Ransquawk

Sterling “collapses”; Fifty ticks lower

I had a meeting yesterday morning where I didn’t have access to any market news or rates.

When I returned the first thing I saw was that Sterling had “collapsed” in reaction to factory output data which was at its lowest since 2012. Imagine my surprise when I signed into a broker page to see that Sterling was trading thirty pips lower than its opening having recovered from its low which was just twenty pips below.

It appears to be becoming a feature the market now that commentators are struggling to find adjectives to suitably describe market movements.

When I was trading full time, if I had been “off the desk” I would have expected a 200 pip move to accompany such a headline. Now, since liquidity is so plentiful, daily ranges are shrinking and we have entered an environment when it almost needs a “Black Swan” event to see a range in excess of 100 pips in the major currencies.

It was always likely that when the common currency was adopted in 1999, that eventually the liquidity that had been available within the legacy currencies would flow into euros but the advent of technological advances and banks creating price making algos has seen the market advance at a far greater pace.

“Rocket man” becomes “Talented man”

One of the more significant but less prominent takeaways from the Trump/Kim Summit is the tacit acceptance of a shift in the global order where China is now, if not the major influence, running America a very close second.

Trump’s rhetoric has turned through 180 degrees in a matter of months. This summit which was unthinkable under every President since Eisenhower is taking place because Beijing was getting concerned. It was no more concerned by Kim than Trump and has cleverly given Trump the responsibility for removing the nuclear threat from Pyongyang. What China wants China gets in Asia, that is now well understood, but for Trump to now become moved to act when they ask is an enigmatic reaction that was impossible to predict.

The off again on-again nature of the summit shows just how influential Beijing has been in demanding it takes place. The level of rhetoric rose even after the talks had been announced and Pyongyang blinked first only to be driven to accept Beijing’s wishes. China allowed Trump’s blustering brinkmanship safe in the knowledge that his actions would speak louder than his words, and so it has proved.  

Bitcoin falls again but buyers still to be found

Over the weekend I read that the Head of the U.S. Securities and Exchange Commission had declared all ICO’s to be securities. My reaction? So, what! Even if it did push Bitcoin a little lower.

It is the nature of the entire cryptocurrency market that the three significant elements, Blockchain, standalone coins like Bitcoin etc. and fund-raising issues demand an unregulated market in order to thrive. The process of an ICO is not like and IPO although it will in all probability start to rival its “big brother” in years to come.

I was in London last week and while travelling on the underground, I saw an advert from a “prominent” FX broker offering Bitcoin trading. In the small print at the bottom of the advert was a clause which said that trading in bitcoin is done through “trust and digital security” and as such the regulatory protection of the FCA and FSCS are not available to UK residents.

This, for me was a far more significant issue that whether ICO’s are securities or not since investors should be savvy enough to be able to sort the wheat from the chaff while retail investors wanting to get into crypto’s are being told in a manner they could easily overlook that such investments are the way forward.

I am sure the broker in question has had their advert vetted for content and veracity, but it reminds me of when retail FX broking first started.  

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