Swiss National Bank currency interventions hit highest since Brexit vote By Reuters


© Reuters.

By John Revill

ZURICH (Reuters) – The Swiss National Bank hiked its foreign currency interventions to their highest level since the Brexit referendum in 2016, data on Monday indicated, showing the central bank’s determination to counter the Swiss franc’s coronavirus-driven rise.

Swiss sight deposits rose by nearly 6 billion Swiss francs last week, supporting the SNB’s statement it is escalating its currency market interventions to slow the rise of the safe-haven currency.

Total sight deposits, which include other deposits on sight in Swiss francs, rose to 608.826 billion Swiss francs ($617.41 billion) from 602.992 billion francs in the previous week.

The 5.8 billion franc increase was the biggest this year and followed an increase of 4.4 billion francs a week before and 2.78 billion francs at the start of March.

The SNB said last week it was escalating its foreign currency purchases to stem the rise in the franc, which has appreciated as investors sought safe assets while stock markets have plunged during the coronavirus pandemic.

The franc has risen to its highest level against the euro () in four-and-a-half years as a result, threatening Switzerland’s export-reliant economy.

The central bank declined to comment on Monday, but last week said it was “intervening more strongly in the foreign exchange market to contribute to the stabilization of

the situation”.

The rise in sight deposits showed the SNB was clearly increasing its activity, said Alessandro Bee, an economist at UBS.

“This is the strongest weekly rise since mid-2016, after the Brexit vote, and is a clear sign of intervention,” Bee said.

Sight deposits, a proxy for the SNB’s interventions, increased by 6.3 billion francs after the Brexit vote in June 2016.

The central bank had no theoretical limit on how much it could spend, but it would prefer not to spend more than 10 billion francs a week for several weeks, Bee said.

The interventions also seems to be slowing the franc’s appreciation, with the SNB able to avoid cutting its -0.75% interest rate further into negative territory at its policy update last week.

“Interventions seem to be working as the Swiss franc is not passing the 1.05 barrier against the euro, and I believe the SNB will continue to defend that barrier,” said Karsten Junius, an economist at J.Safra Sarasin.

“There is no limit for the SNB and its reaction will continue to depend on the severity and length of the coronavirus crisis.”

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

Pound Slides to Weakest Since 1985, Surpassing Brexit Vote Lows By Bloomberg


© Reuters. Pound Slides to Weakest Since 1985, Surpassing Brexit Vote Lows

(Bloomberg) —

The pound fell to its lowest level against the dollar in over three decades as the shocks caused by the coronavirus rippled through global markets.

Investors fled from U.K. assets as the pandemic began spreading through Britain, with many fearing Prime Minister Boris Johnson’s response has fallen short compared to measures taken by other European nations. Sterling has also suffered due to heightened global demand for the greenback, with a gauge of dollar strength up for a seventh session.

“A combination of the safe haven dollar bid, the global asset sell-off and liquidation of long positions from the election are all weighing on the pound,” said Neil Jones, head of foreign-exchange sales to financial institutions at Mizuho Bank Ltd.

fell as much as 1.9% to $1.1828, surpassing even the lows it recorded in the aftermath of the 2016 Brexit vote. It was last lower in 1985, when the world’s richest nations signed the Plaza Accord to weaken the dollar and haul the U.S. economy out of a recession.

Alongside the pound, U.K. sovereign bonds plummeted after the government announced a rescue package for businesses in an attempt to stop the coronavirus wrecking the domestic economy. The yield on U.K. bonds rose to their highest in over two months, while the stock index dropped around 5%.

Banks have been wrongfooted after being bullish on sterling, with a median estimate compiled by Bloomberg forecasting the pound at $1.30 by June. Option markets indicate a less optimistic picture, with traders going from neutral on its prospects to the most bearish since the December election.

(Updates with options pricing, bank forecasts, gilts.)

©2020 Bloomberg L.P.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

U.K. Economy Is Picking Up After Brexit By Bloomberg


(Bloomberg) — The U.K. economy continued a run of better-than-expected growth in February, more evidence of a rebound after fourth-quarter stagnation.

