CRYPTO CURRENCY | Hotly anticipated bitcoin futures surge on debut

NEW YORK/SYDNEY — Bitcoin futures jumped more than 20 percent in their eagerly anticipated U.S. debut, which backers hope will encourage wider use and legitimacy for the world’s largest cryptocurrency even as critics warn of the risk of a bubble and price collapse.

The launch on Sunday night may have caused an early outage of the Chicago-based CBOE Global Markets’ website. The exchange said that due to heavy traffic on the CBOE Global Markets website, the site “may be temporarily unavailable.”

The one-month bitcoin contract <0#XBT:> opened trade at 6 pm (6.00 p.m. ET) at $15,460, dipped briefly and then rose to a high of $18,700.

As of 0430 GMT, it was up 16 percent from the open at $17,940, with 2,211 contracts traded.

On the Luxembourg-based Bitstamp BTC=BTSP, bitcoin prices surged 7 percent to $15,720. It is up more than 1,400 percent so far in 2017, and its gains in the past month have been rapid.


Experts had worried that the risks associated with the currency’s Wild West-like nature could overshadow the futures debut, but so far the price action has been unlike the wild swings seen in the past few weeks. Bitcoin tumbled 20 percent in 10 hours on Friday.

“Even if there is an institution or institutional-sized trader out there, they are going to want to make sure that the mechanics work first, just for the futures,” said Ophir Gottlieb, chief executive officer of Los Angeles-based Capital Market Laboratories.

“I think the excitement will come when the futures market is established. That can take a few days,” Gottlieb added.

The futures are cash-settled contracts based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs and brothers Cameron and Tyler Winklevoss.

Market participants said the launch of the futures contract wouldn’t necessarily reduce volatility in the cryptocurrency.

“There are no ways to arbitrage between the market and other exchanges, CBOE cannot settle Bitcoin as far as I know,” said Leonhard Weese, president of the Bitcoin Association of Hong Kong.

“Regular bitcoin traders don’t have access to it, and the trading desks that use the futures market don’t have access to bitcoin.”

Cryptic currency

While bitcoin’s price rise mystifies many, its origins have been the subject of much speculation.

It was set up in 2008 by someone or some group calling themselves Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation difficult if not impossible.

Central bankers and critics of the cryptocurrency have been ringing the alarm bells over the surge in the price and other risks such as whether the opaque market can be used for money laundering.

“It looks remarkably like a bubble forming to me,” the Reserve Bank of New Zealand’s Acting Governor Grant Spencer said on a television program run on Sunday.

“We’ve seen them in the past. Over the centuries we’ve seen bubbles and this appears to be a bit of a classic case,” he said.

Many investors have stood on the sidelines watching its price rocket. However, it is possible to buy bitcoin without having to spend the full price of one coin. Bitcoin’s smallest unit is a Satoshi, named after the elusive creator of the cryptocurrency.

Somebody who invested $1,000 in bitcoin at the start of 2013 and had never sold any of it would now be sitting on around $1.2 million.

Heightened excitement ahead of the launch of the futures has given an extra kick to the cryptocurrency’s scorching run this year.

Controversial move

Bitcoin fans appear excited about the prospect of an exchange-listed and regulated product and the ability to bet on its price swings without having to sign up for a digital wallet.

Others, however, caution that risks remain for investors and possibly even the clearing organizations underpinning the trades.

“You are going to open up the market to a whole lot of people who aren’t currently in bitcoin,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

The launch has so far received a mixed reception from big U.S. banks and brokerages, though.

Several online brokerages, including Charles Schwab Corp and TD Ameritrade Holding Corp (AMTD.O), did not allow trading of the new futures immediately.

The Financial Times reported on Friday that JPMorgan Chase & Co, Citigroup Inc would not immediately clear bitcoin trades for clients.

Goldman Sachs Group Inc said on Thursday it was planning to clear such trades for certain clients.

Bitcoin’s manic run-up this year has boosted volatility far in excess of other asset classes. The futures trading may help dampen some of the sharp moves, analysts said.

“Hypothetically, volatility over the long run should drop after institutions get involved,” Gottlieb said. “But there may not be an immediate impact, say in the first month.”

source: interaksyon.com

Asian stocks extend global rout as traders flee to safety

TOKYO, Japan -- Tokyo stocks led a rout across Asian markets Tuesday, while Japanese government bond yields turned negative, the dollar dived against the yen and gold jumped as fears about the global economy sent investors scrambling to safety.

While most of the region is closed for the Chinese New Year holiday, trading remained thin but dealers took their lead from New York and Europe where banking shares were battered.

The sell-off is the latest this year, which has seen trading screens from Asia to the Americas awash with red.

The latest round of blood-letting came on the back of worries about the financial sector as the global economy slows down, without the support of the Federal Reserve's easy monetary policies.

London, Paris and Frankfurt all finished down more than 2.5 percent, with the German DAX ending below 9,000 for the first time since October 2014. And Wall Street's three main indexes all lost more than one percent.

Financials were in focus as a slowdown in the world economy raises the prospect of loan defaults and lower interest rates, which eat into their bottom lines.

Banking stocks sagged in New York and Europe, with US titan Bank of America, Germany's Deutsche Bank and France's Societe Generale all tanking.

In Asian trade Tokyo slumped 5.3 percent in the afternoon, putting the market back into bear territory, a 20 percent fall from its recent highs.

Financial giant Mitsubishi UFJ plunging almost eight percent and rival Sumitomo Mitsui Financial Group tumbling 7.3 percent. Major brokerage Nomura tanked nearly 11 percent.

