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Wed, 23rd August 2017

Anirudh Sethi Report

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Archives of “Euro” Tag

European Indices Closed in Deep Red- Complete Bloodbath

Closing changes in the major European indexes

  • UK FTSE 100 -1.1%
  • German DAX – flat
  • French CAC -1.2%
  • Spain IBEX -1.9%
  • Italy MIB -1.51%

Weekly changes

  • UK FTSE 100 -2.7%
  • German DAX -2.3%
  • French CAC -2.3%
  • Spain IBEX -3.65%
  • Italy MIB -2.6%
Recent declines in European stock markets were buffered by gains in the euro but this week that wasn’t the case with EUR/USD basically flat.
On Friday, the DAX touched the lowest since March.
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Japan traders refreeze bitcoin business, bracing for split

 Virtual currency traders here are halting bitcoin deposits and withdrawals for the second time in recent days ahead of a potential split in trading protocols expected for Tuesday evening local time, fearing unforeseen glitches and instability.

A number of exchanges shut down temporarily early last week on similar concerns. Traders think that a split could cause trading history logs to become unstable or coins to be lost.

 The split is forecast for around 9:20 p.m. Bitbank and Minnano Bitcoin, a unit of financial instruments trading firm Traders Holdings, are among those that froze transactions Monday. BITPoint Japan, an arm of information technology services company Remixpoint, plans to keep handling them until 8 p.m.

The fork in the digital currency’s software would give rise to a second currency called Bitcoin Cash, which would be issued in the same amounts as existing bitcoin. Japan’s traders have said that in the event of a split, they would give customers one unit of Bitcoin Cash for each corresponding unit of bitcoin they held. The currencies’ respective values would be determined through market trading.

Some traders are opting not to give out Bitcoin Cash, including Coinbase in the U.S., Hong Kong’s BitMEX and Europe’s Bitstamp, suggesting the industry may face a split of its own.

European Indices slip to finish the month flat (with one caveat)

Closing changes to the main European bourses:

  • German DAX -0.4%
  • Spain IBEX -0.3%
  • French CAC -0.6%
  • UK FTSE +0.1%
  • Italy MIB +0.3%

On the month:

  • German DAX -1.7%
  • Spain IBEX +0.55%
  • French CAC -0.50%
  • UK FTSE +0.8%
  • Italy MIB +4.4%

The story changes when you factor in the strength of the euro. In US dollar terms, all the indexes were safely in positive territory with Italian stocks up 7.7%.

The FOMC meet this week, Reuters ask: Global Turning Point in Monetary Policy ?

From the Reuters piece:
  • Prospects for tighter monetary policy in Europe and other countries could pose a fresh problem for the Federal Reserve when it meets
  • Now, the European Central Bank (ECB) also appears likely to decide later this year on when to scale back its monthly bond purchases. When ECB President Mario Draghi first hinted at the prospect last month, world bond yields rose sharply for a while.
  • Moreover, Canada’s central bank raised interest rates for the first time in seven years this month, and the Bank of England is expected to raise rates next year to combat rising inflation.
Full article is here for a look at the global backdrop, and the local (US) too, to this week’s meeting, if you’re interested: Federal Reserve now faces prospect of global monetary policy tightening
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At this meeting there is no ‘Summary of Economic Projections’ update issued, nor is there a press conference by Yellen.

European Indices end the session with losses.

German Dax leads the way lower

The European stocks are ending the session with losses. The German Dax is leading the way as the higher EUR is painful to their export prospects.
Specifically today,
  • German Dax is ending down -1.2%
  • France CAC is ending down 1.0%
  • UK FTSE is down -0.2%
  • Italy FTSE MIB is ending down -0.6%
  • Spain’s Ibex is down -1.5%
  • Portugal PSI20 bucked the trend with a gain of +0.30%
In the European debt market, the 10 year yields are lower:
  • Germany 0.555%, down -2.6 bp
  • France 0.817%, down -2.8 bp
  • UK 1.207%, down -6.4 bp
  • Italy 2.197%, down -4.0 bp
  • Spain 1.557%, down -3.4 bp
  • Portugal 3.067%, down -3.3 bp

Bitcoin Plunges To 2-Week Lows On Triple-Whammy Of Concerns

After ralying over 80% in the last month, Bitcoin prices are tumbling (down 25% from record highs to 2-week lows) as cryptocurrencies face uncertainty on three fronts.

 

 

As iBankCoin reports, investors are spooked over recent cyberattacks, uncertainty surrounding a Bitcoin platform upgrade, and proposed legislation which adds cryptocurencies a list of reportable assets under existing anti-money laundering laws.

Cyber attack

RBI picks dozen for remedial steps

The RBI has trained its guns on a dozen bank accounts that are awash with bad loans for action under insolvency rules that could lead to the liquidation of the companies.

An internal committee of the Reserve Bank of India (RBI) has identified the 12 accounts that would be considered for resolution under Insolvency and Bankruptcy Code (IBC).

These accounts account for around 25 per cent of the gross non-performing assets (NPAs) of the banking system. Bad loans in the banking system are estimated at over Rs 8 lakh crore, meaning the NPAs in the 12 accounts are at over Rs 2 lakh crore.

The RBI had constituted an Internal Advisory Committee (IAC) comprising independent members of its board to advise it on cases that may come under the insolvency code.

This was part of an action plan of the central bank against bad loans under Banking Regulation (Amendment) Ordinance, 2017.

According to the ordinance, the RBI can issue directions to banks to initiate insolvency proceedings against defaulters.

A Problem Emerges: Central Banks Injected A Record $1 Trillion In 2017… It’s Not Enough

Two weeks ago Bank of America caused a stir when it calculated that central banks (mostly the ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, “the largest CB buying on record.” 

 

Draghi says risks of deflation have largely disappeared

Draghi statement to IMFC

  • Growth in the Eurozone is firming and broadening
  • There are sign of a somewhat brighter global recovery and increasing global trade
  • Cannot yet have confidence that a sustained rise in inflation will materialize in a sustainable manner
  • Underlying inflation has not shown a convincing upward trend

You could say he’s cautiously optimistic.

Earlier in the year, the market read the optimism as a sign of potential action to tighten but officials have fought back against that idea, and that’s what helped to cap the euro at 1.09.

“As underlying inflation remains subdued and the path of inflation crucially dependent on the prevailing very favourable financing conditions, we cannot yet have sufficient confidence that a sustained adjustment in inflation will materialize in a durable manner,” he wrote.

It’s a similar line to what he said after the March 9 ECB meeting. The next ECB meeting is April 27.

Forex reserves increase by $889.4 mn to $369.887 bn

India’s foreign exchange reserves rose by USD 889.4 million to USD 369.887 billion during the week ended April 14, helped by increase in foreign currency assets, the Reserve Bank said.

They had declined by USD 956.4 million to USD 368.998 billion in the previous reporting week.

The reserves had touched a life-time high of USD 371.99 billion in the week to September 30, 2016.

Foreign currency assets (FCAs), a major component of the overall reserves, surged by USD 881 million to USD 346.248 billion in the reporting week, RBI said.

Expressed in US dollar terms, FCAs include the effects of appreciation/depreciation of non-US currencies, such as the euro, pound and the yen, held in the reserves.

Gold reserves remained unchanged at USD 19.869 billion, the apex bank said.

The special drawing rights with the International Monetary Fund was up by USD 3.1 million to USD 1.446 billion.

India’s reserve position with the Fund, too, rose by USD 5.3 million to USD 2.323 billion, RBI said.