2024-04-30 10:53

NEW YORK, April 30 (Reuters) - The yen fell against the dollar on Tuesday, giving back a chunk of its sharp gains in the prior session sparked by suspected intervention by Japanese authorities, while U.S. economic data on employment costs boosted the dollar. The yen weakened 0.88% against the greenback at 157.73 per dollar, but was still off its 34-year low of 160.245 hit on Monday when traders say yen-buying intervention by Tokyo drove a strengthening of about five yen. For the month, the yen is down 4.04% against the dollar, on track for its biggest monthly decline since February 2023. The dollar index gained ground after economic data showed U.S. labor costs increased more than expected in the first quarter amid a rise in wages and benefits, confirming the surge in inflation early in the year that will likely delay a much- anticipated interest rate cut later this year. "The trend is still higher for dollar/yen, we really have to see either policy divergence sort of converge a bit, have the U.S. bond market catch a more sustainable bid that takes dollar yen further off the highs, maybe produces a couple of weekly lower lows or some change in rhetoric from the BOJ, but I think it has to be the latter," said Erik Bregar, director of FX and precious metals risk management at Silver Gold Bull in Toronto. Japanese officials may have spent some 5.5 trillion yen ($35.05 billion) in supporting the currency on Monday, Bank of Japan data suggested on Tuesday. The Bank of Japan (BOJ) on Tuesday left its plan for monthly bond buying unchanged for May. Japan's government bond (JGB) investors are looking for clues on the timing of a taper, which will lead to higher, more attractive yields, supporting the yen. This comes as the Fed begins its two-day monetary policy meeting on Tuesday, where it is widely expected to hold rates at 5.25%-5.5%, while comments from Chair Jerome Powell will be closely watched for signs of the central bank's policy path in light of recent data on inflation and the labor market. Markets have continued to push back expectations for the timing of a rate cut this year, with odds for a cut in September of at least 25 basis points (bps) just slightly below 50%, according to CME Group's FedWatch Tool New Tab, opens new tab. The dollar index gained 0.52% at 106.24, with the euro down 0.42% at $1.0674. Sterling weakened 0.49% at $1.2499. The dollar index was up 1.7% for April and poised for its biggest monthly gain since January. The euro is down 1.11% for the month and Sterling is down 1.02%, on track for its biggest monthly drop since September. Bank of America technical strategist Paul Ciana said in a note that a supported and stronger US dollar is the firm's base case, and they still advocate for buying the greenback dips "in anticipation of another leg higher" in the second quarter. French and eurozone inflation data released on Tuesday boosts confidence the European Central Bank (ECB) will be able to start lowering interest rates in early June, said ECB policymaker Francois Villeroy de Galhau, while European Central Bank policymaker Pablo Hernandez de Cos said the ECB should start cutting interest rates in June if inflation continues its gradual decline as expected. Euro zone inflation held steady as expected in April but a crucial indicator on underlying price pressures slowed. Sign up here. https://www.reuters.com/markets/currencies/yen-clings-sharp-gains-after-suspected-intervention-fed-focus-2024-04-30/

