Gold prices steadied on Friday but were on track for their biggest weekly fall since May ahead of US&nbsp;employment data later that could influence the pace of US&nbsp;interest rate rises.

Gold this week broke below a recent trading range and tumbled through technical levels to its lowest since July as progress on US&nbsp;tax reform fuelled optimism about the US&nbsp;economy and boosted the dollar.

&quot;You can put it down to the strength of the dollar and the ebullience of investors regarding equities and all things risk-on,&quot; said ETF Securities analyst Martin Arnold.

&quot;When in such a positive mindset investors don&#39;t look for defensive assets like gold.&quot;

The dollar was given an extra boost on Friday after a funding bill eased fears of a US&nbsp;government shutdown this month. A stronger dollar makes bullion more expensive for holders of other currencies and can dampen demand.

Spot gold was down 0.1 percent at $1,245.66 an ounce at 1109 GMT, close to Thursday&#39;s low of $1243.71, the weakest since July 26. It had fallen 2.7 percent this week, its third consecutive weekly fall and the biggest since early May.

US&nbsp;gold futures were 0.4 percent lower at $1,247.80.

Selling was triggered after gold broke below $1,260, the bottom of its trading range since September, and plunged below its 200-day moving average for the first time since July.

Technical support is now at $1,250 and a Fibonacci level at $1,240.90 but momentum indicators suggest that gold could fall to $1,204.90, the July low, said analysts at ScotiaMocatta.

However, ETF Securities&#39; Arnold said prices were supported by risks including US&nbsp;policy paralysis, tensions in North Korea and the Middle East, and a potential correction in equity valuations. He said gold&#39;s fair value was $1,260-$1,280.

Gold is traditionally seen as a safe investment in times of uncertainty.

Investors were looking ahead to US&nbsp;non-farm payrolls data at 1330 GMT. The US&nbsp;Federal Reserve is expected next week to announce a rise in interest rates and offer guidance on the pace of further increases. Strong payrolls would support the case for aggressive rate rises.

Gold is sensitive to rising interest rates because they push up bond yields, reducing the appeal of non-yielding gold, and tend to boost the dollar.

Among other precious metals, silver was up 0.4 percent at $15.78 but down 4 percent this week.

Platinum was 0.1 percent lower at $892.20 an ounce and on track to fall nearly 5 percent this week, its biggest weekly loss in nine months.

Palladium was up 0.1 percent at $1,013.75 an ounce.

Gold prices steadied on Friday but were on track for their biggest weekly fall since May ahead of US?employment data later that could influence the pace of US?interest rate rises.

Gold prices steadied on Friday but were on track for their biggest weekly fall since May ahead of US employment data later that could influence the pace of US interest rate rises. Gold this week broke below a recent trading range and tumbled through technical levels to its lowest since July as progress on US tax reform fuelled optimism about the US economy and boosted the dollar. "You can put it down to the strength of the dollar and the ebullience of investors regarding equities and all things risk-on," said ETF Securities analyst Martin Arnold. "When in such a positive mindset investors don't look for defensive assets like gold." The dollar was given an extra boost on Friday after a funding bill eased fears of a US government shutdown this month. A stronger dollar makes bullion more expensive for holders of other currencies and can dampen demand. Spot gold was down 0.1 percent at $1,245.66 an ounce at 1109 GMT, close to Thursday's low of $1243.71, the weakest since July 26. It had fallen 2.7 percent this week, its third consecutive weekly fall and the biggest since early May. US gold futures were 0.4 percent lower at $1,247.80. Selling was triggered after gold broke below $1,260, the bottom of its trading range since September, and plunged below its 200-day moving average for the first time since July. Technical support is now at $1,250 and a Fibonacci level at $1,240.90 but momentum indicators suggest that gold could fall to $1,204.90, the July low, said analysts at ScotiaMocatta. However, ETF Securities' Arnold said prices were supported by risks including US policy paralysis, tensions in North Korea and the Middle East, and a potential correction in equity valuations. He said gold's fair value was $1,260-$1,280. Gold is traditionally seen as a safe investment in times of uncertainty. Investors were looking ahead to US non-farm payrolls data at 1330 GMT. The US Federal Reserve is expected next week to announce a rise in interest rates and offer guidance on the pace of further increases. Strong payrolls would support the case for aggressive rate rises. Gold is sensitive to rising interest rates because they push up bond yields, reducing the appeal of non-yielding gold, and tend to boost the dollar. Among other precious metals, silver was up 0.4 percent at $15.78 but down 4 percent this week. Platinum was 0.1 percent lower at $892.20 an ounce and on track to fall nearly 5 percent this week, its biggest weekly loss in nine months. Palladium was up 0.1 percent at $1,013.75 an ounce.

Dollar rise pushes gold toward biggest weekly fall since May

The dollar rose to its highest level in two weeks on Thursday over the optimism about the United States would successfully push through tax reforms, while world shares rebounded after two straight days of losses.

