Sterling Advances Barely Two Days to UK Elections as Latest Poll Predicts Conservatives Win

In just two days from now, a major event that will set the trend for the currency market for the year 2020, the UK elections will be held. In the face of a Brexit extension, UK prime minister had pushed for an earlier election in the hopes of having a majority conservatives win in the parliament which will make the Brexit deal pass through easily.

As the clock ticks, with barely less than 48 hours to this epochal event, the newest poll by Survation conducted for ITV’s good morning Britain show predicts a Boris Johnson win by 14 pts. ahead of Jeremy Corbyn‘s Labour party. The Brexit deal seemed to give the conservatives an edge as it accounted for 32% of the vote decision while NHS gave Labour party a slight edge. On the overall, a majority vote of 42% was predicted for the conservatives while Labour had 28%.

Market Reaction as the Clock Ticks
Optimism looms in the market as the prediction of a conservatives win will ease Britain’s exit from Europe by January 31 deadline.

The EUR/GBP pair continued to fall till the early hours of today breaking the 0.8411 trend line targeting the 0.8149 resistance level. GBP/USD pair rebounded to consolidate briefly targeting 1.3381 resistance levels. Technical analysis within a 4-hour MACD shows that both pairs may likely touch down. CAD edged slightly higher advanced by USMCA news but yet to consolidate gains.

The USD against a basket of five major currencies held steady awaiting FOMC’s minutes due out tomorrow.

Against a basket of currencies, NZD’s dominance is the highest. Sterling also gained momentum firmed up by approaching UK elections.

The safe-haven, the Japanese yen, and Swiss franc remain pressured as major events that will shape the market for 2020 are been anticipated.

On the Asia side, significant market activity wasn’t recorded as most currency pairs held steady within a day’s range.

In the Asian stock market, not so much activity was recorded being weakened by recently released Chinese PMI numbers.

Most of the indexes closed a little lower while US stocks rose swiftly after Friday’s release of US non-farm payroll reports. The outcome of the December 15 deadline set by the US for the signing of a preliminary trade pact will determine the week’s direction and even further into the year 2020.

Also due out later in the week is UK GDP figures and ZEW released out of Germany.

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South Korea to Begin Taxing Cryptocurrency Transactions

The government of South Korea has announced its intentions to begin taxing capital gains on cryptocurrency transactions. Following a report by The Korea Times on the 9th of December, it was disclosed that the new bill to implement the development will be composed and executed by the Ministry of Economy and finance by 2020.

Also, Korean lawmakers are trying to gain approval for a similar bill focused on enforcing transparency in cryptocurrency activities. If this bill is passed, the proposed rules will be implemented exactly a year after the country’s National Assembly’s plenary session.

Though the capital gains bill will be implemented irrespective of similar legislation, The Korea Times cites that the government will be expected to provide a clear definition of what cryptocurrencies or digital assets will be classified under the new ruling.

One of the issues to be defined is whether cryptocurrency-related gains should be taxed similarly as gains in stocks or real estate.

For the Korean government to initiate this new taxation policy, it would require access to private trading information from exchanges, an exercise already in progress in nations like the US.

Means to Deter Fraudulent Activity
It has been noted that if the proposed bill by the South Korean administration is passed, banks will be mandated to provide real account details to cryptocurrency exchanges. What this means is that cryptocurrency exchanges will be expected to implement similar KYC and Anti-Money Laundering regulations that are practiced by normal banks.

This ruling will place cryptocurrency exchanges under the purview of South Korea’s Financial Services Commission and will include an exchange certification policy set by the FATF.

This is coming after a hack that was targeted at Upbit, a South Korean exchange. It was revealed that the perpetrators made away with 342,000 Ethereum tokens (roughly $42 million at the time) while the company was in the process of transferring assets between its hot and cold storage systems which have led many to believe that it was an inside job.

Upbit, however, has promised to refund all affected customers.

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Blockchain Reportedly Making Serious Headwinds in China

An Asia-based research hub, Forkast Insight, has released an in-depth review of how blockchain-related technology is gaining integration in China.

The research hub published its first survey findings on the 5th of December, which comprised insights on how the Chinese authorities and corporations were adopting blockchain. The survey showed that blockchain-related technology was quickly becoming mature and had garnered an assortment of real-world practical applications.

The company included an in-depth survey from Chinese blockchain enthusiasts, scholars, and administrators to reveal how the country’s economy was faring with such innovation.

The review conveys how blockchain is perceived in the country compared to other countries of the globe, how corporations utilize the technology and how it impacts its consumers’ lives, how China is in the forefront in the blockchain patent competition, and how the apex bank of China is ready to release its digital currency in a little while.