2024-04-30 10:46

BEIJING, April 30 (Reuters) - China will step up support for the economy with prudent monetary and proactive fiscal policies, including interest rates and bank reserve requirement ratios (RRR), the Politburo of the Communist Party was quoted by state media as saying on Tuesday. The party's top decision-making body said it would be flexible with policies in the world's second-biggest economy, which grew faster than anticipated in the first quarter but is still facing headwinds. The comments by the Politburo were largely in line with expectations, including modest stimulus steps and some support for the property sector with a focus on dealing with housing inventories. But analysts said the comments showed increased urgency to deal with structural woes. "The sustained recovery and improvement of the economy still face many challenges," the Politburo said, according to Xinhua news agency, after a meeting chaired by President Xi Jinping. The Politburo pointed to problems such as insufficient demand, huge pressures on firms, risks and hidden dangers in key areas of the economy. "At the same time, it must be noted that China's economic foundation is stable, with many advantages, strong resilience, and great potential," it said. China has set an economic growth target for 2024 of around 5%, which many analysts say will be a challenge to achieve without much more stimulus. China's manufacturing and services activity both expanded at a slower pace in April, official surveys showed on Tuesday, suggesting some loss of momentum for the economy. "We need to flexibly use policy tools such as interest rates and reserve requirement ratios, increase support for the real economy, and reduce the overall cost of social financing," the Politburo said. The People's Bank of China has in recent months delivered modest cuts in RRR and interest rates to support economic growth. "The meeting hints that there might be cuts in interest rates and RRR in the second quarter," said Xing Zhaopeng, senior China strategist at ANZ. Amid tepid domestic demand and a property crisis, Beijing has ramped up infrastructure investment and turned to investing in high-tech manufacturing to lift the economy this year. China will issue ultra-long term special treasury bonds as soon as possible, and speed up the issuance of local government special bonds to maintain the necessary intensity of fiscal expenditure, the news agency quoted the Politburo as saying. Beijing plans to issue 1 trillion yuan ($138.14 billion) in special ultra-long term treasury bonds to support some key sectors. "CATCH UP WITH THE TIMES" The party's central committee will gather in July for a key meeting known as a plenum, the third since the body of elite decision makers was elected in 2022, focusing on reforms amid "challenges" at home and complexities broad. "Reform and opening up is an important tool for the party and the people's cause to catch up with the times with great strides," Xinhua quoted the Politburo as saying. Chinese leaders have signalled their willingness to push reforms, amid growing calls from policy advisers for changes to tackle economic imbalances and return to a path of pro-market policies at the cost of increased state control of the economy. Proposals include relaxing urban residency permits to boost consumption, creating a level playing field for the struggling private sector and redesigning the tax system to tackle the root cause of surging municipal debt. "China's senior leadership has today signalled further fiscal and monetary support for the economy and renewed efforts to stabilise the housing market," Capital Economics said in a note. "There are also some signs that the leadership may be getting more serious about addressing the economy's structural problems that threaten the medium-term outlook." China will coordinate and improve policies to reduce housing inventories and optimise policy measures for new housing, the Politburo added. "The meeting proposed to resolve home inventory and optimise new homes, which means China may allow local governments (to) buy commercial houses...and turn them into affordable houses. This could be a significant turning point for the supply side of the property industry," said ANZ's Xing. Shares of beleaguered Chinese property developers have rallied this week on speculation more stimulus measures will be unveiled soon to clear a glut of unsold homes. New home prices fell at their fastest pace in more than eight years in March as developers' debt woes dragged on demand. Top leaders also emphasised the need to develop "new productive forces" according to local conditions, Xinhua said. The term "new productive forces" was coined by President Xi last September, underscoring the need for economic development based on innovation in advanced sectors. ($1 = 7.2392 Chinese yuan renminbi) Sign up here. https://www.reuters.com/world/china/china-step-up-support-economy-flexibly-use-policy-tools-politburo-says-2024-04-30/

2024-04-30 10:37

HONG KONG, April 30 (Reuters) - Six spot bitcoin and ether exchange traded funds (ETFs) finished mixed in their Hong Kong debut on Tuesday amid relatively lukewarm trading, as the city tests Asian investors' enthusiasm for cryptocurrency assets. The debuts mark the first launch of spot cryptocurrency ETFs in Asia and come just three months after the U.S. launched its first ETFs to track spot bitcoin. Cryptocurrency is banned in mainland China, but Hong Kong has been promoting itself as a global digital asset hub, part of a drive to maintain its allure as a financial centre. Spot bitcoin ETFs launched by China AMC , Harvest and Bosera gained between 1.5% and 1.8% at the close. The three ether ETFs , , managed by the asset managers edged down. Bitcoin dropped more than 1%. The first-day total turnover of the six ETFs was about $112 million, far below the $4.6 billion recorded in the first day of U.S. trading. Still, issuers said the funds raised before the official listing are sizable thanks to interests from both crypto and traditional investors. China AMC said its bitcoin ETF launched with an initial size of HK$950 million ($121 million), the biggest among the three issuers. Christina Choi, an executive director of the Securities and Futures Commission (SFC), hailed the product debut as a milestone in Hong Kong's ETF market, but also flagged risks. "Virtual assets are quite speculative and very volatile ... so I remind you that such assets are not suitable for all investors," Choi told Tuesday's launch event. The ETF launch also put Hong Kong in direct competition with the United States for crypto investors. U.S. spot bitcoin ETFs have drawn roughly $12 billion in net inflows, contributing to a surge in bitcoin's price earlier this year. But U.S. regulators have not yet approved ETFs that track spot ether prices. Local crypto giant HashKey Group expects the size of Hong Kong spot crypto ETF market could reach 20% of the U.S. counterpart in one year. Han Tongli, CEO of Harvest Global Investments, said Hong Kong should have greater potential than the U.S. in developing the crypto assets as it can attract investors from both west and east. In the long term, crypto ETFs have the potential to be available to mainland Chinese investors if the products are proved to be risk controllable, Han said. COMPETITION Another difference with U.S. crypto ETFs is that Hong Kong's adopt the so-called "in-kind" transaction mechanism that allows investors to buy and sell ETF shares using the relevant crypto tokens instead of cash. Such an option should be appealing to investors as token owners "may consider the benefit of holding through the ETFs without the cost of first converting to fiat (currency)", said Robert Zhan, risk consulting director at KPMG China. Some analysts expect the majority of initial inflows will come from local retail investors given cost concerns. The management fee of the Hong Kong crypto spot ETFs, ranging between 0.3% to 0.99%, is much higher than the current U.S. listed ones, due to the limited number of regulated service providers under the city's strict legal framework. Currently Hashkey and OSL are the only two approved trading platforms in Hong Kong. "If Hong Kong SFC approves more participants or trading platforms in the long run, it will make the costs lower and more competitive," said Alex Chiu, senior strategist of ETF Business at Value Partners. Bitcoin has gained roughly 50% this year and hit an all-time high of $73,803 in March. It was trading at around $62,000 on Tuesday. Ether has risen more than 30% year-to-date. ($1 = 7.8253 Hong Kong dollars) Sign up here. https://www.reuters.com/markets/currencies/asias-first-spot-bitcoin-ether-etfs-gain-hong-kong-debut-2024-04-30/