Exporters such as Toyota and Uniqlo operator Fast Retailing each down around five percent as they were hit by the strong yen.

The dollar sank to 114.50 yen, having sat above 120 yen just a week ago. The unit is considered a safe haven in times of uncertainty.

'Bucketload of concern'

The flight to safety also saw Japanese government bond yields dive below zero, extending a downtrend sparked by the Bank of Japan's surprise move last month to slap a negative interest rate on some commercial lenders' deposits.

And gold, another commodity considered low risk, climbed 1.5 percent Tuesday to $1,193.50.

Sydney shed 2.7 percent, Wellington was 1.4 percent off, Manila dived 1.5 percent and Jakarta was down 0.6 percent.

Shanghai, Hong Kong and Seoul, among others, were closed.

"Those off celebrating Lunar New Year will be happy their markets are closed," Chris Weston, chief markets strategist in Melbourne at IG Ltd., said in an email to clients.

"These markets need a strong shake up and sharp downside move, followed by a wave of buying to settle things down," he said, according to Bloomberg News.

"But until that comes there will be no clarity, absolutely no confidence and a bucketload of concern. It almost feels as though the markets are pushing central banks into some kind of action, but they don't know exactly what it is they want."

However, while regional equities were being scythed, crude prices staged a rebound after US benchmark West Texas Intermediate fell back below $30 a barrel on Monday.

WTI was up 1.4 percent at $30.10 and Brent added 0.7 percent to $33.12.

Both contracts lost more than 3.5 percent Monday after weekend talks between OPEC kingpin Saudi Arabia and Venezuela dashed hopes for a reduction in production, with Riyadh unwilling to move from its position.

Key figures around 0400 GMT

Tokyo - Nikkei 225: DOWN 5.3 percent at 16,107.26

Sydney - S&P/ASX 200: DOWN 2.9 percent at 4,829.30

Euro/dollar: UP at $1.1212 from $1.1193 on Monday

Dollar/yen: DOWN at 114.50 yen from 115.84 yen

New York - Dow: DOWN 1.1 percent at 16,027.05 (close)

London - FTSE 100: DOWN 2.7 percent at 5,689.36 points (close)

source: interaksyon.com

China forex reserves fall almost $100B in January

BEIJING, China -- China’s foreign exchange reserves have fallen to their lowest level in more than three years, the central bank said Sunday, as Beijing sells dollars to stop the yuan from depreciating further.

The world’s largest currency hoard shrank by $99.5 billion in January to some $3.2 trillion, the People’s Bank of China said on its website, the lowest since May 2012.

Worries about China's economy have pushed the yuan to a five-year low. The country saw its first-ever annual decline in foreign exchange reserves last year as Beijing tried to prevent a more drastic devaluation.

The PBoC is selling dollars to buy yuan amid a capital flight spurred by the slowing growth in the world's second largest economy.

But some analysts predict a more drastic weakening of the yuan this year and question China's ability to continue rapidly shedding the reserves.

"While the remaining reserves represent a substantial war chest, the rapid pace of depletion in recent months is simply unsustainable," IHS Global Insight economist Rajiv Biswas told Bloomberg News.

Outflows increased "as expectations mount that the PBoC will eventually be forced to capitulate once its reserves are sufficiently depleted," he added.

George Magnus, economic commentator and associate at Oxford University's China Centre, wrote on Twitter: "China's fx reserves fell another $100bn ... clearly this can't go on for long."

The pace of decline in the reserves in January was slower than December, which at some $108 billion was the largest monthly drop on record.

China has also tightened some capital controls to try to curb outflows.

"The smaller decline in the reserves suggests that some capital outflow restrictions imposed in January worked," Shen Jianguang, chief Asia economist at Mizuho Securities, wrote in a note.

The drop in February will be much smaller, he added.

China has set its growth target for this year at between 6.5-7 percent, the top economic planner said Wednesday, an acknowledgement that expansion -- already at its slowest pace in 25 years -- will continue to weaken.

Global investors are closely watching the slowdown in the world's second largest economy, which has created turbulence in world markets.

source: interaksyon.com

Weak Chinese trade, US rate hike fears sink global stocks

NEW YORK - Another contraction in Chinese trade and rising expectations of a US interest rate hike in December sent most global markets tumbling Monday.

China's 18.8-percent fall in imports from a year ago, and a 6.9 percent drop in exports, spelled more sluggishness in the world's second-largest economy and in global growth more generally, hitting commodity prices as well as the shares of companies like Caterpillar which depend on them.

Supporting that view, the Organisation for Economic Co-operation and Development on Monday cut its forecast for global growth to 2.9 percent this year and 3.3 percent in 2016, calling the stagnation in global trade "deeply concerning".

On top of that was the strong US jobs data on Friday that gave more support for the US Federal Reserve hiking interest rates for the first time in nine years, which would raise the borrowing costs of governments and companies around the world.

Wall Street's key indices all tumbled 1.0 percent with little to spur buying after six straight weekly gains.

Mace Blicksilver of Marblehead Asset Management said US investors have a number of concerns, and that the market was "probably stronger than it should have been" last week.

"A little weak China data didn't help," he added.

European markets fell as brokers pondered the impact of higher US rates and slower global growth. London's FTSE dipped 0.9 percent, Frankfurt's DAX 30 lost 1.6 percent and Paris' CAC 40 dropped 1.5 percent.

