Interbank Market News Scan: China is graying and will need to revamp its demographic policies ….

Links to follow today ….

Central banks, China. A pension deficit and looming debt crisis driven by a rapidly greying population. That’s the nightmare scenario for Chinese authorities, including the nation’s central bank, who are increasingly worried about the financial implications of the country’s demographic challenges. China population: what’s driving central bank concern about the nation’s ageing workforce? | South China Morning Post (scmp.com)

Central banks, CBDCs. The proposed authoritarian evolution of centrally issued digital currencies takes the world closer to dystopia. Central Bank Digital Currencies And The Orwellian New World Order | Nasdaq

Central banks, bitcoin. Billionaire investor Mike Novogratz said Thursday the surge in cryptocurrencies is serving as a referendum on the perceived ability of the Federal Reserve to manage risks facing the world’s largest economy and suggested people continue to buy into bitcoin. Billionaire investor Mike Novogratz says the record-breaking rally in crypto shows a lack of faith in the Fed – and cites central-bank uncertainty as a reason for bitcoin’s latest surge (msn.com)

Central banks, Bank of Canada. The Bank of Canada sent out a warning to investors this week that inflation still matters. In a surprise move, it accelerated the timetable for a possible interest-rate increase and began paring back its bond purchases on Wednesday. That made Canada the first major economy to signal its intent to reduce emergency levels of monetary stimulus. Inflation Forces the Bank of Canada’s Hand Ahead of Fed and ECB (msn.com)

As we enter a new week, the rates to start your day ….

As of 11:30 am EST, Bloomberg reports that the yield on the three-month Treasury note closed at 0.02% last Friday while the two-year note closed at 0.16%. The ten-year and thirty-year Treasurys closed Friday at 1.56% and 2.23%, respectively.

The Federal Funds rate, the rate at which banks lend to each other overnight in support of their reserve requirements, is at .07%, while the Fed Funds target rate is still at .25%. The prime lending rate is 3.25%.

Exchange rates of interest as of 5:30 pm EST….

Currency PairsRates as of 5:30 pm EST 25 April 2021
EUR/USD1.1890
GBP/USD1.3718
USD/CAD1.2568
AUD/USD0.7625
USD/JPY108.0210
USD/NOK8.5402
USD/CHF0.9417
USD/SEK8.7274
USD/MEX20.5078
Source: OANDA

Interbank market news scan: Fed chair opines on necessity for an improved payments system and testing central bank digital currencies…

The Takeaway: Soon after issuing a statement on the fed funds rate and how warranted attention paid to rising yields should be, Federal Reserve Board chairman Jerome Powell remarked today about the need to further strengthen the global payments system with emphasis on its cross border nature. Mr Powell also provided an update on the testing of central bank digital currencies. Stakeholders in the payments system may want to pay attention to how intermediaries are treated in a central bank digital currency regime.

To see what we’re following, follow the links …

Crypto Exchanges: “Bitcoin is the most talked about cryptocurrency but Ethereum [the blockchain] has more features, including being more flexible” in its hosting of decentralized finance (DeFi) than the Bitcoin blockchain, according to Bank of America. Bank of America Sees DeFi ‘Potentially More Disruptive Than Bitcoin’ – CoinDesk

Decentralized Finance: Reputation-based lending is coming to decentralized finance (DeFi) next month with the release of Maple Finance’s “Pool Delegates” lending suite. Maple Finance Raises $1.4M for Its Reputation-Based DeFi Lending Platform (yahoo.com)

Crypto Exchanges: A number of venture capital giants have completed a financing round for Ethereum-based volatility and derivatives protocol Volmex Finance. Volatility derivatives project Volmex Finance attracts backing from VC giants (cointelegraph.com)

Crypto Prices: Bitcoin’s (BTC) price slid Thursday, retreating along with U.S. stocks and oil prices as U.S. Treasury yields touched some of the highest levels in a year. https://www.coindesk.com/market-wrap-bitcoin-loses-steam-60k-bond-yields

Yields: Rising U.S. bond yields will not hurt Asia’s emerging markets as badly as they did during the “taper tantrum” eight years ago, according to a report by S&P Global Ratings. https://www.cnbc.com/2021/03/18/asias-emerging-economies-can-withstand-rising-us-yields-says-sp.html

Central Banks: Both of the Federal Reserve and the Bank of England vowed to keep liquidity plentiful and not to taper support in the face of rising inflation until they see prolonged signs of an economic recovery. The FOMC served up a surprise with the majority of the dots flat through 2023. Both USD and GBP fell sharply after their respective central banks’ decisions before later stabilizing. Fed, BoE step back, yields push up (fxstreet.com)