While the expansion continued apace, there were also signs of a hit to supply chains from coronavirus, according to IHS Markit’s flash .

The virus’s outbreak weighed on manufacturers’ input stocks, which fell at the fastest pace in more than seven years. Some orders from clients in Asia were canceled and extended shutdowns in China proved a headwind.

Nevertheless, manufacturing output grew the fastest in 10 months, offsetting a small downward move in services. Growth expectations in the private sector edged up slightly, the report showed.

The held gains after the report and traded at $1.2922 as of 9:31 a.m. in London.

“The recent return to growth signaled by the manufacturing and services PMIs provides a clear indication that the U.K. economy is no longer flat on its back,” said Tim Moore, an economist at IHS Markit. The expansion is running at a 0.2% pace in the first quarter, he said.

Firms noted that a reduction in political uncertainty since the December election, when Boris Johnson’s victory gave a clear path to Brexit, translated into higher business activity and more spending by clients.

This and other reports support the case for the Bank of England to refrain from cutting interest rates soon. Figures this week showed the labor market remains tight and consumer spending is picking up.

IHS Markit’s index for output across the whole economy was unchanged at 53.3 in February, a better reading than the 52.8 forecast by economists and well above the critical 50-mark that separates expansion from contraction.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

Dutch PM says next EU budget must acknowledge Brexit gap By Reuters


Dutch PM says next EU budget must acknowledge Brexit gap

BRUSSELS (Reuters) – The Netherlands is willing to pay more into the next EU budget but the figures must take into account the Brexit hole, Dutch Prime Minister Mark Rutte said after the bloc’s national leaders failed to agree on their joint spending from 2021 in two days of fraught talks.

“We are willing to pay more because we are accepting that the budget will go up with economic growth and inflation,” Rutte told reporters, but stressed the reality of losing Britain’s contributions must be taken into account.

He said a proposal late on Friday aimed at breaking the deadlock was rejected by beneficiaries of the EU budget just as much as the “frugal” camp seeking to rein in spending.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Pound on Back Foot as Traders Fear Rocky Brexit Trade Talks Ahead By Investing.com


© Reuters.

By Yasin Ebrahim

Invesing.com – The U.K. and EU are slated to get trade talks underway only in March, but tough rhetoric from both sides has raised fears that rough negotiations lie ahead, keeping the pound on the back foot against the dollar on Thursday.

fell 0.58% $1.2926.

The dollar was also helped by better-than-expected labor market data, underpinning investor hopes for a robust nonfarm payrolls report due Friday.

The U.S. Department of Labor reported Thursday that dropped by 15,000 to a seasonally adjusted 202,000, beating economists’ forecast for a drop to 215,000.

The , which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.21% to 98.36.

The yen, meanwhile, continued to lose altitude against the greenback as easing coronavirus fears and China’s move to halve tariffs on U.S. goods dented safe-haven demand.

China said it would halve tariffs on $75 billion of U.S. imports as part of its efforts to comply with the phase one agreement that was ratified in Washington last month.

rose 0.10% to Y109.92.

fell 0.20% to $1.0975 as European Central Bank Governor Christine Lagarde reinforced expectations that the central bank’s ultra-loose monetary measures will remain in place at least until the year.

“Moderate growth performance is delaying the pass-through from wage increases to prices and inflation developments remain subdued,” Largarde said. “The euro area economy therefore continues to require support from our monetary policy.”

rose 0.08% to C$1.3292

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

Pound Slumps Before Start of Tough Brexit Trading Negotiations By Bloomberg



(Bloomberg) — Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.

The pound is back in the doldrums as concerns about a chaotic Brexit at the end of the year loom into view.

Sterling fell the most in a month, leading losses among Group-of-10 currencies, as traders brace for British Prime Minister Boris Johnson to threaten to walk away from talks with the European Union rather than accept demands from Brussels to sign up to the bloc’s single market regulations. The EU’s chief negotiator Michel Barnier is also due to set out his planned position on Monday.