Friday's strong US jobs report "pretty much made it a given that a US rate hike will take place after all in 2015," said Markus Huber, senior analyst at broker Peregrine & Black.

Ironically Chinese shares pushed higher, buoyed by news that the government was lifting a four-month ban on IPOs.

Chen Jiahe of Cinda Securities said regulators were more comfortable "after leveraged funding through outside channels was cleared and investor confidence recovered."

The dollar stabilized after last week's surge on the rate expectations, trading at 123.18 yen and $1.0749 per euro in late deals.

Still, said Joe Manimbo of Western Union Business Solutions, "market focus on monetary policies that are expected to loosen in Europe and tighten in the US suggests more open road for the dollar to run over the foreseeable future."

The key figures around 2200 GMT

New York - Dow:            DOWN 1.0 percent at 17,730.48 (close)

New York - S&P 500:     DOWN 1.0 percent at 2,078.58 (close)

New York - Nasdaq Composite:    DOWN 1.0 percent at 5,095.30 (close)

London - FTSE 100:       DOWN 0.9 percent at 6,295.16 (close)

Frankfurt - DAX 30:        DOWN 1.6 percent at 10,993.241 (close)

Paris- CAC 40:               DOWN 1.5 percent at 4,911.17 (close)

EURO STOXX 50:           DOWN 1.4 percent at 3,418.36 (close)   

Tokyo - Nikkei 225:      UP 2.0 percent at 19,642.74  (close)

Euro/dollar:                    UP to $1.0748 from $1.0742 late Friday

Dollar/yen:                     UP to 123.19 yen from 123.16 yen late Friday

source: interaksyon.com

Asian stocks on defensive on weak China data, Fed rate view

TOKYO - Asian shares were on the defensive on Monday after new indications of a slowdown in the Chinese economy strained the nerves of markets already unsettled by the prospect of a U.S. interest rate hike in September.

Japan's Nikkei fell 0.4 percent and South Korean shares dropped 0.3 percent. MSCI's broadest index of Asia-Pacific shares outside Japan stood near its 1 1/2-year low hit last month and stood flat.

"The markets are beginning to price in structurally lower growth in China and an end to the so-called commodity super-cycle," said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.

Chinese exports tumbled 8.3 percent in July, their biggest drop in four months and far worse than economists' forecast of a 1.0 percent fall, data showed on Saturday.

Producer price deflation deepened to 5.4 percent, sending wholesale prices to their lowest since late 2009.

The data came as many emerging currencies came under pressure from expectations that the U.S. Federal Reserve will end nearly a decade of its zero interest rates.

The U.S. Department of Labor said on Friday employers added 215,000 jobs in July, only slightly below a Reuters poll of 223,000 jobs. The unemployment rate held at a seven-year low of 5.3 percent and there were signs that wages were beginning to pick up.

Taken together, the figures promoted traders to ratchet up expectations that the Fed would raise interest rates in September, even though money market futures pricing suggest it remained a close call.

On Wall Street, the Dow Jones industrial average fell 0.3 percent, hitting a six-month low. The S&P 500 shed also about 0.3 percent.

Emerging market shares were beaten harder, with MSCI's emerging market index falling to a two-year low on Friday.

The prospect of higher U.S. interest rates has made the dollar more attractive to investors in the past year, which in turn has lowered demand for commodities and crimped U.S. corporate earnings from exports.

The U.S. dollar index, which tracks the greenback versus a basket of euro, yen and four other currencies, reached 98.334, its highest since late April after the U.S. job data, before turning lower. On Monday, it stood at 97.670.

The euro traded at $1.0957 while the yen was 124.35 to the dollar.

Oil prices kept sliding on the global slowdown, a U.S. gasoline glut and a rise in the U.S. oil rig count.

Crude futures prices fell to fresh multi-month lows early on Monday. Brent fell to $48.26 per barrel, not far from a six-year low of $45.19 hit in January.

source: interaksyon.com

Asian stocks near 2015 lows on China economy worry, dollar strong

HONG KONG - An index of Asian shares outside Japan fell close to this year's lows thanks to a deepening selloff in commodities and concerns over slowing growth in China, while the dollar held its ground against a basket of currencies.

China's factory activity shrank more than initially estimated in July, contracting by the most in two years as new orders fell, according to a private survey that dashed hopes that the economy may be steadying.

"We believe the stock market panic in early July chilled economic activity, which is what the manufacturing PMIs picked up," ING economist Tim Condon said in a research note ahead of the Caixin PMI release.

MSCI's broadest index of Asia-Pacific shares outside Japan fell more than 1 percent before paring losses to be down 0.9 percent. The biggest losers were financials and cyclicals. The index's low for this year was on July 8.

Stock markets across the region declined with Japan's Nikkei down 0.5 percent and South Korea's Kospi falling 0.9 percent.

"We believe the macro environment remains challenging for emerging market assets amid headwinds of low commodity prices, concerns over China and a looming Fed tightening cycle," Barclays strategists wrote in a daily note in clients.

Recent flows data confirm that trend. Net foreign selling from emerging Asia has reached nearly $10 billion over the past two months with only India seeing some tiny inflows.

Although outflows have pummeled stock markets from Korea to Taiwan, valuations suggest more downside is likely.

While recent weakness in stocks has made emerging market valuations more attractive than those of developed market counterparts, they are twice as expensive as Asian financial crisis lows, according to research from Julius Baer.

On Wall Street on Friday, the Dow lost 0.3 percent and the S&P 500 shed 0.2 percent, due to a drop in energy shares.

