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Could Bitcoin have finally found stability? - EMEA Brief 19 Dec

Guest IG-Andi


  • Bitcoin could have bottomed as its priced stabilized after the big disappointment it gave earlier this year. As the cryptocurrency has corrected 80-90% multiple times in the past, the slump this year could only be another bump in the road. However, scalability issues flog the currency as its promoters try to entail it in the real economy. Is the crypto market ready for another roller-coaster?
  • Oil temporarily bottomed after falling 7%, amidst concerns over the strength of global trade. West Texas Intermediate fluctuated around $46.28 a barrel, after gaining 0.1%. Investors keep an eye out for the US crude inventories, with the recent decline highlighting expectations of continued oversupply despite the OPEC+ production cut vow.
  • Gold prices edged higher to a more than five-month peak supported by a softer greenback and uncertainty towards today’s Fed’s hike decision. The yellow metal hit its highest since July 11 at $1,251.06 earlier in the current trading session. The continued stock rout this year seem to have commodity traders excited again about the bullion.
  • Trading in Asia was mixed, with investors titubant about the FOMC rate decision due today. Softbank’s weak IPO did not help shares in Japan, where the Topix fell 0.6%. Indices fell also in China and Australia but kept steady in Hong Kong.
  • Japanese 10-year bonds yield climbed almost to zero for the first time since September 2017. The recent decline in government bond yields provided for more liquidity moving to Yen and Yen-denominated assets.

Asian overnight: Another bearish session overnight has seen losses across Asia, with the Hong Kong’s Hang Seng providing the one flash of green after posting a miniscule gain of less than 0.1%. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.4 percent, Japan's Nikkei steadied after an early dip and E-Mini futures for the S&P 500 added 0.2 percent.With the Fed widely expected to raise rates once again today, emerging markets are understandably under pressure given their exposure to USD-denominated debt. Donald Trump's warns not to "make yet another mistake" will unlikely affect the FOMC meeting today.

UK, US and Europe: Italian budget plan Odyssey continues as the European Commission is due to meet today to discuss the country’s spending plan. Italy cut its deficit target for next year to 2.04% of GDP from the initial 2.4% after the skirmish with the EU. Concerns that deficit projections could be underestimated could jeopardize the Italian populist government’s case to the EU. The major risk is that the plan will not deliver the expected growth in Italy. EU is already tackling difficult Brexit negotiations and the slowing global economy does not help. As a G7 country, Italy could prove to be an earthquake to the EU unity.

Economic calendar - key events and forecast (times in GMT)


Source: Daily FX Economic Calendar

9.30am – UK CPI (November): prices to rise 2.5% YoY and 0.2% MoM, and Core PCI to rise 2.2% YoY. Markets to watch: GBP crosses

1.30pm – Canada CPI (November): CPI to rise 2.2% YoY from 2.4%. Markets to watch: CAD crosses

3pm – US existing home sales (November): sales to fall 0.5% MoM from a 1.4% increase. Markets to watch: US indices, USD crosses

3.30pm – US EIA crude inventories (w/e 14 December): stockpiles to rise by 1.1 million barrels. Markets to watch: Brent, WTI

7pm – Fed rate decision: rates are expected to rise to 2.5% from 2.25%, but the main focus will be on the future path, and we may get some hints about this in the statement and in the press conference at 7.30pm. Markets to watch: US indices, USD crosses

Corporate News, Upgrades and Downgrades

  • GlaxoSmithKline has agreed to spin off its consumer health business into a joint venture with Pfizer, in which GSK will have a controlling interest of 68%. Within three years of closing the transaction, GSK intends to demerge the consumer division from the pharma business. 
  • Polymetal has completed the non-cash asset swap of its Tarutin property in Russia for 85% of a Kazakhstan copper-gold property. 
  • Versarien reports that it has signed a non-binding agreement with an unnamed Chinese state-owned aerospace firm. 

Bpost upgraded to outperform at RBC
Fresenius SE upgraded to buy at Goldman
Kongsberg upgraded to buy at SEB Equities
Petrofac upgraded to buy at Kepler Cheuvreux

Asos downgraded to outperform at RBC

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