Latin American Currencies Hit Record Lows as Drop Turns to Rout

(Bloomberg) — A decline in Latin American currencies turned into a rout Wednesday, with three of the region’s most-traded currencies hitting record lows.

The Colombian peso headed for its fourth day of declines as President Ivan Duque failed to quell anti-government demonstrations, while Chile’s peso weakened after another night of disturbances across the country. Brazil, which has avoided such extreme political turbulence, also saw its currency reach a record low, forcing the central bank to intervene for the third time in two days.

Chile’s currency is down 11% in the past month after the worst social unrest since the restoration of democracy in 1990 threatened to stall economic growth. Now Colombia is following suit, with protests convulsing the nation for the past week.

“There’s a reason this has been dubbed the Latin American equivalent to the Arab Spring,” said Omotunde Lawal, a London-based money manager at Barings. “Currencies are adjusting for idiosyncratic events in each country.”

While it’s not on the radar of as many investors, Uruguay’s peso fell for a sixth day and trades at its weakest level ever against the dollar. The currency tends to closely track the Argentine peso, which is close to its own record low.

Latin America is now home to the three worst-performing emerging-market currencies this year: Argentina’s peso (-37%), Chile’s peso (-15%) and Brazil’s real (-9.1%). Only the Mexican peso (+0.4%) has edged higher against the dollar during that span.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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North Korea urges US to drop hostile policy if it wants to continue dialogue

KCNA reports

Adds that North Korea says it will not offer anything for Trump to brag about in the meantime. This just adds to the bit-part rhetoric from last week here.

The relationship between the two sure looks like anything but amicable right now.
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Video: How a drop in the euro sparks a global rout

The euro is the linchpin holding everything together, but it’s breaking

The euro closed the week at the lowest level in two years but this might be just the beginning. The ZEW survey this week showed economic expectations tanking and the euro won’t be far behind unless Merkel reverses course and starts spending. If the euro goes, it will set off a cascading series of events, as I explain in this video.

Want me to make a more-detailed video on this topic? Let me know in the comments. Would you like us to make more videos in general? Let us know by subscribing to our YouTube channel.

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RBA’s Kent Says Rate Cuts, Currency Drop Are Providing Stimulus

(Bloomberg) — Australia’s back-to-back interest-rate cuts are flowing through the financial system and into the economy, while the falling currency should provide a similar stimulus to sustained declines of previous years, a senior Reserve Bank official said.

“The transmission of monetary policy in Australia to financial conditions is working in the usual way,” Christopher Kent, assistant governor for financial markets, said in Sydney Tuesday. “In particular, the change in the stance of policy has underpinned the decline in risk-free rates along the yield curve. It has also contributed to a decline in the cost of funding in corporate bond markets, supported equity prices, and lowered the cost of funding for banks.”

Kent also said in his speech to the Finance & Treasury Association that much of the reduction in banks’ funding costs has been passed through to business and household borrowers. The cash rate currently stands at 1%, with traders pricing in another quarter-point cut this year and a further one in 2020.

Kent noted that a spike in commodity prices over the past year had impacted the currency less than in the past, due to expectations that the supply-driven gains were likely to be short-lived. He estimated that, in trade-weighted terms, the dollar was down about 7% over the past year; it was trading at 67.57 U.S. cents at 10:52 a.m. in Sydney, near the lowest level since 2009.

Some Support

“Notwithstanding an easier stance of monetary policy globally, the decline in interest rates in Australia has contributed to the depreciation of the Australian dollar,” he said. “That broad-based easing in financial conditions in Australia will provide some additional support to demand in the period ahead.”

Asked after the address whether the currency would deliver the same impetus to the economy as on previous occasions, given changes in the industrial base, Kent was categorical in his response: “Absolutely.”

“Education and tourism benefit just as much through a depreciation in terms of their competitiveness as any other industries which are no longer so prominent,” he said. “So yes I think it’s going to have about the same sort of effect in terms of the stimulus.”

Kent was also asked whether the central bank’s focus was still inflation or perhaps unemployment or even under-employment now. He reiterated the bank’s line that there was more spare capacity in the economy than had been anticipated, as strong hiring had been met by a “substantial increase” in the participation rate.

“We’re certainly not unemployment rate targeters, we still are inflation targeters,” he said. “But it’s a dual mandate, we care about inflation, we care about full employment. We care about the general welfare of the populace.”

(Updates with Q&A currency comments from first paragraph.)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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To avoid a ‘flash crash’, FX traders drop yen shorts and run bare

© Reuters.  To avoid a 'flash crash', FX traders drop yen shorts and run bare © Reuters. To avoid a ‘flash crash’, FX traders drop yen shorts and run bare

By Swati Pandey

SYDNEY (Reuters) – As Japan heads for an unprecedented market holiday, investors around the globe are fretting over the risk of a ‘flash crash’ or violent spasm in currencies that can occur when traders are away and turnover is super thin.

Japanese markets will be shut from April 29 to May 6, easily the longest break in modern times, to celebrate Crown Prince Naruhito’s enthronement as the next emperor.

Prudent investors are preparing with a variety of strategies, including cutting their holdings in the yen and increasing hedges on their foreign exchange exposures, several money managers and analysts told Reuters.

Some are looking deeply into the holdings of Japanese retail investors – known in the market as “Mrs Watanabes” – whose large wagers and herd behavior can roil prices.

“We see the upcoming Japanese forex liquidity drought as offering danger for corporates, but perhaps opportunity for speculative accounts,” said Sean Callow, the Sydney-based currency strategist at Westpac.

“Corporates need to beware of the potential for dislocative price action as seen in January, triggering stop-loss orders and causing collateral damage even to non-yen forex pairs. Higher forex hedge ratios may be prudent.”

Investors have already suffered two flash crashes this year when Japan was shut.

One came in January when the safe-haven yen spiked and sent an array of currencies sensitive to risk appetite tumbling. Another followed in February when the Swiss Franc saw wild gyrations.

“I would be especially cautious around the middle of next week, on May 1,” said Marios Hadjikyriacos, a Cyprus-based investment analyst at broker XM.

Not only are Japan and China off, but most of Europe will be away for Labor Day.

“Liquidity may be in very short supply until U.S. traders get to their desks ahead of the Fed meeting that day.”

The U.S. Federal Reserve holds a two-day policy meeting on April 30-May 1, dropping a potentially very large market risk into a very shallow trading pool.

China will also release key economic activity data on April 30 and May 2, while the protracted Sino-U.S. trade negotiations also resume next week.

Traders worry that adverse news could force investors out of short positions in the yen, which they customarily borrow to fund purchases of higher yielding but riskier currencies.

This is exactly what happened in January when a torrent of stop-loss sales sent the U.S. dollar down almost four whole yen in a matter of minutes.

LONGS AND SHORTS

Some analysts suggest investors should buy the yen against the Australian dollar, taking the opposite side of what is a popular carry-trade for Japanese retail investors.

Another recommendation is to essentially buy insurance against wild moves by being long the ‘implied volatility’ — market expectations for future volatility — on the Aussie-yen pair.

Mrs Watanabes are already working at it by borrowing dollars to buy yen, data from the Tokyo Financial Exchange shows. Their net short dollar/long yen positions hit an all-time high of 223,202 contracts on April 17, worth $ 2.32 billion.

They have also slashed bets that the yen will fall against the Australian dollar, a favored play, to a 14-month trough.

Yet, they still have heavy exposure to the Turkish lira and the South African rand, with long positions in Turkey’s currency above levels seen during the January crash.

“The yen is susceptible to both a big up-move during Golden Week from forced position liquidation were the Lira (or Rand) to weaken significantly, but also an amplified down move were the U.S. dollar to strengthen significantly,” Ray Attrill, Sydney-based currency strategist at NAB, said in a note.

In anticipation of possibly sudden market moves, the Tokyo Financial Exchange has asked its retail clients to beef up their margin deposits or lighten their positions before the holidays, manager Yasuhiro Fujitmoto told Reuters.

There are also signs that investors globally are betting on a steep yen rise in the short-term, particularly through yen calls in the options market.

Ironically, the general drop in currency volatility in recent months further adds to the risk of a flash crash.

Derivative traders have been tempted to sell implied volatility across markets in the expectation that all will remain quiet. If volatility were to spike suddenly, many of those positions could also be under water, forcing more short-covering.

Indeed, one-month implied volatility in the Japanese yen is now around 4.5, lower than during last year’s Golden Week of around 7.

Kenneth Broux, a currency strategist at Societe Generale (PA:) in London, said Japan’s Golden Week holiday had been a non-event in the last few years for the currency markets.

“…but with volatility so low, the risk that we can see an event risk hitting FX markets has grown. There is no shortage of events during that period,” he said.

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Forex – Dollar Set for Second-Straight Weekly Drop on Mixed Jobs Report

© Reuters. © Reuters.

Investing.com – The U.S. dollar Friday was set to post a second week of losses in a row despite analysts downplaying expectations the Federal Reserve won’t hike rates this year after the economy created more jobs than expected last month.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.03% to 95.55.

grew by 304,000 last month, up from 222,000 the prior month. The gain was well above economists’ forecast of 165,000.

The unexpectedly ticked higher to 4% in January from 3.9% in December. Meanwhile, average hourly earnings slowed to a rate of , below expectations for a 0.3% rise.

Analysts continued to tout a healthy backdrop for the labor market, saying the jobs report would strengthen the outlook for an interest rate hike this year.

“While it makes sense for the Fed to wait and see how its 2018 rate hikes impact the economy in the first half of this year, strong job creation and wage growth suggests consumer spending should still be robust and that policymakers should be able to hike rates once more this year,” CIBC said.

Elsewhere, rose 0.17% $ 1.1465 following data showing the pace of improved

fell 0.14% to $ 1.3082, while fell 0.38 to C$ 1.3076 as oil prices surged, propping up the loonie, following a fall in rig counts and signs that U.S. sanctions on Venezuelan exports have trimmed supply.

rose 0.62% to Y109.55 as demand for the safe-haven yen fell on the back of improving sentiment on trade.

President Donald Trump told reporters on Thursday he was confident “every point (on trade) will be agreed to” when he meets with President Xi Jinping at an as-yet-unscheduled date. The United States and China had their second-round of high level trade talks this week, and the U.S. trade team is expected to head to Beijing in mid-February for follow-up talks.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Facebook shares drop as data privacy fallout spreads

© Reuters. FILE PHOTO - 3D printed Facebook logo is seen in front of displayed cyber code © Reuters. FILE PHOTO – 3D printed Facebook logo is seen in front of displayed cyber code

By Lisa Lambert and Paresh Dave

WASHINGTON (Reuters) – Facebook Inc (NASDAQ:) shares sank on Wednesday as concerns about its ability to safeguard user data sparked a government lawsuit, criticism in the U.S. Congress and a New York Times report on how it had shared data with other companies.

The stock of the world’s largest social media company fell 7.25 percent, its biggest intraday drop since July, taking losses for the year to about 24 percent. Investors are concerned about snowballing legal and regulatory efforts over data use polices that have upset many customers and could carry significant penalties and costs.

In particular, the Silicon Valley firm has drawn global scrutiny since disclosing earlier this year that a third-party personality quiz distributed on Facebook gathered profile information on 87 million users worldwide and sold the data to British political consulting firm Cambridge Analytica.

Washington, D.C., Attorney General Karl Racine said the U.S. capital city was suing Facebook, accusing it of misleading users because it had known about the incident for two years before disclosing it.

It further alleges Facebook misled users by allowing several app makers it called partners "to override Facebook consumers’ privacy settings and access their information without their knowledge or consent."

Facebook said in a statement, "We’re reviewing the complaint and look forward to continuing our discussions with attorneys general in D.C. and elsewhere."

The New York Times reported new details on Tuesday about the user data that remained available to such partners years after they had shut down features that required them. Facebook acknowledged the lapse in a blog post but said it had not found evidence of wrongdoing by those partners.

In response, both Democrat and Republican lawmakers criticized the company and queried whether Chief Executive Officer Mark Zuckerberg had lied to Congress in hearings earlier this year.

The incoming chair of the House Judiciary Committee’s antitrust subcommittee, Representative David Cicilline, tweeted: "Zuckerberg told Congress that Facebook users had ‘complete control’ over their data. Sure looks like he lied."

Incoming Republican senator Josh Hawley made similar comments about Zuckerberg’s testimony.

The stock slide was the worst since the owner of Facebook, WhatsApp and Instagram warned in July that profit margins would erode in coming years because of consumer and government pressure to better guard data and suppress objectionable content.

"Facebook could have prevented third parties from misusing its consumers’ data had it implemented and maintained reasonable oversight of third-party applications," according to the lawsuit filed in the Superior Court of Washington, D.C., on Wednesday.