In currencies, the dollar on Monday held broadly steady at 123.97 yen. The euro was steady at $1.1097.

While recent dollar moves have been buffeted by U.S. economic data, the broader trend was on the upside after the Federal Reserve last week left the door open for a possible interest rate increase in September.

The U.S. dollar has rallied 7.75 percent so far this year against the world's main trading currencies, after a 12.8 percent rise last year.

And "the dollar's recent rally may just be getting started," according to research from the BlackRock Investment Institute.

"Since the 1970s when the Bretton Woods fixed-currency regime ended and currencies began floating, a typical dollar rally has lasted roughly six to seven years," according to Russ Koesterich, BlackRock global investment strategist, who noted dollar rallies tend to be self-reinforcing, leading to greater inflows into U.S. assets in expectation of further dollar appreciation.

That traditionally is also a headwind for emerging markets, which have an inverse relationship to the dollar.

Commodities too are singing the emerging market blues.

Crude oil continued to flounder after posting its biggest monthly drop since 2008 in July on China's stock market slump and signs that top Middle East producers were pumping out crude at record levels.

U.S. crude was down 0.7 percent at $46.81 a barrel after losing 21 percent in July.

Copper prices fell 10 percent in July, the worst month since January and are now at their lowest levels since June 2009.

Overall the Reuters commodity index fell 10.8 percent in July, its biggest monthly fall since September 2011.

Reflecting the economic slowdown in China and sluggish growth in Europe and the Americas, international trade is also slowing.

Bonds were the sole bright spot.

The benchmark 10-year note yield held firm at 2.21 percent while 10-year Japanese bond yields stabilized at 0.41 percent.

source: interaksyon.com

Microsoft profit falls on sluggish Windows, currency pressure

SEATTLE — Microsoft Corp on Monday reported a fall in its quarterly profit that was in line with Wall Street forecasts, as sluggish personal computer sales dampened demand for Windows software and the company struggled with the impact of the strong U.S. dollar.

Shares of the world’s largest software company, which have surged to 14 year highs in the past few months, fell 3 percent in after-hours trading, to $45.63.

“While currency is a headwind for Microsoft and other large international companies, we would characterize the headline numbers as good enough, although some bulls may have been hoping for a bigger beat,” said Daniel Ives, an analyst at FBR Capital Markets.

Microsoft’s flagship Windows business has been under pressure for three years as PC sales have declined, although the market appears to be stabilizing in recent months.

Currency shifts against the strong U.S. dollar also crimped profit in the fiscal second quarter, ended Dec. 31, although Microsoft did not specify by how much. Microsoft gets almost three-quarters of its revenue from overseas, but a significant amount of that is still in U.S. dollars.

“Overall, the only surprise I think was in commercial licensing, where we had a little bit of a headwind from foreign exchange as well as macro conditions in China and Japan,” the company’s chief financial officer, Amy Hood, said in a phone interview with Reuters.

Commercial licensing is chiefly sales of Windows and Office to business customers, which is Microsoft’s biggest revenue generator.

Microsoft reported profit of $5.86 billion, or 71 cents per share for the latest quarter, compared with $6.56 billion, or 78 cents per share, in the year-ago quarter.

Sales rose 8 percent to $26.47 billion, largely due to the acquisition of Nokia’s phone handset business last year.

Analysts had expected revenue of $26.3 billion and earnings of 71 cents per share, on average, including some restructuring costs.

source: interaksyon.com

Asian shares sag, dollar rises on upbeat U.S. data

TOKYO - Asian shares sagged on Friday though upbeat signals on China's manufacturing activity limited losses, while the dollar pushed higher after upbeat U.S. data led some investors to price-in a less dovish stance at the U.S. Federal Reserve.

China's manufacturing sector grew at the fastest in 18 months in October, with the official Purchasing Managers' Index (PMI) rising to 51.4 last month from September's 51.1, beating economists' consensus forecast of 51.2.

The final HSBC/Markit Purchasing Managers' Index (PMI) came in at 50.9, up from 50.2 in September and unchanged from a preliminary flash estimate released last week.

MSCI's broadest index of Asia-Pacific shares outside Japan fell about 0.2 percent, while Australian shares .AXJO gave up 0.2 percent, but still remained just shy of five-year highs. Japan's Nikkei stock average erased early gains and dropped 0.6 percent.

U.S. S&P E-mini futures edged up 0.1 percent, after the S&P 500 Index closed down about 0.4 percent but still gained 4.5 percent for the month.

Later on Friday, the U.S. ISM survey of manufacturing for October could offer investors a fresh signal on the Fed's future course.

"If the ISM report is better than expected, it could add to revived tapering expectations, and U.S. yields and the dollar could go up and stocks could go down," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

Data on Thursday showed the pace of business activity in the U.S. Midwest jumped more than expected in October, soothing some worries about sluggish fourth-quarter growth after last month's federal government shutdown.

A decline in new jobless claims in the latest week also added to evidence that the economy weathered the shutdown. New claims fell by 10,000 to 340,000, just above the average estimate of 339,000.

Still, not all investors or economists were convinced that the latest U.S. data heralded a shift in monetary policy expectations.

"The existence of noise in the October data will likely make it difficult for the Fed to gather enough evidence to start tapering in December," strategists at Barclays wrote in a note to clients, adding that they still to expect the central bank to begin reducing its current $85 billion monthly bond purchases in March 2014.

