the Bank’s economic outlook will be a factor for the markets to consider. We can expect the EUR to brush off any negative numbers out of Germany should there be any upward revisions to economic forecasts.

At the time of writing, the EUR was up 0.09% at $1.1605, with the risk off sentiment ahead of the European open providing support. Any material moves may be on hold however, with all eyes on the economic bulletin ahead of the Republican’s tax reform bill later today.

For the Pound, we have yet to see the effects of this morning’s RICS House Price Balance numbers for October. Only a net 1% of surveyors reported rising prices, down from September’s 6%. London prices saw the worst result since the wake of the global financial crisis, with 63% of surveyors reporting a drop in house prices. Uncertainty over Brexit and the ability of the Tory party to navigate Britain out of the EU has weighed on the housing sector and, with the latest rate cut by the BoE, a further slowdown in the sector may be on the horizon.

With Theresa May losing a 2nd cabinet minister in a matter of days and lack of progress on Brexit, we can expect the Pound to continue to face choppy times. The 0.14% gain at the time of writing will be more as a result of the softer Dollar and concerns over the U.S tax reform bill and Trump’s rhetoric over North Korea than any shift in sentiment towards the Pound. $1.32 levels look a way off for now and likely to be in the hands of the U.S administration later today.

On the data front, this afternoon’s NIESR GDP estimate will garner some interest, though politics will continue to be the key driver for now.

Across the Pond, stats are limited to the weekly jobless claims figures. While we will expect the Dollar to respond, focus will be on the release of the tax reform bill due out today. With the Dollar Spot Index down 0.08% at 94.794, there could be quite a move later today. The markets for now are showing little optimism ahead of the release.

Tax Reforms Places the Dollar Center Stage

Earlier in the Day:

Key stats through the Asian session today were limited to China’s October trade figures. Exports increased by 6.9% in Dollar terms year-on-year, falling short of a forecasted 8.8% increase, while imports rose by 17.2%, well ahead of a forecasted 13.5% increase. The U.S Dollar trade surplus widened from $28.61bn to $38.17bn.

Following Tuesday’s RBA Statement, the figures had little impact on the Aussie Dollar, which was flat at $0.7645 at the time of writing.

With no other stats for the markets to focus on, Trump’s visit to Asia was the main area of interest as was concerns over the prospects of tax reforms in the U.S., which weighed on the U.S Dollar through the session.

Sentiment towards U.S tax reforms are expected to be a key driver for the markets over the near-term and the lack of confidence was reflected in this morning’s pull back in the equity markets. Both the Hang Seng and CSI300 had enjoyed solid gains early in the session before retracing, with the Hang Seng in the red at the time of writing.

For the Nikkei, the bulls are certainly showing their horns, with many calling for the rally to continue and for the Nikkei to hit the dizzying heights of 30,000 in the next few years. Much will depend on how successfully Prime Minister Abe negotiates the much talked about trade agreement with the U.S and whether China growth will in fact slow towards the end of the year. Following Tuesday’s rally, the Nikkei spent the day in the red today, down 0.1% by the close.

The Day Ahead:

There are no material stats scheduled for release out of the Eurozone this morning, leaving the markets to consider what lies ahead for the Eurozone economy and monetary policy. As things stand, monetary policy divergence remains in favour of the Dollar, but with the hopes of tax reforms also priced in, it’s not all over for the EUR just yet.

At the time of writing, the EUR was flat at $1.1587, easing back from an intraday high $1.1606.

With no material stats out of the UK, Bank of England Governor Carney is scheduled to speak this morning. Carney is not expected to discuss monetary policy, but he has surprised the markets before, which could provide some direction. While monetary policy continues to be a consideration, the EU has been piling on the pressure.

Brexit news will be a factor for the markets to consider, with there being plenty of bad press of late on how Britain will progress.

Cable was down 0.06% to $1.3158 at the time of the report, the Pound giving up gains from earlier in the day.

Across the Pond, things are not much better for the Dollar. The Dollar Spot Index was down 0.08% at 94.833 at the time of the writing. Concerns over tax reforms weighed on the Dollar through the early part of the day as the market looks ahead to the floor vote next week. The general view is that the final reform bill will be in quite a different form to how it looks today and will likely be rolled out towards the end of the year.

With macroeconomic data having continued to support a December rate hike, focus will remain on Capitol Hill and growth policies, with any negative talk on tax reforms likely to weigh more heavily on the Dollar.