2024-04-30 10:30

SEATTLE, April 30 (Reuters) - Changpeng Zhao, the former chief executive of Binance, was sentenced on Tuesday to four months in prison after pleading guilty to violating U.S. laws against money laundering at the world's largest cryptocurrency exchange. Once considered the most powerful crypto industry figure, Zhao, known as "CZ," is the second major crypto boss to be sentenced to prison. The sentence imposed by U.S. District Judge Richard Jones in Seattle was significantly shorter than the three years sought by prosecutors, and below the maximum 1-1/2 years recommended under federal guidelines. It was also much lighter than the 25 years behind bars that Sam Bankman-Fried received in March for stealing $8 billion from customers of his now-bankrupt FTX exchange. Bankman-Fried is appealing his conviction and sentence. Still, prosecutors cheered the outcome of what had been a years-long investigation into Binance and Zhao, a billionaire who had been living beyond U.S. reach in the United Arab Emirates. "This was an epic day,” U.S. Attorney Tessa Gorman told reporters outside the courthouse. “Incarceration was critical in this case and we’re pleased with the result.” Before handing down the sentence, Jones faulted Zhao for making Binance's growth and profitability a higher priority than complying with U.S. laws. "You had the wherewithal, the finance capabilities, and the people power to make sure that every single regulation had to be complied with, and so you failed at that opportunity," he said. Zhao, 47, did not visibly react upon hearing his sentence. He wore a navy blue suit and tie in the courtroom, with his mother and several other family members in attendance. Defense lawyers had requested probation. "'Crime pays' is the message sent today," Dennis Kelleher, head of the financial reform advocacy group Better Markets, wrote in an email, noting Zhao will still get to keep his vast wealth. 'I'M SORRY' Prosecutors said Binance employed a "Wild West" model that welcomed criminals, and did not report more than 100,000 suspicious transactions with designated terrorist groups including Hamas, al-Qaeda and Islamic State. They also said Zhao's exchange supported the sale of child sexual abuse materials and received a large portion of ransomware proceeds. Binance agreed to a $4.32 billion penalty, and Zhao paid a $50 million criminal fine plus $50 million to the U.S. Commodity Futures Trading Commission. "I'm sorry," Zhao told the judge before being sentenced. "I believe the first step of taking responsibility is to fully recognize the mistakes. Here I failed to implement an adequate anti-money laundering program ... I realize now the seriousness of that mistake." Much of Binance's misconduct, including its weak money laundering controls, was first reported by Reuters. Zhao will surrender voluntarily to serve his sentence, most likely at a detention center near Seattle-Tacoma International Airport. “Not prioritizing compliance is a few shades below criminal intent. It’s bad, but it’s below the usual requirement of specific intent" that would justify a years-long sentence, said Robert Frenchman, a lawyer specializing in white-collar crime. But given the scale of Binance’s violations and the massive fines imposed, he should not have expected probation or home detention, Frenchman added. NOT A MONSTER Prosecutors had told the judge a tough sentence would send a clear signal to other would-be criminals. "We are not suggesting that Mr. Zhao is Sam Bankman-Fried or that he is a monster," prosecutor Kevin Mosley said. But Zhao's conduct, he said, "wasn't a mistake. This wasn't a regulatory 'oops.'" Zhao stepped down as Binance's chief in November, when he and the exchange he founded in 2017 admitted to evading money-laundering requirements under the Bank Secrecy Act. In seeking probation, defense lawyers said others who admitted to similar wrongdoing, including BitMEX founder Arthur Hayes, were not locked up. Zhao "wanted to make a difference in the world," but made mistakes, defense lawyer Mark Bartlett said. Jones said the three-year sentence requested by prosecutors was inappropriate because they did not show that Zhao knew in advance about illegal activity. "It's always the case the government asks for more than they think they'll get," said Frenchman. "Going that much above guidelines for a pleader is unusually aggressive." Several other crypto moguls are also in the crosshairs of U.S. authorities after the collapse of crypto prices in 2022 exposed fraud and misconduct across the industry. Sign up here. https://www.reuters.com/legal/binances-ceo-zhao-faces-sentencing-over-money-laundering-violations-2024-04-30/