Pressure on euro

The euro remained under pressure after plunging in the previous session as euro-zone inflation dropped to its lowest rate in nearly four years, heightening expectations that the European Central Bank will further ease its monetary policy.

The euro dropped about 0.3 percent to $1.3545, moving away from a two-year peak of $1.3833 set one week ago. On Thursday, it suffered its biggest one-day fall against the greenback in six months, tumbling 1.1 percent.

Data on Thursday showed euro-area inflation slowed to a four-year low of 0.7 percent last month, far below the ECB's target of just under 2 percent. Other data showed unemployment held at record highs in September.

The dollar index, which measures the greenback against six major currencies, was on track for a sixth session of gains, rising 0.3 percent to 80.398 after touching a two-week peak of 80.418 and pulling further away from a nine-month trough of 78.998 hit one week ago.

Against the Japanese currency, the dollar was about 0.2 percent lower on the day at 98.18 yen.

In commodities trading, gold steadied but was still trading close its lowest in nearly two weeks, hurt by sharp losses in the previous session from month-end profit-taking, the strong U.S. economic data and the higher dollar. Spot gold edged up 0.1 percent to $1,326.53 an ounce, after sliding 1.4 percent on Thursday.

source: interaksyon.com

Asian shares cheer as deal to avert U.S. default reached

SYDNEY - Share markets from Australia to Japan staged a relief rally on Thursday after legislators produced a last-minute deal to lift the U.S. government's borrowing limit and dodge a potentially catastrophic debt default.

The agreement, crafted by U.S. Senate leaders, has been approved by Congress, leaving President Barack Obama to sign the bill into law. Obama has vowed to do so promptly and begin reopening the government "immediately.

It came just hours ahead of an October 17 deadline when the Treasury Department said it would have exhausted its borrowing authority.

MSCI's broadest index of Asia-Pacific shares outside Japan hit a fresh five-month high and was last up 0.4 percent. Tokyo's Nikkei advanced 1.2 percent to its highest in three weeks.

But in what appeared to be a buy-on-the-rumor/sell-on-the-fact move, U.S. stock index futures actually dipped on the news, having already rallied 1.3 percent overnight on hopes that a breakthrough was imminent.

The dollar index, which tracks the greenback's performance against a currency basket, also slipped a touch to 80.381, pulling back from a one-month high of 80.745.

The deal, however, does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. It funds the government until January 15 and raises the debt limit through to February 7, so global markets face the possibility of another showdown in Washington early next year.

"The can has been kicked further down the road...the reset button has been pushed and we will go thought this all again in two months time," said Evan Lucas, market strategist at IG in Melbourne.

But Lucas expected "normal trading" to return over the coming days as the earnings season gets underway.

Still, the resolution couldn't have come at a better time for companies such as South Korean train maker Hyundai Rotem, which recently launched an initial public offering in what could be the country's biggest share sale so far this year.

Crisis over?

In the currency market, the improved risk appetite saw investors favor high-yielding currencies including the Australian dollar.

The Aussie dollar hit a 4-month high of $0.9574 and scaled a 4-1/2 month peak of 94.48 yen. It has since stepped back a notch to $0.9534 and 94.01 yen.

Against the yen, the U.S. dollar briefly reached a three-week high of 99.01, before strong selling interest knocked it back to 98.64. The euro edged up 0.1 percent to $1.3549.

Among commodities, copper slipped 0.5 percent to $7,227 a tonne (1 tonne = 1.12 metric tons), while gold traded at $1,280 an ounce -- struggling to gain momentum in the absence of safety bids. U.S. crude dithered at $102 a barrel.

Many traders are already trying to get past the fiscal drama and looking to see when a backlog of U.S. economic data, including the September payrolls, will be released when the partial government shutdown is lifted.

With the maneuvering in Washington just about over, investors will re-focus on economic news and the timeline for the U.S. Federal Reserve's tapering of its bond-buying program -- a major driver of global assets in recent months.

The Fed stunned markets last month by opting to delay the start of stimulus reduction.

"It will be some time before we are able to get a clear read on the U.S. labor market post-shutdown," said Westpac economist Elliot Clarke.

"But a logical expectation given recent events and the lack of a long-term solution is that we will see soft employment growth through the remainder of 2013 and into 2014."

That, Clarke said, is likely to see the Fed maintain a dovish tilt, adding the U.S. central bank will very likely have to downgrade its 2013 and 2014 growth forecasts given the impact of the U.S. government shutdown.

source: interaksyon.com

End-Sept forex reserves enough to pay for a year's worth of imports

MANILA - The Philippines' foreign exchange reserves grew last month, allowing the country to pay for nearly a year's worth of imported goods and services, the Bangko Sentral ng Pilipinas (BSP) said today.

In a statement, the BSP said the country's gross international reserves (GIR) climbed to $83 billion at end-September from $82.9 billion at end-August. Compared with a year ago, the end-September GIR was $1 billion higher.

Alternatively, the country's end-September GIR would allow it to pay 8.7 times over its short-term foreign debt based on original maturity, or 5.7 times over the same obligations based on residual maturity. Residual maturity includes debt payments on long-term obligations falling due within the next 12 months.

An ample GIR helps prop up the peso and keep domestic inflation at bay. Inflation averaged 2.8 percent in the first nine months of the year, or well below the lower-end of the BSP's full-year target range of 3-5 percent.

source: interaksyon.com

New fund launched for bitcoin investors

NEW YORK CITY — Bitcoin Thursday got a lift with the arrival of a new investment vehicle that lets wealthy and professional investors bet on the virtual currency.

