After a dull couple of days, markets came to life yesterday as several events of interest to the market came to a climax:
After falling all day, the British Pound suddenly leapt in value as news leaked of a draft outline agreement between the U.K. and the E.U. over Brexit. Although the rumor is officially denied, it seems that the U.K. has agreed to pay a “divorce” bill of approximately €50 billion, which would then lead to more flexibility from the E.U. on some key issues which are causing headaches for the U.K., specifically the issue of the Irish border. The “softer” the Brexit, the higher the market values the British Pound, so the currency has gone on to reach a new 9-week high against the U.S. Dollar at 1.3430.
Bitcoin, the world’s largest and most successful cryptocurrency, reached and dramatically exceeded the psychologically important value of $10,000 per coin. At the time of writing, it has reached almost $11,000, and looks likely to enjoy its strongest 1-day rise ever in Dollar terms, by more than $1,000! It is hard to say what effect, if any, the rise of cryptocurrencies is having upon other financial markets.
Last, but certainly not least, North Korea seems to have successfully tested a ballistic missile for the first time. The U.S. Secretary of Defense indicated that he now believes North Korea has the capability to strike anywhere in the world with such a missile. The test is estimated to have reached a maximum altitude of 2,500 miles. Strangely, as news of the test came through, the U.S. stock market continued to make new all-time high prices, and traditional safe haven assets such as the Japanese Yen and Gold barely moved, even as the test missile hurled towards Japanese skies!
Jerome Powell, the nominee to become the next Chair of the U.S. Federal Reserve, testified before Congress in a confirmation hearing. He gave a rosy view of the U.S. economic future regarding economic growth and unemployment and avoided saying anything that might upset anyone, and the stock market seemed to respond by advancing nicely.