Posts belonging to Category currencies

Brexit Deal

From tariffs to visas: here’s what’s in the Brexit deal

The Brexit trade and security deal, finalised on Christmas Eve, runs to 2,000 pages, including annexes. It will enter into force once approved by both sides. The devil of what has been agreed will be in the detail – and will be pored over in the days to come. Here are the main agreements, at a glance.

Tariff-free and quota-free access to one of the world’s biggest markets is the backbone of the Brexit deal and goes beyond the EU’s deals with Canada or Japan.

There will be mutual recognition of trusted trader programmes. This means UK producers will have to comply with both UK and EU standards.

There will be no more automatic recognition for doctors, nurses, architects, dentists, pharmacists, vets, engineers. They will now have to seek recognition in the member state they wish to practise in.

UK nationals no longer have the freedom to work, study, start a business or live in the EU. Visas will be required for stays over 90 days. Coordination of some social security benefits such as old-age pensions and healthcare will make it easier to work abroad and not lose any pre-existing build up of contributions to national insurance.

The UK will leave the common fisheries policy.

Supermarkets ‘told to stockpile food’ as fears grow of no-deal Brexit

Brexit talks enter final day amid fears of no-deal

The UK government is reported to have warned supermarkets to stockpile food and other essential supplies amid increasing fears of a no-deal Brexit in less than three weeks’ time.

Boris Johnson and the president of EU commission, Ursula von der Leyen, agreed on Sunday to continue with the fraught trade negotiations, but ministers have played down the chances of a deal. And in anticipation of shortages prompted by a no-deal, ministers have told supermarkets to start stockpiling goods.

Facebook hopes the cryptocurrency it backs will launch in 2021

Facebook should be given the “benefit of the doubt” by regulators in its ambitions to launch the cryptocurrency it backs and its digital wallet, the head of the company’s financial services arm said on Monday.

David Marcus, the head of Facebook Financial, also known as F2, said he hopes both the cryptocurrency called Diem and the social networking firm’s wallet Novi will launch next year. The cryptocurrency was initially called Libra and was designed to be managed by a non-profit consortium consisting of several companies called the Libra Association. Facebook had planned to launch a wallet called Calibra that would allow users to send this cryptocurrency to each other.

One Libra coin was initially supposed to be backed by a basket of currencies. But regulators raised a number of concerns from the impact Libra could have on financial stability to issues over data privacy and money laundering. In April, the Libra Association scaled back plans and said it would offer stable coins backed by just one nation’s currency, rather than a single coin backed by several currencies.

The potential impact of Brexit without a trade deal

Financial markets to tumble and huge economic costs

Britain and the European Union are seeking a post-Brexit trade deal, with failure likely to result in increased chaos in mutual trade, financial markets tumbling and huge economic costs. Here are some of the potential pressure points of a failure to reach agreement on trade.

Investors and banks have long predicted a trade deal would be done, so a no-deal would hit the British pound, foreign exchange traders say. But investor sentiment was hit by the sides saying on Saturday that there was still no agreement covering annual trade worth nearly $1 trillion, and sterling has fallen against the U.S. dollar since then. The shock result of Britain’s referendum on leaving the EU in 2016 sent the pound down 8% against the dollar, its biggest one-day fall since the era of free-floating exchange rates began in the 1970s.

In the case of a “no deal” on trade , Britain would lose zero-tariff and zero-quota access to the European single market of 450 million consumers overnight. Britain would default to World Trade Organization (WTO) terms in its trade with the 27-state bloc. It would impose its new UK global tariff (UKGT) on EU imports while the EU would impose its common external tariff on UK imports. Non-tariff barriers could hinder trade, with prices widely expected to rise for British consumers and businesses

Borders risk disruption, especially the main crossing points, with experts saying shortages of certain foods are possible in Britain as it imports 60% of its fresh food, with disruptions in British lamb exports to the EU also possible. Any disruption would be felt most keenly by sectors that rely on just-in-time supply chains, including autos, food and beverages. Other sectors likely to be affected would include textiles, pharmaceuticals, and chemical and petroleum products.

China Exports Surge

Overseas shipments grew 21.1 percent

China’s exports rose in November at their fastest pace in almost three years, official figures showed Monday, as a surge in demand in key markets ahead of the festive period also helped the country post a record trade surplus.

The reading is the latest spot of good news out of the world’s number two economy, which has been enjoying a bounceback from virus-induced lockdowns that sent it into a rare contraction earlier in the year.