SecondMarket, a New York-based investment platform that specializes in alternative ventures, Thursday began accepting investors in its Bitcoin Investment Trust, a private investment vehicle that will purchase the virtual currency, store it in a virtual safe of sorts and allot new shares of stock to shareholders as they buy in.

The fund kicked off with seed investment of $2.25 million from SecondMarket, which specializes in alternative investments.

Mark Murphy, a SecondMarket spokesman, said the fund had heard from financial professionals, technology figures, gold enthusiasts and others.

“There’s really high interest,” said Murphy, who said there is no goal as far as the size of the fund.

The fund’s arrival comes as investors look for new ways to bet on the four-year old currency, increasingly used to make payments in online transactions.

There is an estimated $1.5 billion in bitcoin on the market.

Partisans of bitcoin say it offers promise as a global and easily transacted currency outside the purview of central bankers.

SecondMarket designed the fund as a means for investors to bet on bitcoin without having to procure the currency themselves.

“We believe that bitcoin may have significant upside given the size and scope of the industries that are potentially impacted by bitcoin,” said SecondMarket founder Barry Silbert in a statement.

“However, bitcoin also faces regulatory uncertainty and widespread adoption issues that make investing in bitcoin a highly risky endeavor.”

As a private fund, the venture is open to accredited investors, those who meet specific criteria such as, for an individual, earning at least $200,000 a year for the last two years.

The minimum investment in the fund is $25,000.

The fund is regulated by the US Securities and Exchange Commission, but is not registered with the agency, Murphy said.

The fund’s launch comes as some regulators have stepped up probes into use of the virtual currency.

The New York Department of Financial Services in August sent subpoenas to leading investors in bitcoin and expressed concern that it could be used by drug traffickers and gun runners and threaten US national security.

The department said it was considering new regulations on the currency.

source: interaksyon.com

Bitcoin group, US regulators discuss digital currency

WASHINGTON — U.S. regulators and law enforcement agencies met on Monday with an advocacy group for Bitcoin, a digital currency that has been under fire for its purported role in facilitating anonymous money transfers.

Jennifer Shasky-Calvery, director of the Financial Crimes Enforcement Network (FinCEN), said her unit hosted a presentation by members of the Bitcoin Foundation, an advocacy group of Bitcoin-related businesses.

“This is part of our ongoing dialogue aimed at enhancing communication with our regulated financial industries,” Shasky-Calvery said in a statement.

She also noted that virtual currency exchanges must register with regulators and face requirements similar to those imposed on other financial firms. FinCEN is the Treasury Department’s anti-money laundering unit.

Bitcoins, which have been around since 2008, are a form of electronic money that can be exchanged without using traditional banking or money transfer systems.

Bitcoins are the most prominent of these new currencies, which have come under scrutiny from regulators and law enforcement officials.

Representatives of the Bitcoin Foundation did not immediately respond to requests for comment. The group’s website says it aims to make the currency more respected and to improve and protect its integrity.

The currency first came under scrutiny by law enforcement officials in mid-2011 after media reports surfaced linking the digital currency to the Silk Road online marketplace where marijuana, heroin, LSD and other illicit drugs are sold.

In recent months, the U.S. government has taken steps to rein in the currency and more regulatory action is expected.

Tokyo-based Mt. Gox, the world’s largest exchanger of U.S. dollars with Bitcoins, had two accounts held by its U.S. subsidiary seized this year by agents from the Department of Homeland Security on the grounds that it was operating a money transmitting business without a license.

The Federal Bureau of Investigation reported last year that Bitcoin was used by criminals to move money around the world, and the U.S. Treasury said in March that digital currency firms are money transmitters and must comply with rules that combat money laundering.

The Senate Committee on Homeland Security and Government Affairs launched an inquiry into Bitcoin and other virtual currencies earlier this month, asking a range of regulators to list what safeguards are in place to prevent criminal activity.

source: interaksyon.com

Emerging countries must be able to control capital flows -- study

JACKSON HOLE, Wyoming - Emerging market nations can be adversely affected by large swings in investment and, therefore, must develop tools to control credit flows or risk relinquishing any independent monetary policy, a study shows.

These findings were presented at the Kansas City Federal Reserve's monetary policy symposium at Jackson Hole, which highlighted the global impact of the unconventional monetary policy of the United States and other major central banks.

Many countries, including India and Brazil, have recently experienced steep sell-offs in their currencies, linked in part to the prospect that the Fed might soon dial down the pace of its bond-buying monetary stimulus.

The Jackson Hole study highlights a shift in conventional economic thinking, which used to champion an open flow of money between countries, regardless of the consequences.

"Macroprudential policies are necessary to restore monetary policy independence for the non‐central countries," wrote Helene Rey, professor at the London Business School. "They can substitute for capital controls, although if they are not sufficient, capital controls must also be considered."

That, said the study, is because countries with floating exchange rates, the dominant global practice, would be abdicating their control over interest rates and credit creation from sources outside their control.

"Independent monetary policies are possible if - and only if - the capital account is managed, directly or indirectly, via macroprudential policies," Rey said. These can take many forms, including efforts to restrain credit growth in particular areas of the economy.

"Since, for a country, the most dangerous outcome of inappropriately loose global financial conditions is excessive credit growth, a sensible policy option is to monitor directly credit growth and leverage in each market," she said.

Terrence Checki, executive vice president of the Federal Reserve Bank of New York, charged with commenting on the paper, pushed back against the notion that rich-country central banks should start paying more attention to the international effects of their policies.