The drop marks a turnaround from the U.K.’s formal exit of the EU on Friday, when the currency achieved its best week since mid-December after the Bank of England helped support the currency Thursday by keeping interest rates unchanged. While the U.K. is now in a transitional phase without rule changes, it could still be heading for an economically messy divorce if a trade agreement can’t be reached by the end of 2020.

“The U.K. government wants to pursue a harder Brexit trading relationship to allow more room for policy divergence with the EU which is seen as one of the key benefits of Brexit,” said Lee Hardman, a foreign-exchange strategist at MUFG Bank Ltd. “It continues to pose downside risks for the pound in the year ahead.”

The fell 0.8% to $1.3100 by 9:40 a.m., after gaining 1% last week. It dropped 0.6% to 84.48 pence per .

Sterling’s rally on Friday came on the back of month-end flows that pressured the dollar across the board and may have exaggerated a sense of buoyancy for the U.K. currency. Options market gauges were relatively steady, with bets on pound gains in the short and medium-term still in demand.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

be ready in case of no-deal Brexit By Reuters


© Reuters. A financial trader works at their desk at CMC Markets in the City of London

By Huw Jones

LONDON (Reuters) – Financial firms in Britain should be ready in case no trade agreement is struck with the European Union by December, a senior UK regulator said on Thursday.

Britain leaves the EU next week, followed by a “business as usual” transition that ends in December. Britain and the EU will formally begin trade talks in coming weeks.

“Firms still need to ensure they are prepared for a range of scenarios that may happen at the end of 2020,” said Nausicaa Delfas, executive director of international at the Financial Conduct Authority.

Britain’s banks, trading platforms and insurers hope to get access to the EU market after December under the EU equivalence system, through which Brussels grants access to countries whose regulatory regimes it deems comparable to its own.

Britain has already put all EU financial rules into UK law, which means it will have “the most equivalent framework to the EU of any country in the world,” Delfas told an event held by law firm BCLP.

Britain will also need to decide whether EU-based financial firms can have access to UK investors under the same equivalence system it has inherited by adopting the EU laws.

“This provides a strong basis for the EU and UK to find each other equivalent across the full range of equivalence provisions,” Delfas said.

The EU’s financial laws include about 40 equivalence provisions, ranging from trading shares to insurance, but access remains more limited than the unfettered “passporting” UK firms enjoyed inside the EU.

“As both the UK and EU are committed to open markets, there is also a strong rationale for both sides to discuss broadening their respective equivalence frameworks,” Delfas said.

The EU is committed to completing its equivalence assessments by the end of June, but banks fear it will be overshadowed by broader UK-EU trade talks.

“We believe that equivalence decisions should be based on technical assessments,” Delfas said.

Equivalence should be determined on the “outcomes” of respective rules rather than a need to be written identically, Delfas said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



As Brexit nears, UK’s Johnson pushes for deeper trade ties with Africa By Reuters



LONDON (Reuters) – Prime Minister Boris Johnson will call for deeper investment ties between Britain and Africa at a summit for leaders of 21 African countries on Monday that comes days before his country will leave the European Union.

After securing Britain’s departure from the EU, the world’s largest trading bloc, on Jan. 31, Johnson is keen to develop business ties with countries outside Europe.

At the summit in London, Johnson will call for Britain to be the “investment partner of choice” for Africa. He will highlight deals worth billions of pounds with countries on the continent, underlining the roles British companies are playing in providing anything from smart street lighting in Nigeria to environmentally friendly breweries in Kenya.

The prime minister will also announce an end to British support for thermal coal mining or coal power plants overseas, according to a statement issued before the summit’s start.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

Javid aims to double UK growth after Brexit: FT By Reuters



LONDON (Reuters) – Finance minister Sajid Javid is aiming to roughly double Britain’s underlying rate of economic growth after it leaves the European Union, but will not champion big manufacturing sectors that want to stick to EU rules.

In an interview with the Financial Times before he travels to meet business leaders in Davos, Switzerland, Javid said Britain would not commit to sticking to EU rules in post-Brexit trade talks – something many businesses want to ease cross-border checks.

“There will not be alignment, we will not be a ruletaker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year,” he said.