China At the Forefront of Blockchain Innovations
It was recounted sometime in November that China’s blockchain growth will record an annual growth rate of 66% from 2018 through 2023 and would generate more than $2 billion by 2023.

Following recent calls by the Chinese President for the country to foster blockchain technology adoption, it is now apparent that China is in the lead when it comes to blockchain matters, putting the country ahead of the United States.

Xi specified the number of sectors that needed blockchain intervention like health care, charity organizations, law enforcement and a host of others, further emphasizing the benefits blockchain adoption could provide the country with.

Huge Strides for Blockchain in China
The Asian nation has cemented its intentions of adopting blockchain technology, with the administration ascribing substantial relevance of this innovation to the digital economy. The recurring approvals of blockchain by the Chinese authorities is a good signal that the administration is geared towards subsequent execution of the technology all through the nation.

Impressively, the Chinese army is also considering employing blockchain-related technology to fine-tune some processes in the sector like awarding workforce and managing private information

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Pound, USD, and Euro Stay in Focus as Trade Talks Deadline, UK Elections Approach

This incoming week is very crucial in the economic calendar. First is the upcoming UK election scheduled to hold on Thursday, December 12, 2019. Secondly, the December 15 deadline set by the US for the signing of a preliminary trade pact in which President Trump had threatened more tariff hikes on Chinese goods in case of a failed pact.

Investors are on edge as they await the outcome of the UK elections in which the majority of the polls had predicted conservatives win. Brexit, the exit of Britain from the European Union had made major headlines this year which had influenced the pound.

Also, the trade war between the two giant economies, the US and China had been a major headline story this year. The previous week, President Trump had announced that the trade deal may have to wait till 2020.

Central bank activity may also come to play as ECB, the Fed and Swiss bank will reveal the direction of recent monetary policies.

How This May Impact the Currency Market
US Dollar– This year, according to analysts, the greenback when weighed against a basket of ten major currencies had exceeded expectations. Though banks had predicted a bearish trend for the dollar this year, it had forged on against the winds.

On the optimistic view, analysts foresee a tariff reversal in the preliminary trade deal which will buoy the dollar and other riskier assets.

Given this, analysts propose that this may be a suitable time to give the dollar and other riskier assets a go while also storing safe-havens.

On the contrary, if events take a twist and a failed pact happens, it will prop the safe-havens, the Japanese Yen, Gold, and Swiss Francs. The pound and bonds market will also profit from this, with the dollar undermined.

Pound– All had not gone so well with British pound this year as it touched down a three year low in September 2019 while it rebounded slightly when hopes for Brexit were raised and an earlier election fixed. On the optimistic view, a Boris Johnson win and also a majority win in the parliament for the Conservatives will buoy the pound.

On the flip side, there had been a tinge of caution in view that the polls may not be accurate and also a conservatives win seemed shaky as the election approached.in this case, the safe havens will be buoyed.

The bonds markets had profited this year when the trade talks and the Brexit deal had purported the view of a global recession. The trepidation had negatively influenced the market, also with the manufacturing stats released, the fears of a global recession had heightened.

Euro– Central bank activity may prop up the Euro in the year 2020, because of ECB’s favorable economic outlook while analysts predict that the Fed’s move may undermine the dollar.

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EU to Stifle Growth of Stablecoins on European Territories

The leaders of the European Union have come to an agreement that no Stablecoin program will be granted permission to operate on European territory until the inherent threats Stablecoins pose to monetary sovereignty has been dealt with.

This was announced in a joint statement by the EU Council and the European Commission. Although the bodies unanimously agreed that Stablecoins may provide efficient, cheap, and fast payment solutions, they explained that the threats posed are currently far greater than the benefits.

The publication was endorsed on the 5th of December by the Economic and Financial Affairs Council.

Threats Posed by Stablecoins
In the publication, the EU defined several threats and problems related to the adoption of Stablecoins. The organization contended that if such projects are embraced globally, it could jeopardize the world’s monetary sovereignty.

The EU went on to explain in the publication that the adoption of Stablecoins presents threats and problems to areas like customer security, privacy, terrorism funding, taxation, governance and many more. The EU stated that Stablecoins can intensify threats in these areas and that it could also create problems in monetary policies and financial stability.

EU Prescribes Collaborative Effort in Handling Stablecoin
Still in the publication, the EU urged other jurisdictions to adopt a collaborative effort in tackling the problems posed by Stablecoins. The organization also mentioned that bodies planning on issuing Stablecoins in the EU’s jurisdiction had to provide ample data on their product and be prepared to be subjected to thorough scrutiny to ensure compliance with the rules and regulations of the organization.

However, the EU has expressed its endorsement of central banks researching the merits and demerits of producing a central bank digital currency. They also endorse domestic research on the creation of cheap and speedy cross-border payment methods.