He said that, in keeping with conventional wisdom at the Fed, monetary policy should be aimed at domestic objectives.

"It's not clear we can control the financial cycle very well with monetary policy," Checki said.

source: interaksyon.com

Brazil central bank launches $60 billion currency intervention

SAO PAOLO - Brazil's central bank announced a currency-intervention program on Thursday that will provide $60 billion worth of cash and insurance to the foreign-exchange market by year-end, a move aimed at bolstering the country's currency, the real, as it slips to near five-year lows against the dollar.

The bank said in a statement it will sell, on Mondays through Thursdays, $500 million worth of currency swaps, derivative contracts designed to provide investors with insurance against a weaker real. On Fridays, it will offer $1 billion on the spot market through repurchase agreements.

Both are designed to prevent companies and individuals with dollar obligations from scrambling to the market at the same time, afraid that waiting will force them to pay more to buy dollars. When that happens, the real tends to weaken further and faster.

"This shows the firm determination of monetary authorities to keep the exchange rate from slipping further," said Andre Perfeito, chief economist with Gradual Investments in São Paulo.

The program starts on Friday and runs until December, the central bank said, adding it may announce additional auctions if it sees fit.

The move comes as the government seeks ways to control inflation and keep the real from sliding while at the same time trying to kick-start an economy that has stagnated despite a rapid expansion of credit. While a weaker real can help Brazil's export of commodities and manufactured goods, it makes raw materials and other imports more expensive, helping drive inflation higher.

Brazil cut its outlook for gross domestic product (GDP) growth to 2.5 percent from 3 percent in 2013 and to 4 percent from 4.5 percent for 2014, Finance Minister Guido Mantega said in an interview with Brazil's Globo Television Network late on Thursday.

For Perfeito, the move signals the central bank's intention to limit interest rate hikes. In addition to controlling inflation, higher rates would attract investment to Brazil, helping the real firm against the dollar. At the same time higher rates could also slow growth by making borrowing more expensive.

"I think that this is an effort to adjust expectations a bit because $60 billion is a lot," Perfeito said. "This kind of attitude just before a Copom meeting shows that exchange rate controls won't be carried out only through monetary policy."

The bank's Copom monetary policy committee, which sets Brazil's benchmark rate, meets on August 28.

Interest-rate futures contracts suggest that there is a 76 percent chance that the central bank will raise the benchmark Selic target rate half a percentage point to 9 percent and a 24 percent chance of raising it 1.25 percentage points to 9.25 percent, according to Thomson Reuters data.

The real's weakening and the Copom meeting come as the United States' central banking authority, the Federal Reserve, is moving closer to ending a bond-buying program that has injected billions into the U.S. economy driving down interest rates.

As a result investors have been searching for higher-yielding, emerging market securities.

With the end of the Fed's "quantitative easing" program expected soon, capital flows have flowed out of emerging markets such as Brazil and back to the United States and other developed countries, helping to weaken the real.

"Today, the big problem is there is a structural change (in the world economy)," said Eduardo Velho, chief economist with Miami-based investment bank INVX Global Partners LLC, in São Paulo. "The central bank's move is an important measure to reduce volatility and slow the pressure on the exchange rate. I see this as positive."

On Thursday Brazil's real firmed 0.1 percent to 2.4305 reais to the dollar.

source: interaksyon.com

Rupee, rupiah lead emerging market slide on US Fed fears

MUMBAI/JAKARTA - India's rupee crashed to a record low and the Indonesian rupiah hit a 4-year trough on Monday, as the expected withdrawal of U.S. monetary stimulus prompts investors to shun emerging markets burdened by weak external balances, slowing economies and inflation.

It followed a slide on Friday in Brazil's real, a currency that, like the rupee, has been hammered by investor doubts that actions taken by monetary authorities last week will prove effective in stemming the sell-off.

"Our primary concern is that the policy authorities still don't 'get it' - thinking this is a fairly minor squall which will simmer down relatively quickly with fairly minor actions," Robert Prior-Wandesforde, an economist at Credit Suisse in Singapore, wrote in a note on the Indian currency on Monday.

Growing expectations that the U.S. Federal Reserve will start scaling back its bond purchases as early as next month, slowing the flow of cheap money into higher yielding overseas assets, have weighed on many emerging markets.

The currencies of countries already struggling with wide current account deficits, such as India and Indonesia, are seen as among the most vulnerable to sudden capital flight and have been hit hardest.

"The market is still acting on the negative current account and fiscal deficits," said Nizam Idris, a strategist with Macquarie Capital, when asked about the two Asian laggards.

The latest blow for Indonesia's currency was delivered by central bank data released late on Friday that showed the current account deficit grew to 4.4 percent of GDP in the second quarter of the year, from 2.4 percent in the previous quarter.

"Although the current level of reserves is still equivalent to a reasonably healthy 5.5 months of imports, the Bank can't continue to burn reserves at the current rate without the market worrying about a 'crisis' scenario unfolding," Credit Suisse said in a note.

Indonesia's Finance Minister Chatib Basri said he was not worried by the rupiah weakness and predicted the current account deficit, though it would remain into next year, would narrow.

'Tapering' threat

Some analysts predicted the weakness could ripple out to other Asian markets, with Malaysia's current account data due on Wednesday likely to be closely watched.

India's tumbling currency has been the worst performer in Asia since late May, when the Fed first signaled that it may begin "tapering" its monetary stimulus this year.