Overseas shipments grew 21.1 percent on-year last month to $268 billion thanks to strong demand for medical goods and electronics.

The figures — the best since February 2018 — surpassed the 12 percent tipped in a Bloomberg poll of analysts and was much better than the 11.4 percent seen in October. The reading also marked the sixth straight month of growth.

Bitcoin rockets past $18,000

The all-time high is in sight

Bitcoin prices continue to skyrocket and the cryptocurrency is now within striking distance of its all-time high from December 2017. Bitcoin briefly surged above $18,000 on Wednesday, having passed the $15,000, $16,000 and $17,000 milestones in the past few days. The record high for bitcoin is just below $20,000. The total value of all the bitcoins in circulation is now more than $300 billion — also near an all-time high.
The cryptocurrency, which has more than doubled in value this year, has picked up steam lately for a variety of reasons.
Bitcoin, like gold, has benefited from a weaker dollar. Investors increasingly view bitcoin as a viable alternative to paper, government-backed currencies. The dollar could remain in the doldrums for awhile — especially since most market experts expect the Federal Reserve to keep interest rates at zero for the foreseeable future.

EU Suing the UK over Brexit Breach

Full contradiction of the Northern Ireland Protocol

The European Union has launched legal proceedings against the UK after it failed to withdraw legislation that would breach the Brexit deal both sides signed last year and break international law. The announcement comes after weeks of controversy since Boris Johnson’s government revealed its plans to put in place legislation that would override a specific part of the Withdrawal Agreement called the Northern Ireland Protocol.

Speaking in Brussels, Ursula von der Leyen, President of the EU Commission, said that the EU had invited the UK to “remove the problematic parts of their draft internal market bill by the end of September.” She said that the draft bill is “by its very nature a breach of the obligation of good faith laid down in the Withdrawal Agreement,” adding that “it will be in full contradiction” of the Northern Ireland Protocol.

U.S. dollar’s future as global reserve currency in jeopardy

 U.S. response to the pandemic could debase the dollar

The dollar’s decades-long position as the global reserve currency is in jeopardy because of steps the U.S. has taken to support its economy during the COVID-19 pandemic, according to Ray Dalio, founder of hedge fund giant Bridgewater Associates.

While equities and gold benefited from the trillions of dollars in fiscal spending and monetary injections, those efforts are debasing the currency and have raised the possibility that the U.S. will go too far in testing the limits of government stimulus, Dalio said Tuesday in an interview with Bloomberg Television.

“There is so much debt production and debt monetization,” Dalio said.

Pelosi warns ‘no chance’ of US-UK trade deal if Brexit violates international treaty

 Good Friday agreement brought peace to Northern Ireland after decades of sectarian conflict

Rep. Nancy Pelosi, Speaker of the United States House of Representatives, has warned that Britain will be unable to secure a trade deal with the US if it does anything to undermine the treaty that brought peace to Northern Ireland after decades of violence. Pelosi’s comments came after the UK said it would legislate to override parts of the divorce deal with the European Union in the event that a trade agreement isn’t reached. The UK government claims that its Internal Market Bill is designed to ensure that trade between the four nations of the United Kingdom would remain unfettered in the event of a no-deal Brexit.

The UK concedes that it would breach the EU withdrawal agreement; a British Cabinet minister said this week that the legislation would ”
break international law in a very specific and limited way.” That did not go down well among top Democrats in the US, who fear it could undermine the 1998 Good Friday agreement, which brought peace to Northern Ireland after decades of sectarian conflict.

Brexit: Boris Johnson to override EU withdrawal agreement

Move threatens to collapse talks

Boris Johnson is drawing up legislation that will override the Brexit withdrawal agreement on Northern Ireland, a move that threatens the collapse of crunch talks which the prime minister has said must be completed within five weeks.

Johnson will put an ultimatum to negotiators this week, saying the UK and Europe must agree a post-Brexit trade deal by 15 October or Britain will walk away for good.

But progress on the already fragile talks will be threatened by plans revealed on Sunday for the UK government to publish a controversial section of the internal market bill on Wednesday that will intentionally try to unpick parts of the withdrawal agreement signed in January. It will include elements of the special arrangements for Northern Ireland that are legally binding.

