Moneyway Analysts Report:
The Washington Post, citing unidentified sources, reported on Tuesday that Senate Republican leaders are considering a one-year delay in the implementation of a major corporate tax cut to comply with Senate rules. Any potential delay in the implementation of tax cuts, or the possibility of proposed reforms being watered down, would tend to work against the U.S. currency, analysts said.
Oil is down slightly, on surprising increase in production numbers, ConocoPhillips announced a surprise 22 percent increase in next year’s drilling budget, the latest signal that U.S. output may not ebb any time soon.
Daniel Bochove and Christine Owram from Bloomberg Report:
Investors who bet on a $750 million asset sale by Canadian penny stock that sent its shares soaring only to see the deal evaporate, won’t see their trades reversed, regulators said.
The disclosure from West High Yield (W.H.Y.) Resources Ltd. “while highly conditional on a number of factors, did not contain information which was either misstated or inaccurate,” the Investment Industry Regulatory Organization of Canada said in a letter sent this week to an investor in the company.
A copy of letter was obtained by Bloomberg and confirmed by an IIROC spokesman in a telephone interview.
West High Yield surged almost 1,000 percent on Oct. 5 after it announced the deal to sell its main assets. The stock jumped as high as C$3.80 from just 36 cents the previous day, before closing at C$2, giving the company with no revenue a market value of C$114 million ($89 million). The cash deal to sell a magnesium deposit in British Columbia to Gryphon Enterprises LLC would have been worth about 46 times West High Yield’s value the day before the announcement, making it one of the biggest mining asset sales in the world this year.
West High Yield’s shares have been halted since Oct. 6. Late Tuesday, West High Yield said in a statement that Gryphon had not come up with the $500,000 deposit and the deal was terminated.
IIROC has the authority to reverse trades that violate Universal Market Integrity Rules, Debra Haggarty, senior complaints and inquiries specialist at IIROC, said in the letter to investors.
XE Reports on currencies:
EUR-USD settled just below 1.1600 after the market failed to sustain gains above here during the early part of Asia-Pacific session. The pair saw a three-and-a-half-month low at 1.1553 yesterday before recovering somewhat, concomitantly with U.S. Treasury yields and on new reports that the U.S. corporate tax cut may be delayed one year before implementation. Both the Eurozone and U.S. calendars are quiet today. EUR-USD’s price action remains consistent with the bearish trend that’s been in evolution since early September, when the pair capped out after a five-month rally period at 1.2092. Former support at 1.1618-20 now marks resistance.
USD-JPY has firmed up a tad after logging a four-session low at 113.64 yesterday. Ditto for EUR-JPY, which logged a six-session low yesterday. Japanese exporter offers are reportedly clustered around 114.30-35. USD-JPY’s overall trend bias, as indicated be price action momentum indicators, remains to the upside, which has been prominent since the re-election of Abe as prime minister, providing an endorsement of a reflationary political policy framework that favours ultra-accommodative monetary policy. USD-JPY has support is at 113.42-44 and resistance 114.42-45.
Sterling has come under across-the-board pressure, with Her Majesty’s currency presently showing a 0.2% loss to the dollar and a 0.4% decline against both the euro and yen. Cable has been shoved below 1.3150 after logging a peak at 1.3176 yesterday. Sterling markets are still taking stock of yesterday’s FT report alleging that leaders of major U.S. banks warned U.S. commerce secretary Wilber Ross that the UK’s unstable government and slow progress in Brexit planning may force them start to relocate operations across the channel. Ross also warned during a speech at the CBI’s annual conference on Monday that any deal the Britain makes with the EU that maintains its regulations might “hinder development of a close post-Brexit U.S.-UK relationship.” Cable has been flat-lining in the low 1.30s for a month now, but we continue see risks as being notably more skewed to the downside than to the upside. Cable has support is at 1.3039-40, and resistance at 1.3180.
EUR-CHF has tipped under 1.1600 for the first time since last Wednesday. Heaviness in EUR-USD and other euro crosses has been weighting on EUR-CHF. The 33-month peak seen in late October at 1.1712 has slipped off the radar screen., though we continue to anticipate an eventual return to 1.2000, which is the former trading floor of the SNB.
USD-CAD has settled in the mid 1.27s after logging a two-week low on Tuesday at 1.2702. The pair’s two-month rally phase from sub-1.2100 levels looks to have stalled over the last week. BoC Governor Poloz in a speech yesterday reaffirmed guidance given last month by saying that “the economy is likely to require less monetary stimulus over time, we will be cautious in making future adjustments to our policy rate.” Not quite a committed tightening path, then, in the face of moderating growth momentum in the economy, continued benign price pressures, and ongoing uncertainty about NAFTA negotiations. We project the next BoC rate hike to be in March, as Friday’s jobs and trade data have not altered expectations for a moderation in GDP in the second half of the year. We expect USD-CAD to trade with little directional bias for now.