Interbank Market News Scan: Slight dollar strengthening as of 9:08 pm AST

Interbank, DOW. “U.S. stock futures moved lower in overnight trading on Sunday as investors grew concerned about the economic ramifications of the fighting between Russia and Ukraine.” See article here. Source: CNBC

Interbank, Asia, stock market. “U.S. crude was up more than 5%, and shares in Asia-Pacific traded lower on Monday as investors monitor the Russia-Ukraine crisis and related sanctions.” See article here. Source: CNBC

Interbank, Japan, Russia, SWIFT. “Japan said it is weighing its response to global moves to punish Russia for its invasion of Ukraine by further isolating the country from international banking transactions.” See article here. Source: The Asahi Shimbun

Interbank, Russia, central banks, sanctions, gold. “The lure of gold has been an ever-present throughout history — particularly in periods of geopolitical uncertainty. If Russia is selling below market rates, then we think someone, somewhere will be willing to take the risk.” See article here. Source: Financial Times

Interbank, Russia, foreign exchange reserves, sanctions. “The Biden administration and its European allies vowed Saturday to block Moscow’s access to its sizable foreign currency reserves in the West, teeing up one of the most powerful financial penalties and threatening to send the Russian financial market into free fall.” See article here. Source: The Washington Post

Foreign exchange rates of interest in Asia as of 9:08 pm AST

USD/JPY=115.525

AUD/USD=0.72213

NZD/USD=0.67419

USD/CNY=6.3161

Source: OANDA

Dollar index=97.15 as of 9:32pm AST

Source: MarketWatch

Interbank Market News Scan: I bet on the AUD-USD last night…

Last night, I bet on an increase in the AUD-USD exchange rate after reading analysis that the currency pair was seeing resistance around 0.7500 USD with lows between .7440-.7480 USD. While inflation in Australia is lower than in the United States (3.8% vs 5.4%), what helped tip me to the buy side was the higher yield on Australian 10-year government bonds (1.76%) versus the United States 10-year (1.63%).

Bank rates in Australia are slightly lower which tells me that their banks have a little more incentive to lend, which they may need given an expected slow retraction in inflation with expectations at 3.1%.

Meanwhile in the United States, Treasury secretary Janet Yellen and Federal Reserve chair Jerome Powell expect inflation concerns to dissipate next year.

Personally, I suspect that if there is any inflation it will be in certain areas of the labor market. I believe businesses with any vision will put in place labor work arounds where they will not require people to come into offices. Professional, “creative” type employees will be able to demand higher salaries while low wage earners will drive down earnings as they compete with more low-wage, unskilled workers.

Back to Australia, again, expect the inflation print tonight. I will be listening to how other central banks react. The news may temper the level of rate hikes they put in place. Just a thought …

Alton Drew

26.10.2021

Interbank market news scan: Australian central bank wants to see a tighter labor market …

Follow the links …

Australia’s central bank believes it will take a significant and sustained tightening in the labor market to lift inflation to more comfortable levels, a tough task that could take years to achieve. Australia’s central bank says tighter labor market will lift inflation (cnbc.com)

A body representing cryptocurrency and blockchain stakeholders in Nigeria has joined other crypto industry players in assailing the recent Central Bank of Nigeria (CBN) directive to banks. The CBN order, which seeks snuff out crypto entities from the banking system, took effect on February 5, 2020. Nigeria Crypto Ban: Stakeholder Body, Politicians Assail Central Bank’s Directive to Financial Institutions – Emerging Markets Bitcoin News

Indonesia’s central bank is seen trimming its benchmark rate for the first time this year on Thursday, on top of the five rate cuts it has delivered since the start of the coronavirus pandemic, according to a majority of analysts in a Reuters poll. Indonesia’s central bank seen making this year’s first rate cut | The Star

As cryptocurrencies increasingly go mainstream, pressure is growing on the world’s biggest central banks to move forward with their plans to issue digital cash and fend off private sector threats to traditional money. Bitcoin’s mainstream charge raises stakes for central bank digital cash – Technology – Dunya News

Currency pairsExchange Rate as of 4:15 pm 8 February 2021(1) As of 12:23 am EST Exchange Rate as of 16 February 2021(2)(3)
AUD/USD0.7656 0.7803
USD/CAD1.2781 1.2619
USD/CNY6.4664 6.4542
EUR/USD1.2035 1.2139
USD/INR72.8500 72.6320
GBP/USD1.3714 1.3939
USD/JPY105.4400 105.5800
USD/MXN20.1300 19.9410
USD/DKK6.1785 6.1255
USD/NOK8.5428 8.3658
BTC/USD  45,471.7000
ETH/USD  1,683.8900
Sources: Federal Reserve (1) ; Reuters-exchange rates (2) ; OANDA-cryptocurrency (3)

16 February 2021

Interbank market scan as of 9:27 pm AST: central banks, cryptocurrency, foreign exchange

Currency pairsExchange Rate as of 11:07am AST 28 January 2021Exchange Rate as of 10:11 pm AST 31 January 2021
AUD/USD0.76810.7639
USD/CAD1.27741.2781
USD/CNY6.48226.4250
EUR/USD1.21181.2130
USD/INR73.050072.8770
GBP/USD1.37151.3714
USD/JPY104.0600104.6500
USD/MXN20.700020.4010
USD/DKK6.15546.1323
USD/NOK8.62428.5628
Source: Reuters

Australia only recently started its quantitative-easing program, yet the key question already confronting the central bank is when and how to taper bond purchases given the strong economic recovery. Australia Central Bank Faces Taper Quandary as Peers on Hold – Bloomberg

Dogecoin, a Shiba Inu-themed digital coin that started as a joke and became the latest obsession for retail traders this week, plunged almost by half Saturday, sparking a flurry of posts on Reddit and Twitter begging coin holders not to panic sell. Dogecoin Plunges After Rally, Sparking Outcry on Reddit – Bloomberg

The European Central Bank’s chief economist Philip Lane played down the prospect of the ECB buying stocks or bank bonds as part of its pandemic-fighting efforts, saying in a newspaper interview published on Sunday these were not in its toolbox. ECB’s Lane says stocks, bank bonds not in toolbox: paper | Reuters

Cutting the UK’s official interest rate below zero would fail to boost Britain’s Covid-stricken economy because lenders would increase mortgage costs in response, the Bank of England has been told. Negative interest rates would not help Covid economy, Bank of England told (msn.com)

Bitcoin prices on Indian crypto exchanges fell 7-8% on Sunday afternoon after the government announced it would introduce India’s cryptocurrency bill in the budget session of the Parliament. https://economictimes.indiatimes.com/tech/tech-bytes/crypto-community-panics-on-news-of-pvt-currencys-exit/articleshow/80620693.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

31 January 2021

U.S. Treasury conference call with finance ministers of Australia, Canada, and the United Kingdom …

WASHINGTON – On October 28, 2020, U.S. Treasury Secretary Steven T. Mnuchin participated in a conference call with the Finance Ministers of Australia, Canada and the United Kingdom to discuss policies to support business and employment in response to the COVID-19 pandemic.  The call, hosted by Chancellor Rishi Sunak, is the latest in a series of regular calls among the Finance Ministers of the “Five Eyes” nations.  The Ministers discussed various policy responses to support workers and businesses and collaborative efforts to promote a strong and sustained economic recovery.

Source: U.S. Department of Treasury