Interbank market news scan as of 12:42 pm AST: central banks, cryptocurrencies, foreign exchange

Currency pairsFederal Reserve as of 25 January 2021Reuters as of 25 January 2021Reuters as of 26 January 2021 
AUD/USD0.77280.77130.7754 
USD/CAD1.27111.27511.2695 
USD/CNY6.48106.47846.4636 
EUR/USD1.21791.21381.2166 
USD/INR72.980072.954572.8814 
GBP/USD1.36851.36641.3733 
USD/JPY103.7600103.7600103.7700 
USD/MXN19.925020.110120.0006 
USD/DKK6.10816.12666.1245 
USD/NOK8.48208.54188.5475 
Sources: Federal Reserve, Reuters

The dollar’s strength continues to vary since our post yesterday.  The dollar weakened against the Australian dollar, the Canadian dollar, and the Chinese yuan.  The dollar also weakened against the British pound and the Mexican peso.  It continues to trade flat against the Japanese yen.

In other news …

Bank Indonesia will continue to maintain loose monetary policy until such signs emerge, given that inflation is currently under control, says Perry Warjiyo, the central bank’s governor. Indonesia may see signs of inflation pressure in fourth quarter of 2021: Central bank governor (msn.com)

Brazil‘s central bank does not expect to raise interest rates in the immediate future because of an unusually high degree of economic uncertainty, minutes from its last policy meeting showed on Tuesday, although fiscal risks could prompt it to tighten policy faster than its baseline scenario suggests. Brazil central bank unlikely to raise rates now as economy sputters, minutes show | Nasdaq

Nigeria’s central bank held its benchmark lending rate at 11.5% on Tuesday, governor Godwin Emefiele said at its first interest rate meeting of 2021. Nigeria’s central bank holds benchmark lending rate at 11.5% | Reuters

China’s central bank won’t exit “prematurely” from its supportive monetary policies while at the same time keeping debt risks under control, Governor Yi Gang said. China Central Bank Won’t Exit Prematurely From Stimulus, Yi Says – Bloomberg

No existing cryptocurrency has a structure that is likely to allow it to work as a means of payment over the long term, Bank of England Governor Andrew Bailey told an online forum hosted by the Davos-based World Economic Forum on Monday. Current cryptocurrencies unlikely to last, Bank of England governor says | Reuters

Interbank market news scan: As of 1:22 pm AST, Central banks, cryptocurrency, foreign exchange

Central banks across Asia are starting the year juggling policy reviews and political pressure to do more to support their economies. Asian Central Banks Start Year Juggling Politics, Policy Reviews (msn.com)

The ECB’s Governing Council, led by President Christine Lagarde, will now likely pause for the foreseeable future and use this week’s meeting to steer markets in a new direction, as well as discussing the strength of the euro. After unprecedented stimulus, the European Central Bank is set for a change of focus (msn.com)

The French central bank said on Monday it would exit from coal and limit exposure to gas and oil in its investment portfolio by 2024 as part of a shift towards more environmentally friendly assets. French central bank to exit coal, cap oil and gas investments | Reuters

Janet Yellen, who is expected to lead the Treasury Department for the incoming Biden Administration, described cryptocurrencies as a “particular concern” when it comes to terrorist financing. Biden Treasury pick Janet Yellen warns cryptocurrency poses terrorism risk (msn.com)

Even after setting a new record high of $1,439 on Monday, the rally for Ethereum’s ether cryptocurrency may have only just begun, according to Fundstrat Global Advisors strategist David Grider. Ether’s Rise to Record Highs May Propel Cryptocurrency to $10.5K: Fundstrat Global – CoinDesk

Lacalle believes that “numerous governments would be very very happy to implement strict regulations on cryptocurrencies,” noting that it is “fundamentally because, as we are seeing, cryptocurrencies are rising dramatically as a response to a very aggressive policy from central banks.” Economist Slams ECB Chief Lagarde’s Bitcoin Remarks as Dangerous for Cryptocurrency Regulation – Regulation Bitcoin News

Interbank market scan, as of 11:17 am AST: Central banks, cryptocurrency, foreign exchange

