EURUSD falls to 3-week low; US stocks coiling

Summary:

  • EURUSD falls to 3-week low after German inflation miss

  • Brexit update: UK MPs to vote again on Friday

  • US growth misses forecast; S&P500 coiling

  • DE30: Downward revision to 2019 guidance hits Infineon

  • HSBC banker encourages CFTC on blockchain

 

There are growing signs of disinflation around the Eurozone, with the latest data from Germany coming in lower than forecast and a key inflation expectation gauge dropping to its lowest level since September 2016. The HICP for Germany Y/Y came in at +1.5% vs +1.6% expected, extending its recent decline. Regional releases earlier in the day hinted that the countrywide figure could be soft, and the decline will dampen expectations somewhat for a sizable rise in the EU release due out on Monday. On the topic of inflation, a key market gauge of long-term euro zone inflation expectations fell to within 6 basis points (0.06%) of its all time low earlier today, with the five-year, five-year forward declining to its lowest level since September 2016 at 1.31% and down by 0.1% on the week.

 

It’s not been a good 24 hours for the pound really with the currency experiencing pretty much one-way trade lower ever since the DUP announced yesterday evening that they would not support Theresa May’s deal. Parliament will vote once more on Brexit tomorrow but it is not believed to be another so-called “meaningful” vote on PM May’s deal - but either way, unless the DUP are on board the chances of it passing still remain slim to none. MPs will be asked to vote on the withdrawal agreement but not the “political declaration” which may be seen as a legal success should it get the required support but would leave opposition MPs and the public at large feeling that the government has pulled a fast one. The government is seemingly splitting the withdrawal agreement (WA) from the political declaration (PD) for 2 main reasons - firstly to get around speaker Bercow's criteria for a substantial change to May’s deal needed to bring it back to the house and secondly as it is not as definitive it could receive more support from MPs who have so far opposed May's deal.

 

The US economy grew slower than expected at the end of last year, with the final GDP print of last year marking a sizable drop on the prior release and also signalling a second consecutive miss. Turning to the numbers, a Q4 final GDP Q/Q reading of 2.2% (annualised) is far from disastrous compared to other developed economies, but it does represent a larger drop than the 2.4% expected from a prior reading of 2.6%.  The US500 could be coiling ahead of its next larger move with 2790 possible support and 2835 offering potential resistance.

 

Infineon Technologies (IFX.DE) continues to be pressured by yesterday’s release of updated guidance for 2019. The company slashed  2019 forecasts for the second time since the beginning of the year. German company now expects 5.3% revenue growth compared to 9% expected as recently as in February. Semiconductor named deteriorating conditions in China and slowing global economy as the main reasons behind revision.

 

According to CoinMarketCap, the capitalization of the whole cryptocurrency market stays around the $142.5 mark while altcoins (cryptos excluding Bitcoin) account for roughly 49.7% of this value at press time. HSBC senior vice president Jesse Drennan produced some blockchain-related remarks directed towards the US Commodity Futures Trading Commission during the Commission’s Technology Advisory Committee meeting, as the CoinDesk reported. The bank’s executive encouraged the Commission to make more positive noise about distributed ledger technology (DLT). Drennan thinks also that some positive words on DLT produced by the CFTC would be beneficial. The HSBC’s banker said also that companies interested in distributed ledger technology often check what regulators thinks about this technology. As a result, positive noise about blockchain produced by the Commission may encourage some companies which are still hesitating.

 

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Morning wrap (27.11.2020)
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