Politics to take centre stage in US and Europe - BBH

Sandeep Kanihama FXStreet Contributor

Research Team at BBH lists down three political issues that may become talking points in the days ahead.

Key Quotes

“First, the tensions between Greece and the EU has eased since the middle of December, and a new tranche of aid is expected shortly. Greece's 10-year bond yield fell 25 bp last week to bring the decline to about 45 bp since Christmas Eve. Note that investors will likely learn in the days ahead that Greece is still experiencing deflation. Greece will also report November industrial output (6.8% year-over-year in October) and October unemployment (23.1% in September). Meanwhile, Greece's privatization efforts appear to be progressing with the sale of a 51% stake in the Piraeus ports to a Chinese company while has been managing a couple of piers.”

“Second, a decision by the UK Supreme Court on the royal prerogative regarding triggering Article 50 to begin the formal negotiations for leaving the EU is expected over the next couple of weeks. Prime Minister May confirmed two things many investors have suspects: that there were not plans for Brexit before the referendum and that the UK will leave the single market. This may weigh on sterling, which lost more than 1% before the weekend to fall for the fourth week in the past five. Separately, we note that a 24-hour London Underground strike will make for difficult commutes on Monday.”

“Third, the US Senate is set to begin taking up the President-elect's nominations. Although it is widely recognized Presidents' prerogative to pick their own advisers and cabinet, many of the nominees are particularly contentious for Democrats, and some Republicans may challenge a couple of the nominees as well. The process begins in earnest with a Senator Sessions (Republican from Alabama) nomination for Attorney General. Sessions' views on civil rights, including voting rights, same-sex marriage, and immigration, as well as Trump's proposal to establishing a registry of Muslims and imposing a ban on their immigration, will make for a particularly heated hearing.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY holds firm above 157.00 ahead of Ueda's presser

USD/JPY holds the uptick above 157.00 in the European session on Friday as the Japanese Yen remains under intense selling pressure despite the Bank of Japan's (BoJ) interest rate hike to 1.25% and a somewhat hawkish Monetary Policy Statement, as two dissents against the rate hike weigh. All eyes now remain on BoJ Governor Ueda's press conference for further trading impetus.

Gold: Acceptance above $4,400 is critical for buyers

Gold holds the previous recovery around $4,350 early Friday; buyers still cautious. US Dollar trades subdued amid retreating Oil prices and US Treasury bond yields. Gold settled Thursday above the 100-day SMA near $4,320, with a neutral daily RSI.

Bitcoin extends recovery, Ethereum eyes $2,500, XRP holds $1.30

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) extend their recovery, trading above $76,700, $2,400 and $1.300, respectively, on Friday. These top three cryptocurrencies now face key technical levels that could determine whether their recoveries extend further or pull back.

Cardano extends gains on bullish derivatives

Cardano (ADA) extends its recovery, trading above $0.210 at the time of writing on Friday, after finding support around a key zone earlier this week. Improving derivatives positioning and supporting technical indicators indicate growing bullish sentiment among ADA traders. Derivatives data shows a bullish tilt among Cardano traders.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.