Beijing is keen to end the dollar hegemony that affords Washington vast power and ultra-low borrowing costs. It also wants to pull in more foreign capital to accelerate its economic development. Opinion | How Trump made China’s currency great again – The Washington Post

The USD/JPY bottoms are close at 102.00’s and nearly 200 pips. USD/CAD 200 pip bottoms at 1.2500’s. USD 200 pip bottoms means all currencies listed as USD/Other pair are all close to major bottoms at 200 ish pips. Currency market: USD/PLN and USD/BRL (fxstreet.com)

Brussels faces a steep climb in its effort to boost the international role of the euro as part of its quest to strengthen the EU’s self-reliance, investors and analysts said after the bloc set out new ambitions for the single currency. EU faces barriers to boosting single currency’s global status | Financial Times (ft.com)

European multinational corporations suffered the brunt of the $9.82 billion reported lost due to currency volatility in the third quarter of 2020. Kyriba’s Currency Impact Report Reveals $9.82 Billion in Total Quarterly FX Losses for European and North American Multinational Corporations (apnews.com)

The negative impact of currency fluctuations on North American company results fell sharply in 2020’s third quarter, reversing an upward trend, according to data from treasury and financial management firm Kyriba released on Tuesday. Currency Hit to North American Companies Dropped in Third Quarter: Kyriba | Investing News | US News

Banque de France has successfully conducted a central bank digital currency (CBDC) experiment using a blockchain platform for interbank settlement. French Central Bank Trials Digital Currency for Interbank Settlement | Nasdaq

Interbank market news scan, as of 10:50 am AST: Central banks, forex, cryptocurrencies

19 January 2021

The United States Senate Committee on Finance today considers the nomination of Janet Yellen as Secretary of the Treasury. Hearing | Hearings | The United States Senate Committee on Finance

China’s interbank treasury bond index in net price opened lower at 980.92 points Monday, lower from the previous close of 981.93 points, according to the China Foreign Exchange Trade System. China’s interbank treasury bond index opens lower Monday – Xinhua | English.news.cn (xinhuanet.com)

The shift of jobs and assets to Paris after Brexit will accelerate this year, providing Europe with an opportunity to strengthen its own financial infrastructure, according to Bank of France Governor Francois Villeroy de Galhau. Bank of France Governor: Brexit Finance Shift to Paris to Accelerate in 2021 – Bloomberg

Australia’s major bank economists expect the country’s central bank to extend its A$100 billion ($77.05 billion) government bond buying programme beyond April with an updated guidance expected as soon as next month. Australia central bank seen extending QE beyond April – economists (msn.com)

More London-based financial firms are expected to relocate to France this year after Britain completed its Brexit transition, the head of the French central bank said on Tuesday. French central bank sees firms speeding up Brexit relocation this year | Reuters

Ether is closing in on an all-time high. The cryptocurrency, one of many alternatives to bitcoin, rallied as much as 17% on Tuesday to an intraday high of $1,439, according to data from industry site CoinDesk. Ether, the world’s second-biggest cryptocurrency, is closing in on an all-time high (msn.com)

Stablecoins are taking a promising step forward after the Department of the Treasury approved them for use by U.S. banks. While that helps them progress toward being a currency on par with those issued by governments, many are still unclear on what exactly stablecoins are and what sets them apart from other cryptocurrencies. What Are Stablecoins? Why Investors Are Moving To Cryptocurrency’s Safest Bet (ibtimes.com)

Interbank market news scan, at 1:04 am AST: Latest news on central banks, cryptocurrency, foreign exchange …

The dollar slipped from close to its highest in nearly one month on Tuesday as caution set in before U.S. Treasury Secretary nominee Janet Yellen testifies later, with traders keeping a close eye on the policies of the incoming Joe Biden government. Dollar retreats from one-month high as traders eye Biden’s FX policy | Reuters

Among the many races the pandemic has accelerated, none is so pointless as the issuance of central-bank digital currencies. The Canadian government, which should know better, has jumped into the fray despite earlier opposition. Reversing comments made in February 2020, Bank of Canada deputy governor Timothy Lane now believes state involvement in cryptocurrencies is a pressing matter. Along with its G7 partners, Canada has been exploring central-bank digital currencies since 2017 but the race suddenly sped up in mid-October. Central banks should stay clear of cryptocurrencies – Canadian Investor