Payments System: Federal Reserve chairman Jerome Powell offers remarks on improving the payments system. Closing remarks by Chair Powell at a conference hosted by the Committee on Payments and Market Infrastructures – Federal Reserve Board

Currency pairs that include top countries with foreign direct investment in the US …

The majority of foreign direct investment in the United States is held by Japan, the United Kingdom, Canada, the Netherlands, Germany, France, and Luxembourg. Since the Biden administration has taken office, the dollar-yen and dollar-euro have seen appreciation (4.9% and 1.5%, respectively), while the dollar-pound and the dollar-loonie have fallen, 2.4% and 2.3%, respectively.

Currency pair20 January 202119 March 2021Percentage change
USD/JPY103.9300108.99004.9
USD/GBP0.73450.7170-2.4
USD/CAD1.27311.2433-2.3
USD/EUR (1)0.82540.83741.5
Source: OANDA (1) The euro is the currency of France, German, and Luxembourg

18 March 2021, 9:46 pm EST

For US major trade partners, a mixed bag on their costs for the dollar …

The top twelve destinations for U.S. exports are Canada, Mexico, China, Japan, Great Britain, France, Germany, Belgium, South Korea, Norway, Brazil, and Taiwan. There has been a mixed bag in terms of increases or decreases in each country’s cost of the US dollar since the beginning of 2021. Using currency data from OANDA, we identified the rate changes between 1 January 2021 and 18 March 2021.

Currency pair1 January 202118 March 2021Percentage change
USD/CAD1.27411.2450-2.3
USD/MXN19.883320.59713.6
USD/CNY6.52776.5006-0.4
USD/JPY103.1600109.07005.7
USD/GBP0.73250.7189-1.9
USD/EUR(1)0.81530.83882.9
USD/KRW1,086.10001,128.13003.9
USD/NOK8.54548.4699-0.9
USD/BRL5.19165.62088.2
USD/TWD28.077228.27240.7
Source: OANDA

(1) France, Germany, and Belgium use the euro as their currency. We refer to them collectively as the Eurozone.

Since January, countries seeing their currencies significantly strengthen against the dollar are Canada and Great Britain. On the other hand, Mexico, Japan, the Eurozone, South Korea, and Brazil have seen their currencies significantly weaken, making their cost to import U.S. product more expensive.

The primary mover of currency rates is supply and demand. The increased price of the dollar could be a result of this basic economic principal. Changes in bond yields may also have an impact on currency pricing as well as changes in policy rates imposed on banks due to their central banks’ policy initiatives.

During the same period in 2020, with the exception of Japan, all other top US trading partners saw their costs for US exports increase as shown in the following table:

Currency pair1 January 202018 March 2020Percentage change
USD/CAD1.30161.41008.3
USD/MXN18.906422.826620.7
USD/CNY6.96687.00480.4
USD/JPY108.6300106.9900-1.5
USD/GBP0.75830.82318.5
USD/EUR0.89150.90351.3
USD/KRW1,154.56001,240.10007.4
USD/NOK8.790610.357317.8
USD/BRL4.01635.006924.7
USD/TWD29.953130.21870.9
Source: OANDA

The shut downs around the globe due to the pandemic we believe may be the significant factor behind the changes in direction of these currency pairs.

18 March 2021 11:58 am EST

Foreign exchange rates. Dollar continues its fall …

Foreign exchange rates of interest as of 9 December 2020, 5:30 pm AST:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .78113 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.28002 CAD

INR/USD = 0.01356 USD/INR=73.6386

CAD/USD= 0.78113 USD/CAD= 1.28002

JMD/USD= 0.00682 USD/JMD = 143.631

EUR/USD= 1.21122 USD/EUR = 0.82552

NGN/USD= 0.00260 USD/NGN = 379.723

CNH/USD= 0.15338 USD/CNH = 6.51859

JPY/USD = 0.00961 USD/JPY = 104.09

Source: OANDA

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9:49 am AST 18 November 2020, Foreign exchange rates between U.S. and select countries in East Africa, West Africa, the Caribbean, and Asia

As of 9:49 am AST, 18 November 2020:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76422 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.30834 CAD

