The Euro opens the week on a positive note, recovering from sharp losses. Global stocks are mostly lower as the bull market is showing signs of winding down. U.S. tax reform remains on the headlines as investors await new developments. Elsewhere, Bitcoin is trading steady above the $8,000 level. Here are the big things to know for today’s trading.
1. Euro on recovery mode
The euro was higher against the other major currencies, reversing sharp losses seen during Asian hours after talks aimed at forming Germany’s next coalition government collapsed overnight.
Negotiations broke down after the pro-business Free Democratic Party (FDP) walked out of the talks, ending efforts to form a three-way coalition government.
The collapse of talks leaves German Chancellor Angela Merkel with the option of forming a minority government. If no new government is formed the president can call a new election.
German President Frank-Walter Steinmeirer plans to deliver a statement at 13:00 GMT.
EUR/USD was at 1.1800 during early deals in New York, bouncing back from an overnight low of 1.1723, as investors judged the failure of German coalition talks was unlikely to harm the outlook for the region’s economy.
2. Global stocks mostly lower
Global stocks were mostly lower in cautious trade, as the current bull market continued to show signs of slowing down after a stellar year so far.
Asian-Pacific markets ended mixed. Among notable standouts, China’s Shanghai Composite Index retraced losses in afternoon trade to recover from the biggest drop since August after Beijing set sweeping new guidelines to regulate asset management products.
In Europe, most of the region's bourses were in negative territory in mid-morning trade, with Germany's main share index under pressure.
On Wall Street, three major indexes looked set to open modestly lower, as investors kept an eye on U.S. tax reform developments. U.S. stocks fell on Friday, with the Dow and S&P 500 posting their first two-week losing streak since August.
3. U.S. Tax reform updates
Investors were keeping an eye on U.S. tax reform developments at the start of a holiday-shortened week. President Donald Trump tweeted on Sunday that Senator Jeff Flake will oppose the Republican tax bill, but the senator's office said he has not yet made up his mind.
Last week, the House voted to pass a tax bill that would lower corporate taxes and cut individual taxes for most households in 2018, in a step towards the biggest U.S. tax code overhaul since the 1980s.
But the legislation may face a tougher fight in the Senate amid resistance within Republican ranks. Senate lawmakers are expected to vote on their version of the bill after this week’s Thanksgiving holiday.
More than two Republican defections would likely kill the bill. Wisconsin Senator Ron Johnson has already publicly stated he opposes the bill in its current form.
4. Bitcoin wild ride continues
Bitcoin prices hit a fresh all-time high above the $8,000 mark, capping a wild week for the cryptocurrency.
The digital currency last traded at $8,060, after reaching an all-time peak of $8,130 earlier.
The rally comes on the back of a huge sell-off at the start of last week, which saw the price of bitcoin collapse to around $5,500.
Bitcoin, which is known for sharp swings, has tended to rebound quickly from pullbacks. It has risen more than 500% so far this year and at current prices has a total market capitalization of around $135 billion.