British Pound Plummets

Specter of a No-Deal Brexit Returns

The pound fell after U.K. Prime Minister Boris Johnson ratcheted up the chances of trade negotiations failing with the European Union. Sterling declined as much as 1% against the dollar to $1.3145, extending its losing run to the longest since June, as Johnson prepared to tell the EU he’s willing to let talks fail rather than compromise on what he sees as core Brexit principles.

“It looks that we are only at the beginning of a painful correction lower in the pound,” said Valentin Marinov, head of Group-of-10 foreign-exchange strategy at Credit Agricole SA, who sees the pound dropping to $1.20 in the event of no deal.

The cost of hedging against swings in the pound out to six months is at the highest level since at least July, with the three-month tenor covering the U.S. election as well as Brexit developments. Investors are refocusing on Brexit with the two sides accepting they need to reach a deal by mid-October in order to pave the way for a smooth exit at the end of the year, when the Brexit transition period ends. A so-called cliff-edge departure could add to the economic strain on the U.K. from the coronavirus.

Robust Chinese Demand Fuels Oil Market Recovery

 U.S. dollar weakness

Following last week’s price rally, oil prices move higher on Monday morning, on bullish demand figures coming from China. Additionally, U.S. dollar weakness contributed to last week’s price rally. Traders are also expecting deeper OPEC+ cuts of 1.15 million bbl/d in August and September. As a result, Brent crude traded above $46 which was mainly driven by the supply disruption triggered by the hurricanes in the Gulf Mexico, which affected around 84% of the USGC production where around 1.7 million bbl/d remain offline.

Laura, a category 4 hurricane made landfall early Thursday last week, in the Southwestern part of Louisiana. becoming one of the most powerful storms in history to hit the state. More than 310 offshore platforms, out of 643, were evacuated in addition to nine refineries leading to a 2.7 million bbl/d outage, around 15% of the US refining capacity. Furthermore, initial reports reveal that the damage caused to the refineries is minor, but continuing power outages could delay the resumption of refining operations.

Bitcoin Surged Above $12,000

Gold market is “in control” of Bitcoin’s price

After two weeks of consolidation under $12,000, Bitcoin cleared that technical resistance early Monday morning. According to TradingView, cryptocurrency traded at $12,320, with the rally finding legs on an influx of buying volume on exchanges like Coinbase and Bitstamp.

Bitcoin’s latest leg higher coincided with a move upward in the value of gold. The precious metal almost matched Bitcoin’s price performance, with both rallying a few percent higher over a matter of hours. This is in line with analyses that indicate the gold market is “in control” of Bitcoin’s price.

Analysts are optimistic about what comes next for Bitcoin, citing the importance of the $12,000 level to BTC’s recent price action.

Stocks rally on treatment hopes

Currencies await ECB

Asian stocks rose to a seven-week high on Thursday, boosted by encouraging early results from a COVID-19 treatment trial, though bonds and currencies stuck to cautious ranges ahead of a European Central Bank meeting later in the day.

U.S. and European stock futures gained throughout the session, with EuroSTOXX futures STXEc1 and FTSE futures FFIc1 last up more than 1% and S&P 500 futures ESc1 up about 0.7%.

A 1.4% rise in MSCI’s broadest index of Asia-Pacific shares, excluding Japan, .MIAPJ0000PUS has it tracking toward a weekly gain of more than 5%, its best in three weeks.

Optimism in equity markets was driven by positive partial results from a trial of Gilead’s (GILD.O) antiviral remdesivir, which showed the drug could help speed recovery from COVID-19, the respiratory disease caused by the new coronavirus.

Fed slashes rates

Global central banks coordinate to cushion coronavirus blow

The U.S. Federal Reserve and global central banks moved aggressively on Sunday to buttress a world economy unraveling rapidly amid the coronavirus pandemic, with the Fed slashing interest rates to near zero, pledging hundreds of billions of dollars in asset purchases and backstopping foreign authorities with the offer of cheap dollar financing.

The coordinated global actions were reminiscent of the sweeping steps taken just over a decade ago to fight a meltdown of the global financial system, but this time the target was an entirely unfamiliar foe – a fast-spreading health crisis with no certain end in sight that is forcing entire societies to effectively shut down.

In a news conference Federal Reserve chairman Jerome Powell said the epidemic was having a “profound” impact on the economy, forcing whole industries like travel and leisure offline. Yet the ultimate spread of the virus is so uncertain, Powell said, the Fed called off quarterly economic forecasts due this week as a futile exercise until it is clear how many people will get sick, and how