Interbank market news scan: Foreign exchange markets preparing for U.S. jobs situation report…

March’s Nonfarm Payrolls report, which is due out on Friday at 12:30 GMT, is set to show an increase of 630,000 jobs. Here you can find the forecasts of economists and researchers of eight major banks regarding the upcoming employment data. Nonfarm Payrolls Preview: Forecast from eight major banks for March jobs report (fxstreet.com)

The U.S. dollar will remain strong for at least another month, according to a Reuters poll of foreign exchange strategists, who still forecast that the currency will weaken in the longer term. U.S. Dollar to Remain Strong for at Least Another Month: Reuters Poll | Investing News | US News

Currency PairsRates as of 2:15pm 1 April 2021
EUR/USD1.1775
AUD/USD0.7607
GBP/USD1.3824
USD/JPY110.5800
NZD/USD0.7021
USD/CHF0.9413
USD/NOK8.5295
USD/SEK8.7090
USD/CAD1.2565
  
Selected Rates 
Fed Funds.07
Bank prime rate3.25
Discount window.25
2-yr Treasury.16
10-yr Treasury1.68
30-yr2.34
Source: Bloomberg, Federal Reserve, Reuters

Interbank market news scan: Archegos Capital is the management firm that banks are watching this morning …

Banks. Shares of Europe’s largest banks dropped on Monday after extending credit to a major client that couldn’t meet its obligations. Banks tumble after U.S. fund wilts (msn.com)

Banks. U.S. stock futures edged lower Monday after a large investment fund unwound billions of dollars in holdings, triggering concerns that stocks in the portfolio and banks who dealt with the firm could face sharp losses. Stock Futures Drop as Banks Warn of Losses | Fox Business

Banks. Swiss financial watchdog FINMA said on Monday it has been informed by Credit Suisse CSGN.S about its involvement in an international hedge-fund case involving several banks. Swiss watchdog says several banks involved in hedge-fund case | Nasdaq

Federal Reserve. Federal Reserve governor Christopher J. Waller addresses the importance of Federal Reserve independence this morning at 11:00 EST. Federal Reserve Board – Calendar

Federal Reserve. The Federal Reserve releases data on foreign exchange rates and selected interest rates today at 4:15 pm EST. Federal Reserve Board – Calendar

Currency pair29 March 2021 7:18am
EUR/USD1.770
AUD/USD0.7648
GBP/USD1.3832
USD/JPY109.5600
NZD/USD0.6997
USD/CHF0.9395
USD/NOK8.5782
USD/SEK8.6867
USD/CAD1.2592

Interbank market scan: China’s interbank market rate drops; Bitcoin sees a little deceleration …

Links to news you should be following …

India’s foreign-exchange reserves surpassed Russia’s to become the world’s fourth largest, as the South Asian nation’s central bank continues to hoard dollars to cushion the economy against any sudden outflows. India FX Reserves Cross Russia to Become World’s 4th Biggest – Bloomberg

Currency tensions and currency crises are a side effect of many countries failing to manage in the new round of economic globalization that has taken place through increasing flows of multilateral trade and investments that have created a world of currency trades causing economies to depend on global reserve currencies, mainly the US Dollar. Science against Myth (msn.com)

During the past month, the total value locked (TVL) in the Bancor Protocol has more than doubled, surpassing the $1.6 billion mark. Bancor, which serves as a liquidity protocol that enables automated, decentralized exchange, reveals that it managed to break into the top 10 projects in terms of TVL and now generates “the fifth highest revenue” of any protocol on Ethereum (as of March 13, 2021). decentralized finance – Bing News

To add more value to the network’s end-users and keep FinNexus at the industry’s cutting edge, its team has been working extremely hard to introduce new features. FinNexus has been developing its ecosystem on all fronts, expanding an established partnership with ChainLink, striving to add a new decentralized product, and introducing an algorithmic stablecoin-based liquidity pool to its platform.  FinNexus developments take its decentralized options platform to the next level | KnowTechie