The Governor of the Banque De France recently disclosed plans to begin a pilot program of a domestic CBDC in the first quarter of 2020.

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A Look at the Market Ahead of US Non-Farm Payrolls Figures

Due out today from the United States is nonfarm payrolls report for November. A poll conducted by Dow Jones forecasted an increase of 187,000 jobs while the prediction for the unemployment rate is that it may hold steady at 3.6% previously recorded which is close to a 50 year low. Economists also forecast a 0.3% increment for average hourly incomes. A prediction of a 0.4% increase in consumer expectation for December from November’s 95.6 percent holds sway.

Ahead of the stats to be released, on the Asian side, stock indexes rose with the South Korean KOSPI Index topping the chart of the biggest gainer, propelled by Samsung Electronics and SK Hynix recent advance.

In the early hours of today, Nikkei 225 Index, Shanghai Index, Hong Kong’s Hang Seng Index all traded higher consolidating gains.

The non-farm payroll figures will be released today at 13:30 GMT. Also out today is Larry Kudlow’s live interview on CNBC which may give further updates on trade talks.

More U.S. News
Previously, US stocks fell when President Trump announced that the trade deal may be put on hold till November 2020 when US elections will hold.

Another report puts it that China is angered by the Uighur crackdown bill while another stated that the two top economies are still at loggerheads based on the quantity of agricultural produce bought by China.

Another source of concern is how China has failed to give any hint of reassurance from its end.

However, a little flicker of hope was lighted when a report from Bloomberg quoted that the two countries will soon agree to a preliminary pact of the trade deal by a tariff reversal. Also, President Trump didn’t show any sign of differences between the two countries as he is quoted to have said that the talks are going on fine.

The market showed signs of retracement based on this positive report.

More from Asia
A drop was recorded in Japan’s Household spending which is the first-ever recorded since December 2018.

October‘s household spending fell short by 5.1% compared to its 2018 figures which are the largest decline since March 2016 when a drop of 5.3 % was recorded. Economists had forecast a 3% decline on average.

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US Financial Elites Express Their Worry Over Stablecoins and Cryptocurrencies

A board of elite financial regulators in the US has administered a warning to the general public on the inherent dangers of Stablecoins and cryptocurrencies.

On the 4th of December, the Financial Stability Oversight Council pointed out in its warning, possible troubles that could arise if Stablecoins gain acceptance.

The FSOC was established in 2008, after the 2008 global financial meltdown, to tackle possible threats to the financial industry. The board is Chaired by US Secretary of the Treasury, Steven Mnuchin and the board’s voting members comprise of the Chairman of the SEC as well as the Chairman of the Commodity Futures Trading Commission.

FSOC’s Inhibition Towards Stablecoins
The regulators registered their distrust for Stablecoins in their annual report for the year. To explain, they employed an analogy in which Stablecoins become accepted into the financial system and gain recognition as a store of value. If a disruption were to occur in Stablecoins in that situation, it could spell doom for the economy as a whole.

They added that financial regulators needed to evaluate possible threats that could arise from the adoption of digital assets. The FSOC also cited Bitcoin as well as other cryptocurrencies as threats to the economy. However, it seemed like they were incapable of providing concrete reasons for their distrust of cryptos.

The board went on to express their skepticism towards Distributed Ledger Technology stating that the successes and applications of the technology in the financial industry were “still uncertain”.

Mnuchin’s Unreserved Dislike for Bitcoin
US Treasury Secretary Steven Mnuchin has always been against the idea of Bitcoin and has expressed his distrust for the cryptocurrency multiple times. In an interview in July, he asserted that in a five or six years from the time, Bitcoin would be extinct, saying that at that time he would have other priorities and not Bitcoin.

He also assured that he would never be personally involved with the cryptocurrency.

Meanwhile, US lawmakers are still focused on tackling the perceived threats emanating from the crypto industry, especially Facebook’s proposed Stablecoin project, Libra.

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Reversal Risk on AUDUSD While Courting Towards Beneath Price Levels of 0.6800

AUDUSD DAILY DEC 5

AUDUSD Price Analysis – December 5

AUDUSD has continued to lose ground during the middle of the European session and is currently near its lower daily range, around the 0.6830-25 levels. While increasing the risk of reversal, its weak momentum and reversing the trend from the overbought zone, adds to the negative signals.

Key Levels
Resistance Levels: 0.7205, 0.7085, 0.6955
Support Levels: 0.6813, 0.6754, 0.6670

AUDUSD Daily Dec 5th

AUDUSD Long term Trend: Bearish

As we observe the longer-term pattern, with the level at 0.7085 resistance intact, there is no clear-cut confirmation of a trend reversal yet. This means that the downtrend from the level at 0.7205 (high) is still expected to continue to the level at 0.6670 (low).

