|08:30||GBP||Halifax HPI m/m||0.3%||0.2%|
|13:30||CAD||Building Permits m/m||3.8%|
|16:00||EUR||ECB President Draghi Speaks|
|23:50||JPY||Final GDP q/q||0.3%||0.4%|
|00:30 (Dec 8th)||AUD||Home Loans m/m||-2.3%||-1.8%|
Asian markets ended in a sea of red on Wednesday as the rout in technology continued, sending many markets down significantly. Hong Kong’s Hang Seng was hardest hit, falling 2.1%, but the Nikkei in Japan was close behind with a 2% loss, and its worst one-day performance in over eight months. The Nikkei was pressured not only by the selloff in tech, but also by a firmer Yen against the U.S. dollar, which hurts Japanese exporter shares. Both Taiwan and South Korea saw their benchmark indices sliding 1.6% and 1.4% respectively. Australia didn’t avoid the downdraft as weak commodity prices sent shares of Australian mining companies spiraling lower, even though the banking sector provided some support for the market. Mainland China also saw declines due to falling commodity prices, although it was the smallest loss in the region at just 0.3%.
European markets edged lower on Wednesday, despite a weaker Euro, as technology shares continued their retreat on investor worries that the Senate version of the U.S. tax reform bill would be passed. The Senate version of the bill keeps the corporate Alternative Minimum Tax, and some investors fear that this would negatively impact technology firms, more so than other types of companies. Losses were broad based, but modest across the region, as a softer Euro helped prop markets up to some extent. London’s FTSE bucked the falling trend, adding 0.3% as the Pound softened further against the U.S. dollar amid no signs of any progress in Brexit negotiations. The Pound also softened against the Euro, providing more fuel for British equities.
U.S. markets struggled for direction on Wednesday as gains from the tech sector were offset by losses from the energy sector. By the close of trade the major indices were mixed, with the S&P500 basically flat as it edged lower by 0.01%. Even so, the small loss was the fourth consecutive declining session for the index and its longest losing streak since March. The Nasdaq gained 0.2% on the back of the rally in technology, which was likely a result of investors buying the dip after several sessions of declines for technology stocks. The Dow Industrials fell 0.16% as 18 of the 30 Dow components ended the day lower. Surprisingly given the weakness in energy, Merck was the biggest loser ass it fell 2.6%, followed by Disney, which fell 1.6%.
It was another stunning day for Bitcoin as the cryptocurrency began the day in Asia by topping the $12,000 level, then soon after was trading above the $13,000 level. It wasn’t finished though, and by the late afternoon in New York Bitcoin was over $14,000, although it pulled back right after hitting that milestone and by early evening was a few hundred dollars off its daily high. Today was different however, as most of the other major cryptocurrencies didn’t participate in the Bitcoin rally, declining instead by 1.5% to 3.8%. One has to wonder if all the buying is from institutional investors preparing for the launch of Bitcoin futures on the CBOE December 10, and then on the CME December 18.
The pair is reaching a critical support level that if broken could lead to a decline of at least 200 pips. Currently trading right around the 0.7550 level, the pair sees long term support from here down to the 0.7500 level. The pair hasn’t been able to break that support over the past few weeks, but with the U.S. dollar picking up steam now could be the time we see a break of this level finally. There is mid-term support from March/April 2015, but also a longer term support on the monthly chart from the 1989-1991 timeframe. A break of this support could see the pair trading to the 0.7100 level in the coming weeks.