France has long been a topic of discussion, whether in light of small talk or facing great tragedies. Since the unexpected dissolution of the French National Assembly last June, the country has faced a series of setbacks that have had a significant impact on Europe.

France's Economic Struggles and Its Impact on the Common Currency

France's Borrowing Rates and the Euro Crisis

As we previously noted in our weekly interest-rate update, France now finds itself borrowing at rates similar to those of Greece. This is a concerning development as the spread with Germany continues to widen due to the pressure exerted on the government. Some astute observers even described the appointed government as provisional when it was first formed. The question now is whether the 2025 budget will pass or not. This uncertainty is not good news for the common currency, which is already struggling to regain its footing. It has managed to stage a rebound above 1.0335 and reach the target zone, but it also enters the risk zone at 1.055/66. To halt the downward momentum that began in September, this resistance must be overcome.

France's economic situation is a complex web of factors that are affecting not only the country itself but also the entire European Union. The borrowing rates serve as a clear indicator of the challenges faced by France and its ability to manage its finances. As the spread with Germany widens, it creates additional pressure on the government to make difficult decisions and implement reforms.

The impact of these economic issues extends beyond just borrowing rates. It affects the confidence of investors, both domestic and international, and can have a ripple effect on other sectors of the economy. The common currency, which is already facing its own set of challenges, is further weakened by France's difficulties. It becomes crucial for France to address these issues and find solutions to restore stability and growth.

The USDJPY and USDCHF: Consolidating Trends

The USDJPY and USDCHF are currently in a consolidation phase. The USDJPY is expected to reach 147.90 or even 145.90 if it holds below 152.95. This indicates a certain level of uncertainty in the Japanese yen against the US dollar. On the other hand, the USDCHF has touched 0.8820 but seems to be stuck at this level for the time being. It remains to be seen whether these currencies will break out of their current ranges and move in new directions.

The consolidation of these currency pairs is a reflection of the broader market sentiment and the ongoing economic uncertainties. Investors are waiting for more clarity and signals before making significant moves. The movements of the USDJPY and USDCHF will have implications not only for the countries involved but also for the global financial markets.

As we monitor these currency pairs, it is important to consider the various factors that could influence their movements. Economic data, geopolitical events, and central bank policies all play a role in shaping the forex market. Traders and investors need to stay vigilant and adapt to changing conditions to make informed decisions.

Commodity Currencies: The AUDUSD and NZD/USD

The AUDUSD is stabilizing between 0.6428 and 0.6555. To open up real rebound potential towards 0.6686, it needs to break through this resistance level. The NZD/USD, on the other hand, is testing support at 0.5850 and has even made an incursion as far as 0.5796. The initial resistance for the NZD/USD is at 0.5930.

The behavior of commodity currencies is closely tied to global commodity prices and economic conditions. The stabilization of the AUDUSD and the testing of support by the NZD/USD reflect the complex interplay of various factors in the global economy. These currencies are sensitive to changes in demand for commodities and the overall economic outlook.

For traders and investors interested in commodity currencies, it is essential to closely analyze market trends and economic indicators. Understanding the factors that drive these currencies can help in making more accurate predictions and formulating trading strategies. The stability or weakness of the AUDUSD and NZD/USD can have implications for countries that rely heavily on commodity exports.

In a significant legal development, eighteen states have taken a stand against the U.S. Securities and Exchange Commission (SEC) and the Biden administration. This lawsuit, filed in the U.S. District Court for the Eastern District of Kentucky Frankfort Division, names the SEC, its chair, and four commissioners as defendants. The Commonwealth of Kentucky led the charge, with the attorney generals of Nebraska, Tennessee, West Virginia, Iowa, Texas, Mississippi, Montana, Arkansas, Ohio, Kansas, Missouri, Indiana, Utah, Louisiana, South Carolina, Oklahoma, Florida, and the DeFi Education Fund joining forces.

Background and Context

With the emergence of new blockchain technology, states have recognized the need to oversee the digital asset industry. Some states have enacted specific regulatory regimes for financial institutions focused on digital assets. Others have required digital asset platforms to obtain money-transmitter licenses and security bonds to ensure liquidity. Additionally, some states have embraced digital assets more generally, allowing citizens to use them for tax payments and fee settlements and amending unclaimed-property laws to include digital assets.In Kentucky, the General Assembly passed a law granting the commonwealth the authority to take control of abandoned property, including virtual currency. However, the SEC's actions have hindered Kentucky's ability to enforce its laws as a sovereign state. Kentucky has the second-highest collective computing power in the U.S. dedicated to crypto mining and offers tax incentives to digital asset miners to stimulate investment and job creation. Roughly one in five Americans, more than 50 million people, have acquired a digital asset, and American businesses are increasingly accepting Bitcoin and other digital assets as payment methods.Under the leadership of SEC Chair Gary Gensler, the SEC has launched a regulatory offensive against crypto companies. By labeling cryptocurrencies as investment contracts similar to stocks or bonds, the SEC has brought these assets under its regulatory purview. While states have implemented their own regulatory measures, Congress has repeatedly rejected proposals to grant federal agencies broad regulatory power over digital assets. The SEC has not respected state authority and has attempted to assert regulatory control over the digital asset industry through a series of enforcement actions without congressional authorization.In the lawsuit brief, examples of the SEC's aggressive and unorthodox enforcement actions are highlighted. In 2022, the SEC sued a Coinbase employee and his brother, claiming they were not registered with the SEC. However, the SEC did not sue Coinbase, a licensed digital asset platform operating as a money transmitter in several states. The SEC also took action against other individuals but did not allege that the digital assets were securities. In June 2023, the SEC took enforcement action against Coinbase and Binance, arguing that their transactions were securities transactions and that they were using unregistered securities exchanges, brokers, and clearing agencies.The AGs argue that instead of issuing regulations or seeking congressional authorization, the SEC has continued to sue participants in the digital asset industry, faulting them for not complying with requirements that the agency had previously indicated did not apply. While the SEC claims that its actions are justified under the Securities Act of 1933 and the Exchange Act of 1934, these laws do not apply to digital assets like cryptocurrencies, which did not exist 90 years ago.The lawsuit contends that the SEC has engaged in unlawful actions and violated the Administrative Procedure Act. It seeks a court declaration that a digital asset transaction is not an investment contract under the 1933 and 1934 laws. It also asks the court to declare that digital asset platforms facilitating secondary transactions do not need to register as securities exchanges, dealers, brokers, or clearing agencies. Additionally, the lawsuit aims to prohibit the SEC from taking similar enforcement actions and rules that the SEC violated the APA.Texas Attorney General Ken Paxton emphasized that federal bureaucrats in Washington have no authority to dictate to states how they should interact with cryptocurrency and should not crush this new field with a regulatory framework that Congress did not intend. The AGs argue that the SEC's assertion of sweeping jurisdiction without congressional authorization deprives states of their proper sovereign role and stifles the development of innovative regulatory frameworks for the digital asset industry. By attempting to fit digital assets into ill-fitting federal securities laws and disclosure regimes, the SEC is harming the very citizens it is supposed to protect by displacing more suitable state laws designed to ensure consumer protection in the digital asset industry.