CAD/USD=0.76422   USD/CAD=1.30834

CNH/USD= 0.15252   USD/CNH=6.55518

EUR/USD= 1.18649   USD/EUR=0.84273

DKK/USD =0.15929    USD/DKK=6.27630

NGN/USD= 0.00261    USD/NGN=380.703

JPY/USD=0.00959     USD/JPY=104.31

INR/USD=0.01343       USD/INR=74.3381

JMD/USD=0.00673     USD/JMD=145.600

GYD/USD=0.00469       USD/GYD= 204.847

GHS/USD=0.17118     USD/GHS= 5.80017

XCD/USD=0.37037        USD/XCD= 2.70

KES/USD = 0.00907       USD/KES= 108.300

Source: OANDA

Major political/legal event in the United States

Treasury releases data on foreign investment in the United States

Yesterday, the United States Department of the Treasury reported that “in September of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC outflow of $79.9 billion.  Of this, net foreign private outflows were $40.3 billion, and net foreign official outflows were $39.6 billion.”  The Treasury International Capital report also noted that there was a decline in foreign investor ownership of Treasury bills in the amount of $30.3 billion in September 2020.

Source: U.S. Department of the Treasury

11:42 am 12 November 2020, Foreign exchange rates between U.S. and select countries in East Africa, West Africa, the Caribbean, and Asia

As of 11:42 am EST, 12 November 2020:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76641 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.30461 CAD

CAD/USD=0.76641   USD/CAD=1.30461

CNH/USD= 0.15127   USD/CNH=6.60956

EUR/USD= 1.17895    USD/EUR=0.84811

DKK/USD =0.15834     USD/DKK=6.31400

NGN/USD= 0.00262    USD/NGN=380.460

JPY/USD=0.00949      USD/JPY=105.38

INR/USD=0.01344       USD/INR=74.2553

JMD/USD=0.00673      USD/JMD=145.540

GYD/USD=0.00475       USD/GYD= 207.614

GHS/USD=0.17139       USD/GHS= 5.80752

XCD/USD=0.37037        USD/XCD= 2.70

KES/USD = 0.00909       USD/KES= 107.904

Source: OANDA

Major political/legal event in the United States

Federal Reserve Vice-chair Quarles testifies before House Financial Service committee today

Randal K. Quarles, vice-chair for supervision for the Federal Reserve, will testify today before the U.S. House Committee on Financial Services.  His testimony will focus on the Federal Reserve’s supervisory activities in the context of the ongoing pandemic.

The Democratic Party will maintain control of the financial services committee in the next Congress.  There will likely be signals as to where committee chairwoman, U.S. Representative  Maxine Waters, Democrat of California, would like Congress and the Biden administration to focus legislative and regulatory initiatives.

Source: Federal Reserve  

9:47 am 11 November 2020, Foreign exchange rates between U.S. and select countries in East Africa, West Africa, the Caribbean, and Asia

As of  9:47 am EST, 11 November 2020:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76819 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.30157 CAD

CAD/USD=0.76819   USD/CAD=1.30157

CNH/USD= 0.15142   USD/CNH=6.60316

EUR/USD= 1.18174    USD/EUR=0.84611

DKK/USD =0.15870     USD/DKK=6.29960

NGN/USD= 0.00262    USD/NGN=379.530

JPY/USD=0.00951       USD/JPY=105.18

INR/USD=0.01347       USD/INR=74.0906

JMD/USD=0.00674      USD/JMD=145.426

GYD/USD=0.00478       USD/GYD= 209.215

GHS/USD=0.17136       USD/GHS= 5.82457

XCD/USD=0.37037        USD/XCD= 2.70

KES/USD = 0.00911       USD/KES= 108.146

Source: OANDA

Major political/legal event in the United States

Last Monday, the Federal Reserve Bank of New York’s Center for Microeconomic Data released the October 2020 Survey of Consumer Expectations, which shows a decline in income and spending growth expectations. Changes in labor market expectations were mixed showing declines in both average job loss and job finding expectations. Median inflation expectations declined at the short-term horizon, while remaining unchanged at the medium-term horizon. Uncertainty and disagreement about future inflation decreased slightly but remained at an elevated level.

12:59 pm 10 November 2020; Foreign exchange rates between U.S. and select countries in East Africa, West Africa, the Caribbean, and Asia

As of 12:59 pm EST, 10 November 2020:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76934 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.29964 CAD

