SINGAPORE (Reuters) – The euro inched higher on Thursday, as investors awaited details of the European Central Bank’s plans for scaling back its bond-buying stimulus programme, while the dollar took a breather after its recent rally.
The euro inched up 0.1 percent to $1.1819, having edged up from a two-week low of $1.1725 that had been set on Monday.
The ECB is all but certain to cut back on its bond-buying stimulus on Thursday, taking its biggest step yet in unwinding years of loose monetary policy.
Since inflation remains low, however, any reduction in the monthly amount of asset purchases is expected to come with a lengthy extension of the programme.
Still, there seems to be some caution toward the risk that the ECB’s policy announcement could give a lift to the euro, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.
“The market may be hedging for a hawkish surprise,” Innes said, referring to the firmness in the euro in recent trading sessions.
The US dollars dual personalities were in full view overnight as an endless stream of headline surprises weighed on investors sentiment while some localised circumstances played in its favour. Indeed the numerous idiosyncratic storylines had currency markets rocking in every pocket of the globe, however, in general, the USD dollar lost some momentum overnight as concerns resurfaced over the pace of Fed normalisation, and a case of the willies gripped investors ahead of The House Vote on the budget resolution.
Not surprisingly, Republican infighting once again threatens to derail the vote as clouds gather over state and local income tax provision.
Uncertainty over the next Fed Chair has traders double and even triple guessing their best-educated guess. Indeed, the agonising wait is taking its toll on positioning as the longer the process gets drawn out, the more nervous the market becomes and then starts to wonder if the what appeared to be the unlikely scenario of a status quo wins out.
There’s entirely no way to sugar coat yesterday’s domestic CPI miss, and the broadcast of a re-weighing of the CPI basket for the January print only adds to the misery.
If there was any doubt about RBA policy, the CPI print suggests they will be parked in neutral for some time as the lack of any wage inflation to mollify the household debt burden will continue to weigh dovish on RBA policy. Indeed all eyes will be focused on the RBA’s inflation spin in the Statement of Monetary Policy next month where any sliding revision to the CPI forecast could spell doom for the Aussie dollar. Japanese Yen
Market chatter elevated after coming within a hair’s breadth of breaking the critical 114.25, and the burning question remains can we push through this level which has been the markets undoing for the better part of 2017.
Technical hoodoo aside, breaching the 10 Y UST 2.4% inflexion point and the surging Nikkei suggests yes.But with the US tax reform getting more priced into the risk equation, a significant near-term move towards 115 will need some help from a hawkish shift at the Fed helm for the dollar bulls to have their cake and eat it also.
Expectations have been tempered by ECB speak and the dearth of leaks. But of course, when it comes down to crunch time the concern is that the market has written today’s meeting off as a non-event more or less expecting currency neutrality and continuation of well-travelled ranges between 1.1675 -1.1875
While the market is not expecting anything earth-shattering from Draghi dealers will none the less trade the ECB policy lean, but the risk of a hawkish surprise is real and we could see a further extension of recent EUR gains as investors hedge for that possibility Canadian Dollar
What was thought to be the beginning of a Bank of Canada interest rate hike cycle is being discounted as nothing more than a removal of emergency accommodation. Governor Poloz is back roosting with doves. With interest rate differential likely to favor the long USD position going forward after the BoC expressed concerns about downside inflation risk, the Canadian dollar could remain on its back foot heading into 2018
Risk sentiment rand out of gas yesterday as local equity markets moved into consolidation mode with US tax reform narrative and the Fed Chair search still the key themes.
The Rupee is back on investor radar on the bank recapitalization headlines underpinning local equity markets. USDINR moved lower aggressively as investors refocus medium and longer-term outlooks based on these extremely positive developments in the banking sector that have been weighted down by substantial loan loss provisions. In early trade, the USDINR is trading just below 64.90 level, but further short-term gains could be challenged by the shifting USD sentiment around the Fed Chair announcement.
The Malaysian Ringgit
The Ringgit is trading gingerly ahead of the budget.
Indeed, all Forex roads lead to the Fed Chair nomination and US tax reform. But on the domestic from all eyes are on Budget day where its expected Prime Minister Najib Razak will walk the fine line between reducing the fiscal deficit while providing enough tax incentives in what is being perceived as an election budget.
However, what happens on the deficit front will likely shape the Ringgit’s medium-term outlook as the balanced budget would greatly appeal to foreign investors.
Bitcoin Gold Site Suffers 10 Million Hits Per Minute
Bitcoin block height 491,407 was reached 23 October, more than a day earlier than anticipated, triggering the so called Bitcoin Gold hard fork. It is the second such fork of its kind since August, and another is predicted mid-November, Segwit2x, at block 494,784.
Not long after celebrating block height 491,407, the Bitcoin Gold (BTG) team noticed 10 million hits per minute clogging up its web traffic requests. BTG’s Slack channel later attributed most of the hits to internet protocol (IP) addresses routed through China.
It was a clear a DDoS campaign was used against the site, which rendered it essentially unavailable for four hours, causing numerous reports about either the team’s inability to insure against such basic attacks or the team’s lack of knowledge in critical areas of website security.
DDoS attacks are fairly routine, and many markets exist to facilitate those who wish to disrupt a company or group’s online activities. For under 200 USD, robot networks (botnets) can be had in the service of DDoS attacks. Smaller organizations are especially vulnerable.
Different From Bitcoin Cash
Bitcoin’s first hard fork (Bitcoin Cash) went decidedly smoother. A perceived benefit of forks is the 1:1 mirror in coins/tokens a holder receives, roughly similar to perhaps a stock dividend. Users can then retain the new token or profit-take, selling off either “share” of the original or forked coin.
The BTG team has pushed out a proper launch, in the Bitcoin cash manner, until 1 November, which includes release of its code and essentially the ability to mine it. The same goes for a BTG 1:1 coin mirror.
According to its now-live website, BTG will eventually differ in other ways as well from Bitcoin cash. BTG will use the proof-of-work algorithm Equihash, will adjust its difficulty at every block, and incorporate a unique address format.
There are no BTG coins to speak of today (except the 100,000 pre-mined coins) nor a blockchain yet, but it trades as a future on the Bitfinex platform. As of this writing, it’s at 104 USD. BTG’s first day, however, Coinmarketcap reported it down over sixty percent.
Bitcoin cash had its early downs and ups as well, reaching highs of over 800 USD since its inception, but has since stabilized at slightly over 300 USD (as of this writing) with a 5.5 billion market capitalization (fourth among cryptocurrencies). It has the second highest 24h trade volume of all cryptocurrencies.
The source of the DDoS attack on BTG remains a mystery for now. That, combined with its soft launch plans in a couple of weeks, along with little knowledge of who its team members are (its lead developer goes by h4x3rotab), means the BTG project over-all retains a sense of mystery too.
Then again, we still do not know who Satoshi is.
What do you think about the DDoS attack on BTG? Is its price drop just growing pains? Does not knowing who the lead developer is trouble you? Tell us in the comments below!
Images courtesy of: Alejandro Cegarra for USN&WR, Eyevine, Diario Bitcoin.
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