However, a decisive break of the level at 0.7085 may validate the long-term bottom and bring back a solid advance above the daily moving average 5 and 13 handles towards the next upper horizontal zone (now on the level at 0.7205).

AUDUSD 4 Hour Dec 5th

AUDUSD Short term Trend: Ranging

On the flip side, the AUDUSD’s 4-hour bias turned neutral as it retreated from the level at 0.6862. At the moment, the rally stays moderate as long as the level at 0.6754 support stays intact. Above the level at 0.6862 may target the level at 0.6929 resistance first.

A break here may reactivate the recovery from the level at 0.6670 and the overall target is expected from the level at 0.6670 to 0.6929 from 0.6754 at 0.7001. On the downside, a break of the level at 0.6754 may resume the bearish pattern of the level at 0.6929 to retest the level at 0.6670.

Instrument: AUDUSD
Order: Sell
Entry price: 0.6834
Stop: 0.6862
Target: 0.6754

Note: Learn2Trade.com is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results

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Dollar Pressured as Headline Fatigue Sets in from Trade Talks Uncertainties

The dollar tumbled down when President Trump announced that the trade deal may have to wait till November 2020 when the US elections will hold.

Weeks ago, the President had earlier announced that he and China are in “the final throes” of an agreement in the trade talks which had pushed up demand for the dollar and undermined the safe-havens.

Given increased fronts in trade wars, when President Trump announced increasing tariffs for metal exports from Brazil and Argentina while doubling tariffs for French goods by a hundred percent, it seemed as if investors have become wearied by the dilly-dallying created by the trade headlines.

The US had also passed two bills to support human rights and cease exports of certain ammunitions to Hong Kong police and also a third which had reportedly caused anger in China, the Uighur crackdown bill, all these are seen by investors as impediments which may stall the progress of the trade talks.

An analyst noted that with the trade talk uncertainties, it is very hard to predict the movement of the dollar as China had not given any reassurance from its end.

Due out on Friday is non-farm payroll figures which analysts predict may be conformable to earlier economic stats released which were unfavorable.

The dollar was marginally weaker against the euro to trade at $1.1084, standing at – 0.1%.

In its other currency pairs, the greenback traded at 97.551.

British Pound
UK geopolitics seemed favorable to British Pound as most polls pointed to a conservatives win. Because of this, the pound edged higher to hit an eight-month high in the early hours of the day.

AUD, CAD and Kiwi Dollar
On the other hand, the Australian dollar fell 0.2% to trade at $ 0.6838 after the release of retail sales figures.

The kiwi rose 0.4% to trade at $ 0.6555, hitting a four-month high and consolidating gains this week given favorable trade sentiment.

NZD reached a four-month high of NZD 1.0457 per Australian dollar with a 3% gain in the market.

The Canadian dollar reached a one-month high to trade at $ 1.3203 per dollar after the apex bank decided to hold rates steady as it sees support for the economy.

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Bank of Japan Shoots Down Talks About the Country Developing a CBDC

The Governor of the Bank of Japan, Haruhiko Kuroda, announced that claims of Japanese citizens demanding a Central Bank Digital Currency were false.

At a symposium for the 35th anniversary of the Center for Financial Industry Information Systems, which was held on the 4th of December, Kuroda talked about the problems that Stablecoins and CBDCs posed. He stated that there was no apparent necessity or demand for a CBDC in the country. Nonetheless, the BOJ is carrying out researches and investigations into the initiative just in case a CBDC becomes necessary in the future. Kuroda also spoke about the necessity of studying the effect of CBDCs on the economy.

Kuroda Acknowledges the Usefulness of Stablecoins
Even though Kuroda doesn’t see the point of having a national CBDC, he acknowledges that there is an assortment of private digital currency denomination in the Yen. The financial institutions promoted the utilization of such digital currencies, striving to bring about characteristics that look like CBDCs.

A method the financial institutions are practicing to enhance such operations is by boosting the number of cashless payment users and guaranteeing interoperability between different payment service platforms. Some months ago, the institution initiated a reward scheme for loyal customers who use cashless payments to enhance the efficiency of corporations.

Japan is Avoiding Everything Stablecoin for Now
Kuroda has however indicated that global Stablecoins like Libra are considerable alternatives as they can provide effective payment services for its users. Regardless, he explained that GSCs cannot be adopted at this time considering the problems associated with it. Some of these problems include money laundering, data security, and customer insurance all of which have not been adequately dealt with yet.

Kuroda also stated that no GSC will be approved to carry out business in the country until regulatory and legal matters have been dealt with. He went on to implore administrations across the globe to work together and sustain financial durability by supporting free capital mobility.

Regardless, multiple countries across the globe are in serious pursuit of the development of CBDCs and Stablecoins.

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