The overnight Shanghai Interbank Offered Rate (Shibor), which measures the borrowing cost of China’s interbank market, fell 10.5 basis points to 2.14 percent Tuesday.China’s overnight Shibor interbank rate falls Tuesday – Xinhua | English.news.cn (xinhuanet.com)

Cryptocurrency exchange rates as of 8:35 am EST …

BTC/USD=57,494.80 ETH/USD=1,792.44

BTC/EUR=48,177.40 ETH/EUR=1,501.96

BTC/GBP=41,325.00 ETH/GBP=1,288.34

BTC/AUD=74,221.30 ETH/AUD=2,313.90

BTC/CAD=71,715.70 ETH/CAD=2,235.79

BTC/CHF=53,398.50 ETH/CHF=1,664.74

BTC/JPY=6,274,470.00 ETH/JPY=195,611.00

BTC/CNY=373,759.00 ETH/CNY=11,652.20

Source: OANDA

Interbank market news scan: Digital currency won’t replicate cash characteristics …

It would be misguided to expect cash-like features of a central bank digital currency, according to one of the monetary authorities furthest ahead in exploring such a system. Central Bank Digital Money Won’t Replicate Cash, Sweden’s Riksbank Says (msn.com)

Fluency, the UK-based fintech created by Polish emigrants, plans to sell its cryptocurrency banking business and focus on working with central banks’ digital currency efforts, newspaper Puls Biznesu reported on February 15. bne IntelliNews – Polish-UK fintech Fluency to focus on central banks’ digital currency

Democratic Republic of Congo’s economy grew 0.8% in 2020 on the back of strong performance in its mining sector, and is projected to grow 3.2% this year, a central bank advisor said on Tuesday. Congo’s economy grew 0.8% in 2020, to rise 3.2% this year, says central bank | Reuters

Bank of Governor Haruhiko Kuroda said on Tuesday the recent stock price rally reflected market optimism over the global economic outlook, brushing aside views its ultra-loose monetary policy was fueling an asset price bubble. BOJ’s Kuroda says stock boom reflects economic optimism, defends ETF scheme (cnbc.com)

With global demand returning and supply bottlenecks likely to drive up shipping, food and energy prices, Bank of America believes emerging market inflation could be on the horizon. BofA recommended buying currencies backed by hawkish central banks or a robust balance of payments — namely the Brazilian real, Chinese yuan, Czech koruna and South Korean won — along with oil exporters, most notably the Russian rouble and Russian equities. Bank of America names the emerging market currencies to back as inflation risks mount (cnbc.com)

Currency pairsExchange Rate as of 4:15 pm 8 February 2021(1) As of 12:36 pm EST Exchange Rate as of 16 February 2021(2)(3)
AUD/USD0.7656 0.7759
USD/CAD1.2781 1.2698
USD/CNY6.4664 6.4542
EUR/USD1.2035 1.2102
USD/INR72.8500 72.8160
GBP/USD1.3714 1.3905
USD/JPY105.4400 105.8800
USD/MXN20.1300 20.2100
USD/DKK6.1785 6.1383
USD/NOK8.5428 8.4407
BTC/USD  45,471.7000
ETH/USD  1,683.8900
Sources: Federal Reserve (1) ; Reuters-foreign exchange rates (2); OANDA-crypto rates (3)

Interbank market scan as of 11:03 am AST: Central banks, foreign exchange

Currency pairsExchange Rate as of 11:07am AST 28 January 2021Exchange Rate as of 12:10 pm AST 29 January 2021
AUD/USD0.76810.7695
USD/CAD1.27741.2766
USD/CNY6.48226.4291
EUR/USD1.21181.2148
USD/INR73.050072.8335
GBP/USD1.37151.3722
USD/JPY104.0600104.7100
USD/MXN20.700020.2232
USD/DKK6.15546.1206
USD/NOK8.62428.5291
Source: Reuters

The Chinese yuan exhibited increased strength against the U.S. dollar. This may be due in part to decision of the People’s Bank of China to be more hawkish on interest rates and modifying the interbank market rate of the yuan to reflect tightening liquidity. (See links to two articles below).