China’s Blockchain-based Service Network (BSN) – a permissioned blockchain network for building decentralized applications and tokens – plans on releasing a beta central bank digital currency (CBDC) as early as the second half of 2021. https://www.nasdaq.com/articles/chinas-blockchain-based-service-network-to-integrate-central-bank-digital-currency-2021-01

Frank Giustra, billionaire investor and mining financier, is warning that governments and central banks are going to do everything they can to stifle Bitcoin’s journey towards universal adoption. https://dailyhodl.com/2021/01/17/billionaire-investor-says-central-banks-will-stop-at-nothing-to-clamp-down-on-bitcoin/

Opinion: Black Americans and Bitcoin. Playing it Wrong from the Beginning and How to Play it Right Now

A few years ago, I saw a number of Black Americans on Facebook touting bitcoin as the path to wealth. What bothered me that in all the hype being expressed that there was nary a discussion on what currency actual meant. No discussion as to the economics. No discussion as to the political-economic philosophy that undergirds a currency. 2017 saw the bitcoin bubble burst and the chit chat by those same Black Americans faded away like the unrealized gains they promoted.

Bitcoin and other cryptocurrencies have been touted by some proponents as the way to introduce underbanked or unbanked minorities into the credit system. Some Black Americans may have bought into this although the leading Black advocate organizations i.e. National Urban League, NAACP, Color of Change, Multicultural Media, Telecom, and Internet Council, to name a few, have been relatively silent on the benefits of crypto as a banking and payment system. No surprise their since when it comes to technology, Blacks have consistently taken a consumer position versus a producer position. And given that these legacy organizations are lead by the older generation, leadership’s inability to wrap its head around the true underlying economic benefits of cryptocurrency is a direct result of leadership being out of step with technology overall and how technology lies at the core of America’s economic exceptionalism.

In addition to consumerism, Black Americans still emphasize allegiance to the American political economy instead of a more skeptic, independent view of it. Again, its current leadership emphasizes inclusion and diversity as benefits without discussing its costs: that not everyone will benefit from such an approach. A truly inclusive approach to the political economy would be one where Black Americans view themselves not as a community, but as a nation within an American confederation. The advantage of that approach, a national approach, would require that Black Americans re-evaluate the meaning of economic value and the technology or mechanisms for capturing, storing, expressing, and transporting that economic value, particularly in a digital age. Cryptocurrency can be a vehicle for capturing, storing, expressing, and transporting Black economic value.

The upfront work will be the hardest, that being to identify and “mine” that value and quantifying it into a digital asset like cryptocurrency. But by doing so, by tying it to a Black economic engine, Black Americans can provide a blueprint for moving cryptocurrency from merely a speculative commodity to a true currency that can be used in the mainstream to buy and sell any and all goods. Unless crypto can demonstrate its utility in trade, then Nouriel Roubini’s description of cryptocurrency as shit coins will take hold as truly appropriate by most observers. Creating that value means taking a “nationhood” approach. It means connecting all productive assets within Black America to its current banking assets, identifying the economic value within Black America, issuing coin based on that value, ane getting members of its community to buy off on that value.

There are legal and regulatory hurdles, but the biggest hurdle will be cultural and societal. Black Americans will have to take a more courageous approach to Black economic viability and sustainability. The current political-economic structure has failed them and it will be up to Blacks on their own to reimagine the production and distribution of economic value within their communities.

As of 10:27 am AST, cryptocurrency prices hours before the New Year ….

PairsBTCETH
 BTC/USD=28124.40ETH/USD=733.872
 BTC/EUR=22,895.20ETH/EUR=597.422
 BTC/JPY=2,903,660ETH/JPY=75,767.30
 BTC/CNH=183,043ETH/CNH=4,776.27
 BTC/DKK=170,321ETH/DKK=4444.31
 BTC/CHF=24,829.20ETH/CHF=647.888
 BTC/GBP=20,711.40ETH/GBP=540.437
Source: OANDA

Legal Events Impacting Trade in Cryptocurrency/Digital Assets

None to report.