2024-04-30 10:02

A look at the day ahead in U.S. and global markets from Mike Dolan World markets stalled on Tuesday as another heavy earnings week for megacap stocks cranked up, with renewed slippage in Japan's yen and U.S. Treasuries eyed closely in the background. Major macro market moves are likely in check for now as the Federal Reserve starts its latest two day policy meeting - with Wall Street also eyeing first quarter results from two more top ten world caps Amazon and Eli Lilly. News of a larger U.S. Treasury borrowing slate for the coming quarter than previously estimated unnerved the bond market a touch overnight. Blaming lower cash receipts, the government said late Monday it expects to borrow $243 billion in the second quarter - some $41 billion more than it said in January. But currency markets remained focussed on the fate of the yen as it fell again earlier on Tokyo's return from Monday's public holiday - during which suspected official intervention lifted it from a trough of 160 per dollar. As the Nikkei stock benchmark (.N225) New Tab, opens new tab jumped more than 1% on its return from the long weekend, the Japanese currency weakened almost a full yen from Monday's New York close to within a whisker of 157 - almost 1% down from levels seen before Friday's Bank of Japan meeting and despite yesterday's wild swings. Without confirming Monday's intervention, Japan's top currency diplomat Masato Kanda said on Monday that 'speculative, rapid and abnormal' yen moves could not be overlooked and on Tuesday said the authorities were ready to act around the clock. "We are ready 24 hours, so whether it's London, New York or Wellington, it doesn't make a difference," he told reporters. Kanda also said finance ministers of Japan, China, South Korea and ASEAN countries will meet on the sidelines of the upcoming Asian Development Bank's annual meeting in Tbilisi, Georgia. Whatever the merits or otherwise of the yen's accelerating fall to 34-year lows for Japan's own economy, there's some trepidation that it may upend the competitive landscape across Asia's major exporting nations and South Korea and others are watching closely. To that end at least, China continues to hold the yuan relatively stable against the dollar - although its recently buoyant stock markets (.CSI300) New Tab, opens new tab wobbled a bit again Tuesday after a mixed set of monthly business surveys showed a slowing of activity there in April. China's Politburo, a top decision-making body of the ruling Communist Party, said on Tuesday it will step up its support for the economy, flexibly using policy tools that include banks' reserve requirement ratios and interest rates. It also said it would coordinate and improve policies to reduce housing inventories and optimize policy measures for new housing to address the ongoing property sector bust - though the statement seemed to stop short of detailing the sort of major initiatives that markets had speculated about on Monday. In Europe, the heavy earnings season dominated - but there was some relief that April consumer price inflation readings for the euro zone came in as expected at annual 2.4%, core inflation rates ebbed and flash readings for quarterly growth in the bloc beat forecasts with a 0.3% expansion. Money markets are more than 70% priced for the first European Central Bank interest rate cut as soon as June and the euro held steady. That's despite the contrast with Fed expectations, where futures now don't fully price a quarter point off rates until after November's election. With the Fed kicking off this week's two-day meeting on Tuesday, it's widely expected to hold the line again - though there is some focus on whether it will reveal anything on slowing its balance sheet rundown of Treasury holdings. Irked by the 'higher for longer' rates prospect, heavier second-quarter borrowing plans and even the chance Japan may soon be a seller of Treasuries to fund intervention to support the yen, 10-year yields nudged higher again on Tuesday to 4.65%. In company news, HSBC's stock (HSBA.L) New Tab, opens new tab rose 2% after Chief Executive Noel Quinn said he plans to step down, marking the surprise departure of a hard-nosed leader who has overseen a raft of asset sales, guided the lender to record profit and lifted its share price. A former head of the bank's markets business who was appointed to the No. 2 role over a year ago, Chief Financial Officer Georges Elhedery is likely the leading internal candidate for the job. Back on Wall Street, Tesla (TSLA.O) New Tab, opens new tab stole the show on Monday as its beaten down shares surged 15.3% after the electric vehicle maker made progress in securing regulatory approval to launch its advanced driver-assistance program in China. Apple (AAPL.O) New Tab, opens new tab, which reports earnings on Thursday, gained 2.5% following a report the iPhone maker had renewed discussions with OpenAI about using the startup's generative artificial intelligence technology. Amazon tops the heavy earnings diary later, with eyes also on Super Micro Computers for a glimpse of what's happening in the AI world. Key diary items that may provide direction to U.S. markets later on Tuesday: * US April consumer confidence, Chicago April PMI business survey, Dallas Fed April service sector survey, US Q1 labor costs, Feb monthly home prices * Federal Reserve's Federal Open Market Committee starts two-day policy meeting - decision Wednesday * US corporate earnings: Amazon, Eli Lilly, Super Micro Computers, Advanced Micro Devices, Prudential Financial, PayPal, 3M, Marathon, Mondelez, Coca Cola, Starbucks, Molson Coors, McDonalds, Clorox, Corning, Edison, Eaton, Amcor, Archer Daniels Midland, Stryker, Sysco, Hubbell, Pacar, Skyworks Solutions, Incyte, CentrePoint Energy, Diamondback Energy, Caesars Entertainment, American Tower, Illinois Tool Works, Republic Services, Essex Property Trust, Ecolab, Gartner etc Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-04-30/

2024-04-29 23:56

Money market data points to yen intervention Japan PM, officials decline comment Yen steady around 157 per dollar TOKYO, April 30 (Reuters) - Japan stands ready to deal with foreign exchange matters around the clock, top currency diplomat Masato Kanda said on Tuesday, as money market data suggested the finance ministry had spent around $35 billion to prop up the sliding yen a day earlier. Kanda would not say whether the authorities were behind the currency's surge on Monday, but traders and a former Japanese official said it had all the markings of an intervention. "We are ready 24 hours, so whether it's London, New York or Wellington, it doesn't make a difference," the vice finance minister for international affairs told reporters. Central bank money market projections published late on Tuesday showed it anticipated a surge in yen receipts on Wednesday, which might point to heavy yen buying on Monday as foreign exchange trades typically take two days to settle. The data suggests the spending may have been close to the daily record 5.62 trillion yen - nearly $36 billion at current exchange rates - when Japan intervened in October 2022. If it has done so again, it also signals that after weeks of rhetoric it is willing to tackle the currency's weakness. Factors other than foreign exchange intervention can influence money market balances. Prime Minister Fumio Kishida earlier on Tuesday also refused to be drawn into discussing foreign exchange moves or interventions. The yen was last quoted at 157.03 to the dollar in New York trade, after slumping as far as 160.245 on Monday to mark another 34-year low. While Kanda side-stepped direct questions about intervention, he said the authorities would act if excessive moves triggered by speculators negatively impact the daily lives of people. "Higher prices of import goods are said to be affecting most vulnerable people and could be a drag on Japan's momentum to raise actual wages," he said. "The government would need to respond to such moves." HIGHLY LIKELY The yen has been falling for years as global interest rates have shot up in response to resurgent inflation while Japan's have stayed near zero. That gap has driven money out of yen and into other better-yielding currencies and even in March, when Japan hiked rates for the first time since 2007, the yen fell. Momentum and fading expectations of rate cuts in the United States have also helped push down the yen, which has lost more than third of its value on the dollar since early 2021 and brought Japan into the market to defend its currency in 2022. Former top currency diplomat Mitsuhiro Furusawa told Reuters it was highly likely Japan had acted again this week. Krishna Srinivasan, director of the IMF's Asia and Pacific Department, said the lender sees Japanese authorities fully committed to a flexible exchange rate regime and is in close talks with them. While the yen's recent weakness largely reflects interest rate differentials, other factors are playing an increasing role in the moves, including large carry trade positions, he said, speaking in Singapore. He declined to comment specifically on yen moves of the past few days. In carry trades, investors borrow a currency with low interest rates, such as the yen, and sell it to buy higher-yielding currencies. The Group of Seven finance leaders this month agreed to a Japanese proposal to reaffirm that excessive volatility and disorderly moves in the currency market were undesirable. In the first trilateral finance dialogue since last year's three-way leaders summit at Camp David, the U.S., Japan and South Korea agreed to consult on currency markets, acknowledging concern in Tokyo and Seoul about their slumping currencies. The meetings were broadly seen as giving Tokyo approval to step into the foreign exchange market. ($1 = 156.9100 yen) Sign up here. https://www.reuters.com/markets/currencies/japan-forex-authorities-ready-24-hours-top-currency-diplomat-kanda-says-2024-04-29/