News from the federal government …

Yesterday, the White House released the following statement addressing a call between members of the National Security Council and the European Commission:

“National Security Advisor Jake Sullivan spoke by phone today with European Commission President Ursula von der Leyen’s Head of Cabinet Bjoern Seibert. Mr. Sullivan underscored President Biden’s commitment to the transatlantic alliance and his intention to repair and revitalize the U.S.-EU partnership, including our trade and investment relationship. They discussed the importance of close U.S.-EU cooperation on the COVID-19 pandemic and global health security, as well as the global economic recovery and climate change. They also agreed to work together on issues of mutual concern, including China and Turkey.”

In other news: The markets ….

Julian Evans-Pritchard, Senior China Economist at Capital Economics suggests that the People Bank of China (PBOC) could be delivering a hawkish signal, in light of the recent surge in the interbank rates. PBOC: Surge in interbank rates is a hawkish signal – Capital Economics (fxstreet.com)

China’s yuan firmed on Thursday, as tight interbank liquidity heading into Lunar New Year pushed money markets rates higher, though gains were limited as a global stock market rout increased safe-harbour demand for assets like the dollar. China’s yuan inches up as tight liquidity pushes interbank rates higher | Nasdaq

Sweden’s central bank said it had agreed with the U.S. Federal Reserve to extend a $60 billion swap agreement signed during spring last year until Sept. 30 this year. Sweden’s Central Bank Extends Swap Arrangement With U.S. Federal Reserve | Investing News | US News

Bank of America was ringing alarm bells over equities on Friday, as it warned a correction is looming. Get ready for a 10% stock drop, driven by the 3 ‘Rs,’ warns Bank of America (msn.com)

The Central Bank of Nigeria plans to obtain all the necessary approvals required to start the operations of a proposed commodities exchange within the next 90 days, Governor Godwin Emefiele said on Thursday. Nigeria Commodities Exchange to Start in 90 Days to Help Stabilize Food Prices – Bloomberg

The value of Dogecoin, a joke cryptocurrency that launched back in 2013, hit record levels on Thursday. Its price rose by more than 800 percent, reaching around $0.082, which raised its market value to around $7 billion, according to Coindesk, which monitors cryptocurrency prices. Dogecoin Price Tracker, Update as Cryptocurrency Value Skyrockets (msn.com)

Robinhood has restricted trading in cryptocurrencies a day after blocking new purchases of 13 stocks amid “extraordinary market conditions,” the app said. Robinhood Blocks Cryptocurrency Trading, Blames ‘Extraordinary Market Conditions’ (msn.com)

“Guys,” he told them, “I don’t know if bitcoin goes lower next month, but I think over the course of time, bitcoin will be higher.” To be more exact, Denier predicts the cryptocurrency will surge to $US55,000 per coin by the end of 2021, a 70% increase from its current price of around $US32,200. Webull CEO Anthony Denier predicts Bitcoin will surge to $55,000 by the end of 2021. He told us why he’s bullish on the cryptocurrency long-term. (msn.com)

Interbank market news scan as of 1:13 pm AST: central banks, foreign exchange, finance ministries

Currency pairsFederal Reserve as of 18 January 2021Reuters as of 21 January 2021Reuters as of 22 January 2021Reuters as of 25 January 2021
AUD/USD0.77230.77600.77160.7726
USD/CAD1.27091.26311.27211.2716
USD/CNY6.48006.45956.48106.4764
EUR/USD1.20991.21651.21711.2127
USD/INR73.080072.960072.975872.9366
GBP/USD1.35991.37251.36801.3656
USD/JPY103.8000103.5200103.8000103.7900
USD/MXN19.747019.717719.950020.1570
USD/DKK6.14696.11416.11106.1380
USD/NOK8.53108.42858.48238.5584
Sources: Reuters, Federal Reserve

The dollar’s strength has varied over various currency pairs since the Federal Reserve’s 18 January 2021 posting of currency rates.  The AUD/USD increased three pips while the USD/CAD increased seven pips over the relevant period. The USD/NOK and USD/MXN also saw increases over the relevant period of 219 pips and 410 pips, respectively.  The USD/JPY traded flat over the same period.

