Japan considers making bitcoin a legal currency
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US officials have unexpectedly brought attention back to foreign exchange movements at the latest World Economic Forum in Davos. Subsequent attempts to counterbalance the message were not enough to put the genie back into the bottle. Whether this declaration was clumsiness or intentional is open for speculation.
What can be taken for granted is that: Regardless of the conclusion one might derive from this chronology, the unusual comments made in January look like a breach of the so-called Shanghai agreement of Februarywhen G20 leaders were said to have agreed to stabilise currency markets after a strong two-year US dollar appreciation.
The recent tax reform voted by the US Congress has some similarities with those two episodes: However, both in the s and in the s, fiscal support was provided right after an economic recession and was meant to accelerate the economic recovery.
Today, the US economy is in the 9th year of its expansion cycle, and at full employment. Whether this difference will make for a different outcome this time remains to be seen. As seemingly ever-better growth indicators continue to accumulate in the Eurozone, the debate around inflation has become topical on this side of the Atlantic too. However, as deflation concerns have now dissipated and inflation rates now seem set on an upward, if mild, trajectory going forward, all eyes turn toward the ECB.
At least that is the perception of financial markets, that are increasingly pricing an end of the currency wars usd yen bitcoin and what it means to you purchase program and ultimately rising short term rates.
Upward pressure is not only visible on long-term interest rates: Inflation really is topical at the beginning of Yes, the very economy that has been plagued with a year long deflation. No such obvious cause this time, even if favourable base effects on energy prices may play a role. The improving economic backdrop in Japan certainly supports a gradual improvement in the inflation picture, despite still strong structural headwinds. This could be seen as a clear signal that the Currency wars usd yen bitcoin and what it means to you is happy to take advantage of the current improving picture to consider withdrawing some of its policies, with negative externalities for the Japanese financial system.
Or it could simply mean that, for city-dwellers such as Mr Kuroda or Mr Mnuchin, the altitude of Davos loosens their lips possibly more than they would like. US dollar weakness certainly has had a role in supporting prices over the period.
The strength and acceleration of the global economy has also supported the demand side of the equation. But supply-side factors have also driven this rise in prices. The growth in the world oil supply has slowed down after the surge recorded inafter OPEC eventually agreed on a supply cut and low prices shut some US shale producers out of business.
As a result and quite noticeably, oil prices have been rising in even as inventories have been drawn down. US inventories, that had almost doubled from to earlyhave declined over the remainder of the year. This is maybe the best indicator that the large imbalance between supply and demand at the root of the oil price collapse in has now been resolved. If true, oil prices should currency wars usd yen bitcoin and what it means to you less prone to big price shifts in the future.
Besides geopolitical risks, the two main drivers of the gold price are the US dollar and US long-term real rates, which have an historically inverse relationship with the precious metal. Recently, the rapid and strong depreciation of the US dollar has clearly overtaken the relatively subdued increase in US real rates.
Going forward, the evolution of gold prices is likely to remain torn between currency wars usd yen bitcoin and what it means to you two forces - a lower US dollar or higher US long-term real rates.
If you believe US real rates will rise meaningfully, you should stay away from gold, but if you believe in the continuation of a weaker US dollar and a muted increase in US real rates, gold could shine again. Historically, there is a positive correlation between rising interest rates in the United States and a stronger US dollar. The BoJ left its policy unchanged, while in parallel noting an improvement in inflation expectations contributing to the JPY rally.
Currency wars usd yen bitcoin and what it means to you addition, in the last year, the South African economy has recovered from negative growth and high inflation.
Meanwhile, investors are expecting that the country will avoid currency wars usd yen bitcoin and what it means to you credit rating downgrade in March. The surge in volatility in early February took the market by surprise. The move was the biggest ever, 20 volatility points from Friday close to Monday close although VIX spot traded higher during the night and killed a number of strategies, including the infamous XIV.
However, the ETF entered into a death spiral most likely because investors started to redeem it after a bad week in equities, triggering the ETF to re-adjust its exposure by more VIX futures, sending volatility higher and creating a vicious circle. Although the potential damage of this unwind has been well documented recently, a number of investors continued to sell volatility despite knowing that the trade had a very negative asymmetry.
Investors in cryptocurrency discovered in January that their asset class was also subject to gravity as most cryptocurrencies crashed during the month. A number of theories emerged trying to explain why the asset class suffered so much.
Among them, the fear around potential regulations in Asia, especially in Japan and South Korea, seems to be a good explanation. More than simple regulation, Korea talked about banning the trading of cryptocurrencies and shutting down exchanges, which most likely contributed to the selloff.
Finally, China indicated that crypto coin mining could be prohibited due to its intense use of power. The reality check for investors has been difficult! It is not intended for distribution to or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, issue or use.
Users are solely responsible for verifying that they are legally authorised to consult the information herein. This material is intended for informational purposes only and should not be construed as an offer or solicitation for the purchase or sale of any financial instrument, or as currency wars usd yen bitcoin and what it means to you contractual document. The information provided herein is not intended to constitute legal, tax, or accounting advice and may not be suitable for all investors.
The market valuations, terms, and calculations contained herein are estimates only and are subject to change without notice. The information provided is believed to be reliable; however the SYZ Group does not guarantee its completeness or accuracy. Past performance is not an indication of future results. Breadcrumb Home insights February Subscribe to our newsletter. US — The return of the twin deficit? Eurozone — Rate markets start to price the end of negative rates 4.
Japan — Kuroda claims victory on deflation almost 5. Oil prices at a 3-year high. Commodities — Gold and US real rates: South Africa — The South African rand surged on the back of increased investor confidence 9. Wanda Mottu Portfolio Manager. Christophe Buttigieg Portfolio Manager. The US dollar down to a month low after Davos Source: The comeback of the US twin deficit? Inflation may not have picked up yet, but interest rates will Sources: Oil prices at a 3-year high despite inventory decline Sources: The end of the short volatility ETF Sources: Daily Bitcoin volume by currency Sources:
