US dollar weakness at the end of 2017 and the start of 2018 has made it clear that traders are going to have to be careful with dollar futures. On Friday, 12thJanuary 2018, the euro was trading at 1.2202 against the US dollar with an increase of 1.41% for the day (+0.0170). That the dollar is weakening seems odd as the Fed has clearly given forward guidance for three more interest rate increases in 2018. Given that, one would expect a stronger dollar especially as QT (Quantitative Tightening) has only begun.
The chairman of Swiss banking giant UBS said in an interview published Sunday that he does not consider the soaring cryptocurrency bitcoin as money and called for regulators to intervene. "In my opinion, bitcoins are not money," Axel Weber, chairman of Swiss financial giant UBS, said in an interview to Swiss news agency NZZ am Sonntag on Sunday.
Did you know that one of the most popular keywords in the Google searches last month, was “yield curve flattening”? There is a lot of discussion these weeks about the narrowing spread between the long and short term maturities in the Treasury Notes yields. Such a spread has shrunk at the lowest levels since 2007. Why is this a cause of concern? The yield curve is the difference in reward the investors receive for locking their investments for longer periods of time, which means greater uncertainty. A compensation for investors who tolerate the extra risk is usually called risk premium. But when such premium fades away then the yield curve is flat, when the spread is negative, the curve is inverted.
Bank of Canada thinks now is a good time to research their own digital currency. Although the name remains unknown, they are not the first financial institution to contemplate such an approach. Central bank digital currencies are a very unusual development in the financial sector. So far, no major bank has made any significant progress in developing such a currency. Bank of Canada may be the first to achieve some breakthrough in this regard. A paper has been circulating which focuses on creating a native digital currency.
Bitcoin's price has levelled off at around $9,600 on Friday after the cryptocurrency lost almost $2,000 in less than 24 hours over Wednesday and Thursday. Despite the falls, bitcoin is still trading at almost ten times its value at the start of the year. And according to the Bank of France Governor Francois Villeroy de Galhau, Bitcoin is a speculative asset and people who invest in it do so at their own risk.
This Monday I was at Lantern Fund Forum of Lugano, and the main speaker was John Mauldin. One of his main reflections was on how it is possible to manage money in a world where central banks and governments buy assets massively and indiscriminately, without assessing the value of what they buy.
China will issue 2 billion U.S. dollars worth of dollar-denominated sovereign bonds on Thursday, China's Ministry of Finance (MOF) said here on Wednesday. China will issue the sovereign bonds in the Hong Kong Special Administrative Region (HKSAR), including 1 billion U.S. dollars of five-year bonds and 1 billion U.S. dollars of 10-year bonds.
The Fed seems not to understand why there is so little inflation with the economy doing so well that a rate rise in December is probable and two or three more increases in 2018 are possible. There are various pundits that claim the US is doing well on many fronts with the unemployment percentage employed as an argument to prove that the Wall Street rally is thoroughly justified.
The Swiss National Bank on Wednesday revealed the country’s new ten franc note, which will go into circulation on October 18th. The latest in the new series of banknotes that is being issued in stages, the ten franc note follows the 50 franc and 20 franc notes that entered circulation in April 2016 and May 2017 respectively.
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