The rupee strengthened versus the dollar with USD/INR falling 143 pips over the relevant period. The Chinese yuan also strengthened versus the dollar with the exchange rate decreasing 36 pips over the relevant period.

A pip is equal to one hundredth of one percent or 0.0001.

In other news …

The following are the central parity rates of the Chinese currency renminbi, or the yuan, against 24 major currencies announced on Monday by the China Foreign Exchange Trade System: https://www.bignewsnetwork.com/news/267636046/market-exchange-rates-in-china—-jan-25

According to the State Bank of Pakistan (SBP), the dollar today closed at Rs160.80 against the local currency as compared to Friday’s closing rate of Rs160.75. The rupee recorded a 0.03 per cent depreciation in its value. https://arynews.tv/en/pakistani-rupee-weakens-against-us-dollar-3/

The transition of Japanese yen (JPY) London interbank offered rates (Libor) to new benchmark rates risks falling behind the end-2021 deadline at the current pace of progress, which could delay the transition for legacy cash products and have an impact on interbank rate volatility. A more concerted push from regulators or industry groups may be needed if market inertia is to be overcome, says Fitch Ratings. https://www.fitchratings.com/research/banks/jpy-libor-transition-at-risk-of-falling-behind-schedule-24-01-2021

The new governor of the Saudi Central Bank faces the delicate task of balancing the need to preserve monetary reserves amid steep fiscal targets with potential support for Crown Prince Mohammed bin Salman’s ambitious investment plans, analysts said. New Saudi central bank chief may face monetary strains in investment push | Reuters

The Bank of Israel spent $21 billion to try to stop the shekel’s steep appreciation in 2020, with little success. How about $30 billion in 2021? Analysis – Bank of Israel vs the FX market: Can $30 billion stem the shekel’s ascent? | Reuters

Cheap money provided by central banks has been inflating assets and reshaping how we save, invest, and spend. So what’s next? https://www.bloomberg.com/news/features/2021-01-24/central-banks-are-creating-bubbles-everywhere-in-the-pandemic?sref=oriheOus

Interbank news scan: Latest global central bank and foreign exchange news …

The overnight Shanghai Interbank Offered Rate (Shibor), which measures the borrowing cost of China’s interbank market, increased 6.3 basis points to 1.738 percent Friday. Source: Xinhuanet

Some of the world’s biggest banks are urging a US judge not to immediately terminate the London Interbank Offered Rate (Libor) after a group of borrowers filed suit claiming the benchmark was the work of a “price-fixing cartel.” Source: BusinessWorld

How do you wean everyone from asset managers and traders to corporate treasurers off derivatives that are so ubiquitous, they’ve become part of the fabric of the financial system? Source: Bloomberg

Data from the Central Bank of Kenya (CBK) covering the lead up to Friday showed that daily interbank rate was on a rising trend, sending the average near the 6.29 per cent that was last seen in April 2020. Source: Business Daily

On January 15th, the midpoint of RMB exchange rate in the interbank foreign exchange market is: 1 US dollar to RMB 6.4633, 1 euro to RMB 7.8549, and 100 yen to RMB 6.2263. Source: SMM News

My takeaway of Brainard speech: Fed maintaining steady course. No impact on the interbank markets.

Lael Brainard, a member of the Board of Governors of the Federal Reserve System, recently delivered a speech discussing the Federal Reserve’s policy for achieving a two percent inflation goal. She reiterated the Federal Reserve’s FAIT policy, a strategy that uses a flexible average inflation targeting strategy for achieving two percent inflation. The aim, according to Governor Brainard, is to keep inflation moderately above two percent for some time, allowing the economy to make up for any short falls along the way due to running below the two percent goal.

Governor Brainard would like to see the Federal Reserve focus on achieving full employment particularly for low and moderate income U.S. households. Price inflation has not been as responsive to labor market tightness as it has in the past, The Federal Reserve aims to eliminate shortfalls to maximum employment of human capital.

I didn’t hear anything in Governor Brainard’s comments that would have a direct impact on the interbank markets, whether for foreign exchange or for overnight loans.