CAD/USD=0.76934   USD/CAD=1.29964

CNH/USD= 0.15178   USD/CNH=6.58714

EUR/USD= 1.18614    USD/EUR=0.84297

DKK/USD =0.15921     USD/DKK=6.27914

NGN/USD= 0.00261    USD/NGN=381.557

JPY/USD=0.00958       USD/JPY=104.36

INR/USD=0.01352       USD/INR=73.8335

JMD/USD=0.00674      USD/JMD=145.335

GYD/USD=0.00478       USD/GYD= 209.215

GHS/USD=0.17142       USD/GHS= 5.82570

XCD/USD=0.37037        USD/XCD= 2.70

KES/USD = 0.00910       USD/KES= 107.944

Source: OANDA

Major political/legal event in the United States

Yesterday, the Federal Reserve Bank of New York’s Center for Microeconomic Data released the October 2020 Survey of Consumer Expectations, which shows a decline in income and spending growth expectations. Changes in labor market expectations were mixed showing declines in both average job loss and job finding expectations. Median inflation expectations declined at the short-term horizon, while remaining unchanged at the medium-term horizon. Uncertainty and disagreement about future inflation decreased slightly but remained at an elevated level.

Source: Federal Reserve Bank of New York

9 November 2020: Foreign exchange rates between U.S. and select countries in East Africa, West Africa, the Caribbean, and Asia

As of 11:14 pm EST, 9 November 2020:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76934 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.29964 CAD

CAD/USD=0.76934   USD/CAD=1.29964

CNH/USD= 0.15178   USD/CNH=6.58714

EUR/USD= 1.18614    USD/EUR=0.84297

DKK/USD =0.15921     USD/DKK=6.27914

NGN/USD= 0.00261    USD/NGN=381.557

JPY/USD=0.00958       USD/JPY=104.36

INR/USD=0.01352       USD/INR=73.8335

JMD/USD=0.00674      USD/JMD=145.335

GYD/USD=0.00478       USD/GYD= 209.215

GHS/USD=0.17142       USD/GHS= 5.82570

XCD/USD=0.37037        USD/XCD= 2.70

KES/USD = 0.00910       USD/KES= 107.944

Source: OANDA

Major political/legal event in the United States

Biden launches transition website

Presumptive president-elect Joseph R. Biden has launched a transition website that describes his initial initiatives he plans to address upon taking office in January 2021.  Mr Biden appears prepared to engage in a level of spending to address faults and inequities in the American economic infrastructure that were in place prior to the Covid pandemic.  Spending initiatives include:

  • Providing state, local, and tribal governments with financial assistance;
  • Extending Covid crisis unemployment insurance to people out of work;
  • Provide a financial package for small businesses and entrepreneurs;
  • Creation of a public health corps that puts the unemployed to work fighting the pandemic.

No discussion has been provided by the transition team yet on the costs of these packages and the impact they may have on money supply expansion/contraction, trade, or foreign exchange rates.

Source: BuildBackBetter.com

Treasury announces tax deduction for pass-through entities

Today, the U.S. Department of the Treasury announced rule changes that clarify that State and local income taxes imposed on and paid by a pass-through entity are allowed as a deduction by the pass-through entity in computing its non-separately stated taxable income or loss for the taxable year of payment. 

Source: Treasury.gov

Biden starts transition plans: Foreign exchange rates between U.S. and select countries in East Africa, West Africa, the Caribbean, and Asia

As of 11:11 am EST, 9 November 2020:

How to read the chart:

CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76559 USD.

USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.30530 CAD

CAD/USD=0.76559   USD/CAD=1.30530

CNH/USD= 0.15166   USD/CNH=6.58901

EUR/USD= 1.18728    USD/EUR=0.84194

DKK/USD =0.15925     USD/DKK=6.27257

NGN/USD= 0.00261    USD/NGN=381.500

JPY/USD=0.00967       USD/JPY=103.34

INR/USD=0.01350       USD/INR=73.8010

JMD/USD=0.00675      USD/JMD=145.128

GYD/USD=0.00478       USD/GYD= 209.215

GHS/USD=0.17141       USD/GHS= 5.82600

XCD/USD=0.37037        USD/XCD= 2.70

KES/USD = 0.00909       USD/KES= 108.121

Source: OANDA

Major political/legal event in the United States

Presumptive president-elect Joseph R. Biden has launched a transition website that describes his initial initiatives he plans to address upon taking office in January 2021.  Mr Biden appears prepared to engage in a level of spending to address faults and inequities in the American economic infrastructure that were in place prior to the Covid pandemic.  Spending initiatives include:

  • Providing state, local, and tribal governments with financial assistance;
  • Extending Covid crisis unemployment insurance to people out of work;
  • Provide a financial package for small businesses and entrepreneurs;
  • Creation of a public health corps that puts the unemployed to work fighting the pandemic.

No discussion has been provided by the transition team yet on the costs of these packages and the impact they may have on money supply expansion/contraction, trade, or foreign exchange rates.

Source: BuildBackBetter.com