Indian policymakers are grappling with a record current account deficit at 4.8 percent of GDP - and market participants aren't convinced the government can reduce the gap to a targeted 3.7 percent this financial year.

The Reserve Bank of India (RBI) has been selling dollars to support the rupee and last week announced curbs on outflows from companies and individuals, denting stock and bond markets.

"Forex intervention will continue by the central bank," said Param Sarma, chief executive at Brokerage NSP Forex. "Further measures are expected from the RBI but are unlikely to be effective."

Brazil's central bank has also intervened to try and reassure investors, but could not prevent the real from sinking on Friday to its lowest level since the depths of the global financial crisis in 2009.

The real's poor record during previous bouts of market volatility and its steep gains over the past decade are some of the reasons why it is now seen as a risky trade - a "high beta" currency in the jargon of the foreign exchange markets.

Domestic concerns have also made things worse.

As with India, a previously fast-growing economy has slowed, disappointing investors. Also, like Indonesia, a cooling in China's appetite for its commodities exports has resulted in a sharp deterioration in its balance of trade.

source: interaksyon.com

Forex rate climbs to P41:$1

MANILA - The peso-dollar exchange rate climbed to the P41:$1 level amid demand for the greenback among importers.

At the Philippine Dealing System, the peso traded between 40.900 and 41.040 for every dollar, before closing at 41.020, weaker than Tuesday's 40.955.

Trading volume jumped to $810.6 million from the previous $493 million.

Metropolitan Bank and Trust Co said the peso-dollar pair traded within a "very narrow" range as the Bangko Sentral ng Pilipinas continued to buy dollars.

Metrobank said negative swap points did not stop sellers on Tuesday and a "last-minute" buying from the BSP took offers to P40.960 highs.

Trading on Wednesday was dictated by corporate demand, with most players becoming short of dollars. A local currency trader said there was strong demand from importers, adding that this may persist until next week.

The peso-dollar pair is expected to trade within a range of 40.90-41.10 against the dollar in the coming sessions.

source: interaksyon.com

Forex rate touches P40:$1 level

The peso-US dollar rate has breached the psychological barrier of P41:$1 to reach a level not seen since February 2008, with the local currency's appreciation eating into the buying power of the overseas Filipino worker's beneficiaries back home.

At the Philippine Dealing System, the local currency firmed up to 40.87 against the greenback, from Monday's close at 41. The peso-dollar pair traded between 40.85-41, with total trades rising to $899.515 million from the previous day's $655.094 million.

A trader said the peso-dollar pair tested the P40.80:$1 level on Tuesday in the wake of the Greece bailout deal forged between European finance ministers and the International Monetary Fund early Tuesday.

Metrobank said the Bangko Sentral ng Pilipinas was in the market, providing strong support for the greenback, with the peso-dollar pair trading within a two-centavo range for most of the day.

Other traders said the peso could strengthen to as high as P38.50:$1 in one or two months as foreign capital flows into the Philippines unabated. This is several centavos shy of the P37.84:$1 record seen in May 1999.

“It looks possible that the appreciating trend will continue. The currency market could be vulnerable in one to two months,” Jonas Ravela, market strategist at Banco de Oro said.

Data from the BSP showed that the average OFW sends home $300 a month.

With the exchange rate averaging P41.149:$1 - or down from P43.619:$1 at the start of the year - the P13,085.7 equivalent in January likewise has gone down to P12,344.7 in recent weeks, or an erosion in the order of P741.

In an email, BSP Governor Amando M. Tetangco Jr. admitted the peso has appreciated faster than the Thai baht or the Indonesia rupiah, but said the 6 percent volatility rate for the local currency “has been maintained at the middle of the range.”

“There are several factors that have caused the peso appreciation, including the seasonal remittances and positive news out of the EU on the Greek deal. We remain watchful of market conduct,” he said.

source: interaksyon.com

Tokyo shares close mixed

TOKYO — Tokyo stocks closed mixed on Monday with analysts saying worries over political uncertainty in Greece was weighing on investor sentiment.

The Nikkei 225 index at the Tokyo Stock Exchange ended up 20.53 points at 8,973.84. The broader Topix index of all first-section issues lost 0.22%, or 1.70 points, to 756.68.

The headline index turned lower during the Monday session as a bump in purchases of China-related shares ran its course, analysts said.

The buying was spurred by the Chinese central bank’s announcement Saturday that it would cut the reserve requirement ratio for banks to boost liquidity and help inject some energy into a slowing economy.

With Japanese earnings season all but done, Tokyo stocks are not likely to see sharp spikes in either direction, analysts said.

“Prices likely won’t see a catapult forward, but things are now set for a slow grind forward,” said CLSA equity strategist Nicholas Smith.

Investors are wary of turmoil in Greece, where efforts to form a coalition government have so far failed, raising the prospect of new elections that could scupper austerity reforms and possibly force the country out of the eurozone.

Greek voters earlier this month punished ruling parties in a backlash against severe austerity measures in return for multi-billion-euro international loans.

“The lack of transparency, particularly in Europe, with the possibility of Greek re-elections in mid-June, is a worry that looks to remain with us for the time being,” said Monex market analyst Toshiyuki Kanayama.

“And that will keep the investor bias to the downside,” he said.

On currency markets Monday, the euro stood at $1.2888 and 103.10 yen in Asian trade, slipping from $1.2921 and 103.26 yen in New York on Friday.

The dollar was at 79.99 yen from 79.93 in New York.

source: japantoday.com