The court could award unspecified damages and impose a civil penalty of up to $ 5,000 per violation of the district’s consumer protection law, or potentially close to $ 1.7 billion, if penalized for each consumer affected. The lawsuit alleges the quiz software had data on 340,000 D.C. residents, though just 852 users had directly engaged with it.

‘CONFUSING SETTINGS’

Facebook offered separate privacy settings around 2013 to control what friends on the network could see and what data could be accessed by apps, enabling the quiz and other services to collect details about users’ Facebook friends without many of them realizing it, according to the lawsuit.

Racine told reporters that Facebook had tried to settle the case before he filed suit, as is common during investigations of large companies, but that a lawsuit was necessary "to expedite change" at the Silicon Valley company.

Britain’s data protection authority in July fined Facebook 500,000 pounds ($ 631,000) for breaches of data in the Cambridge Analytica incident.

Since then, Facebook has disclosed a pair of security breaches involving profile data and posts of up to 29 million users and 6.8 million users, respectively.

At least six U.S. states have ongoing investigations into Facebook, according to state officials.

In March, a bipartisan coalition of 37 state attorneys wrote to the company, demanding to know more about the Cambridge Analytica data and its possible links to U.S. President Donald Trump’s election campaign.

At the same time, the Federal Trade Commission took the unusual step of announcing an investigation into whether Facebook had violated a 2011 consent decree, exposing the company to a multi-billion dollar fine.

State attorneys general have found some success taking on technology companies over data privacy. Uber Technologies Inc () in September agreed to pay $ 148 million as part of a data breach settlement with 50 U.S. states and Washington, D.C..

Agnieszka McPeak, a professor at Duquesne University School of Law, said states will likely make claims similar to those of D.C., pressuring Facebook into a settlement that involves both a monetary fine and modified business practices.

"If a company faces 51 separate actions around the country for deceptive practices, that can have a real impact," McPeak said.

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VW's Skoda deliveries drop in November on China, January-November shipments up

© Reuters. Skoda logo is pictured during the Volkswagen Group's annual general meeting in Berlin © Reuters. Skoda logo is pictured during the Volkswagen Group’s annual general meeting in Berlin

PRAGUE (Reuters) – Czech carmaker Skoda Auto, part of the Volkswagen (DE:) Group, delivered 1.149 million vehicles in the January-November period, a 5.1 percent rise from a year ago, it said on Thursday.

Deliveries in November alone fell 3.9 percent, however, largely due to declines in China, the carmaker’s largest market.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – Dollar Stabilizes after Wednesday Drop on Dovish Fed

© Reuters.  © Reuters.

Investing.com – The dollar steadied on Thursday following a drop in the previous session after dovish comments by Federal Reserve Chairman Jerome Powell, who said interest rates were now close to the “neutral” level.

The , which measures the greenback’s strength against a basket of six major currencies, edged up 0.12% to 96.78 by 04:18 AM GMT (09:18 AM GMT), after falling 0.62% on Wednesday.

In a speech on Wednesday, Powell said interest rates were at which they neither stimulate nor hinder economic growth. The comments came less than two months after he said rates were probably “a long way” from that point.

Investors viewed the comments as an indication that the Fed would slow its program of hiking interest rates.

Market watchers were looking ahead to the minutes of the Fed’s November meeting due to be released later Thursday, for fresh indications on the path of interest rates.

The Fed is widely expected to raise rates for a fourth time this year at its upcoming meeting in December and has indicated that it may raise rates three more times in 2019, but markets are pricing in just one rate hike next year.

Investors were also monitoring developments in the ahead of the upcoming G20 summit later this week where U.S. President Donald Trump and his Chinese counterpart Xi Jinping are scheduled to hold talks.

Trump said earlier this week that it was “highly unlikely” he would accept China’s request to hold off a planned increase in tariffs due to take effect in January.

The dollar was weaker against the yen, with down 0.32% to 113.33.

The euro was little changed against the U.S. currency, with changing hands at 1.1371.

The pound was broadly lower, with falling 0.45% to 1.2767 and advancing 0.46% to 0.8903.

Sterling was pressured lower amid uncertainty over whether British Prime Minister Theresa May’s Brexit withdrawal deal due to take place on December 11.

The Bank of England warned Wednesday that a no-deal Brexit could plunge the UK economy into the since the Second World War.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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