As of 12:07 pm AST, Bitcoin and Ethereum exchange rates as US Senate ponders $2000 checks for hurting households …

BTC/USD=26,950.30ETH=719.429 
BTC/EUR=22,062.30ETH/EUR=588.96 
BTC/JPY=2,792,990.00ETH/JPY=74,558.10 
BTC/CNH=175,910.00ETH/CNH=4,695.87 
BTC/DKK=164,071.00ETH/DKK=4,379.82 
BTC/CHF=23,971.50ETH/CHF=639.912 
BTC/GBP=19,949.70ETH/GBP=532.551 
   
Source: OANDA

Legal/Political Events Impacting Cryptocurrency

No events of significance at this time.

As 12:45 pm AST, the price of Bitcoin and Ethereum across certain currencies ….

BTC ETH 
BTC/USD=23510.50 ETH/USD=624.02 
BTC/EUR=19,290.00 ETH/EUR=512.00 
BTC/JPY=2,436,310.00 ETH/JPY=64,664.60 
BTC/CNH=153,182.00 ETH/CNH=4,065.75 
BTC/DKK=143,458.00 ETH/DKK=3,807.66 
BTC/CHF=20,933.10 ETH/CHF=555.606 
BTC/GBP=17,330.00 ETH/GBP=459.973 

Legal/Political Events Impacting Cryptocurrencies

No report at this time.

How the regulator’s mindset may impact cryptocurrency …

An article today in Bloomberg discussing how a Biden administration would address the regulation of cryptocurrency has me putting myself in the place of the regulator. What is the U.S. Securities and Exchange Commission’s world view of digital assets? How will the Commodity Futures Trading Commission’s view toward regulation of exchanges evolve? Will the Board of Governors of the Federal Reserve System view the payment system aspect of cryptocurrency as a threat to the current national and global payment system regime or as a welcome supplement that brings more efficiency and transparency?

Clarity on what may happen on the regulatory side of cryptocurrency requires that the trader first take a top-down view of how governments view the world and especially how they view markets. You will never hear a regulator utter the term “free markets.” That phrase is best suited for the rhetoric of politicians who inherit worn out campaign slogans and reboot them for the latest run for office. I doubt they themselves, a significant number of whom are not trained in economics, truly understand what a market is or can likely identify threats to it. Compound markets for digital assets with the mechanics of payment systems and the politician’s eyes glaze over and she falls back to what she knows best: sloganeering tainted with tropes that appeal to individualism, consumerism, collectivism, or whatever narrative they believe their constituency will buy into.

The professional regulator, on the other hand, uses law and regulatory code as a front or an excuse. Statutes and codes give the professional regulator cover for their underlying philosophy and narrative. Unlike the elected official who only spends minutes on issues of markets and their regulation, the professional regulator is the expert spending years developing her own philosophy and transitive narrative and reconciling that philosophy and narrative with at times archaic statutes that the elected official has dumped on her to interpret. With archaic statutes and codes as cover for the regulator, it is the trader’s task not only to generate returns from holding a digital asset but to best understand what that regulator’s philosophy is.

There are two types of regulator. One I term as the myopic regulator. This regulator focuses on the black letter of the law and the code. Their focus is primarily on whether the market participants are following the rules on the books. He does not take into consideration any wider view of the philosophy behind markets and regulation. If the rules are skewed more to trader protection, his interest will be in outcomes that favor trader protection. If the rules skew more toward brokerage or platform protection, the regulator’s interest will be in outcomes favoring platform protection.

On the other side is what I term the universal regulator. They have managed to synthesize the role of government, traders, and platforms. They have an interest in maintaining the viability of the market system. Government’s role, in their view, is to provide for an efficient and productive trading post where there is sufficient transparency between traders and where the exchange platform ensures speed, efficiency, and clarity of trade because without these characteristics, the American markets as a whole become less viable, less reliable. Government will expand or contract in order to meet its universal role.

The trader should be mindful of this regulatory environment, particularly the tug-of-war between more or less regulation of exchanges. Eventually the trader pays the price in terms of transparency, price fairness, and the level of fees, especially where trade is her primary means of livelihood and income. After all, trade boils down to an information game and staying informed on government actions as well as on how government itself can disrupt information flow is important to the trader’s success.