The British Chambers of Commerce (BCC) said businesses were willing to be pragmatic about this approach to Brexit but added that the government needed to be clear about its plans.

“Uncertainty around the extent of divergence risks firms moving their production elsewhere,” BCC co-executive director Claire Walker said.

The opposition Labour Party said Javid’s plans amounted to right-wing ideology overriding common sense and that jobs in the motor industry and manufacturing were under threat.

Prime Minister Boris Johnson has said there will be no extension to an 11-month window in which he hopes to negotiate a long-term trade agreement with the EU after Britain leaves on Jan. 31, despite the EU saying this is unrealistic.

The Financial Times reported that Javid wanted to boost annual economic growth rates to the 2.75% level seen in the second half of the 20th century through greater investment in skills training and physical infrastructure.

Britain’s economy probably grew about 1.3% last year, and the Bank of England estimates it will struggle to grow much faster over the long run due to reduced immigration and greater trade friction after Brexit.

Javid will present his first budget on March 11, and said it would focus on “people and place”, part of the Conservative government’s efforts to reward traditionally Labour-supporting areas that backed it due to Brexit in Dec. 12’s election.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Brexit deal stalls exchange plans for euro share trading move By Reuters



By Huw Jones

LONDON (Reuters) – New European Union cross-border share trading platforms set up by the London Stock Exchange and rival Aquis ahead of Brexit have been mothballed due to limited demand.

The LSE said there are no plans for the new Amsterdam offshoot of its Turquoise pan-European platform to start up next month, while Aquis, which set up a hub in Paris, said trading in euro shares would continue in London for now.

“To do anything else at this point would unnecessarily fragment liquidity and, not surprisingly, there has been no member push for this,” an Aquis official said.

The LSE, Aquis and Cboe Europe, the region’s biggest cross-border share trading platform, created EU hubs in case their London operations get cut off from customers in the bloc after Brexit, which is now due to take place on January 31.

Brexit raised the spectre of London being sidelined in trading euro-denominated shares after transactions in euro-denominated fixed income moved to the bloc in March 2019.

But Britain will now leave the EU with a settlement that includes a transition period to December, meaning continued unfettered access for London-based financial firms.

Cboe Europe has already started up its new Amsterdam hub and although volumes remain negligible, its president David Howson said it will remain open despite the transition period.

Volume in euro shares could start moving from its London unit to the Netherlands if uncertainty over Britain’s direct access to EU investors after transition grows.

“As things evolve throughout the year, we will get clarity on equivalence (EU market access)… Depending on what that time horizon looks like, we will look to differentiate and induce volumes to potentially go there,” Howson said.

Amsterdam will be a base for building up the U.S. exchange operator’s plans to expand into areas like derivatives trading and clearing in Europe, Howson said. Cboe is buying a pan-European stocks clearing house headquartered in the Netherlands.

POLITICAL HURDLES

Britain and the EU aim to complete assessments on so-called equivalence-based market access for firms like trading platforms and clearing houses by June.

Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), said last week that assessments can be done by the summer, but a decision on access would hinge on wider trade negotiations between Brussels and London.

ESMA had said that in the event of a no-deal Brexit, EU investors would have to use EU-based platforms for trading euro denominated shares and derivatives.

There are also other potential hurdles to UK access.

Prime Minister Boris Johnson has said he does not want Britain to align itself to EU rules after Brexit, which could make access for financial firms hard to maintain.

The EU is also keen to build up its own capital market to cut reliance on London and could insist that EU investors trade euro-denominated shares on platforms inside the bloc.

Faced with pressure from EU policymakers, CME and the LSE moved trading in euro-denominated fixed income from London, while UK-based derivatives platforms are also waiting to see how much access they will get to the EU after transition.

“We would like to see a great deal more clarity in the area of… derivatives trading obligation,” said Roger Cogan, head of European public policy at global derivatives industry body ISDA.

If trading moves, clearing could follow over time, industry officials say, further harming London. So far this has not been the case in swaps, where the LSE dominates clearing for now, although it has shifted clearing in euro repurchase agreements from London to its Paris arm.