The U.S. currency slipped against the safe-haven, Japanese yen on Wednesday after U.S. President Donald Trump said he would recognize Jerusalem as the capital of Israel - a move that imperiled Middle East peace efforts and provoked widespread condemnation.&nbsp;But amidst a broader climb in global stocks on Thursday, the greenback rose 0.3 percent against the yen to trade at 112.60 yen and hit a two-week high against a basket of peers.

The MSCI World Index, which tracks shares in 47 countries, was up 0.1 percent.&nbsp;Underpinning some of the dollar&#39;s gains analysts said was some cautious optimism on progress over U.S. tax reforms.&nbsp;

U.S. Senate Republicans agreed to talks with the House of Representatives on sweeping tax legislation on Wednesday, amid early signs that lawmakers could bridge their differences and agree on a final bill ahead of a self-imposed December 22 deadline.

&quot;The dollar is fighting back a little bit but there&#39;s still some caution, as it could still be a few weeks until we know the outcome of the tax reform bill&quot;, said Rabobank currency strategist Jane Foley, in London. She further added, &quot;The yen will be sensitive if geopolitical tensions rise again, and I think there&#39;s an inevitability to that, so I don&#39;t think there&#39;s going to be too much upside for dollar/yen in this environment&quot;.

Upbeat U.S. private-sector employment data released on Wednesday also provided some support to the dollar. But strategists said the currency would trade in narrow ranges until the release of the closely watched non-farm payrolls report on Friday.&nbsp;Bitcoin soared to a record high of more than $14,500, up almost 7 percent on the day and continuing a staggering surge from less than $1,000 at the beginning of the year.

Stock Recover

European stock markets appeared to take their cues from a general recovery in tech stocks overnight in Asia and Wall Street.&nbsp;The pan-European STOXX 600 was up 0.2 percent with tech stocks initially up 0.5 percent. Financials, industrials, and healthcare shares also added points to the index.

&quot;We have seen some aggressive moves in Asia, whereas Europe seems to be a bit more subdued&quot;, said David Madden, an analyst at CMC Markets in London. He further said, &quot;It&#39;s almost like European markets look for an excuse to selloff but it takes them a lot to be convinced to actually push higher&quot;.

Shares in the energy sector, which weighed on shares earlier in Wall Street and Asia, rose in Europe, as oil prices recovered from a big fall on Wednesday.&nbsp;U.S. West Texas Intermediate crude futures traded at $56.13 per barrel in European trade, up 0.3 percent on the day.&nbsp;Brent futures gained 0.4 percent to $61.45 per barrel.

MSCI&#39;s broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent as some technology bellwethers rebounded, with Tencent rising over 3 percent and Alibaba more than 2 percent.&nbsp;In Japan, the Nikkei jumped 1.5 percent, recouping much of its 2.0 percent loss the previous day, which was its biggest fall since late March.

The price of copper, seen as a barometer of global economic health because of its extensive industrial use, also fell sharply earlier this week, raising worries about the world growth outlook.&nbsp;Copper traded at $6,576 a tonne, up 0.5 percent on the day and above a two-month low of $6,507.5 touched on Tuesday.&nbsp;

European stock markets made general recovery in tech stocks overnight

The dollar rose to its highest level in two weeks on Thursday over the optimism about the United States would successfully push through tax reforms, while world shares rebounded after two straight days of losses. The U.S. currency slipped against the safe-haven, Japanese yen on Wednesday after U.S. President Donald Trump said he would recognize Jerusalem as the capital of Israel - a move that imperiled Middle East peace efforts and provoked widespread condemnation. But amidst a broader climb in global stocks on Thursday, the greenback rose 0.3 percent against the yen to trade at 112.60 yen and hit a two-week high against a basket of peers. The MSCI World Index, which tracks shares in 47 countries, was up 0.1 percent. Underpinning some of the dollar's gains analysts said was some cautious optimism on progress over U.S. tax reforms. U.S. Senate Republicans agreed to talks with the House of Representatives on sweeping tax legislation on Wednesday, amid early signs that lawmakers could bridge their differences and agree on a final bill ahead of a self-imposed December 22 deadline. "The dollar is fighting back a little bit but there's still some caution, as it could still be a few weeks until we know the outcome of the tax reform bill", said Rabobank currency strategist Jane Foley, in London. She further added, "The yen will be sensitive if geopolitical tensions rise again, and I think there's an inevitability to that, so I don't think there's going to be too much upside for dollar/yen in this environment". Upbeat U.S. private-sector employment data released on Wednesday also provided some support to the dollar. But strategists said the currency would trade in narrow ranges until the release of the closely watched non-farm payrolls report on Friday. Bitcoin soared to a record high of more than $14,500, up almost 7 percent on the day and continuing a staggering surge from less than $1,000 at the beginning of the year. Stock Recover European stock markets appeared to take their cues from a general recovery in tech stocks overnight in Asia and Wall Street. The pan-European STOXX 600 was up 0.2 percent with tech stocks initially up 0.5 percent. Financials, industrials, and healthcare shares also added points to the index. "We have seen some aggressive moves in Asia, whereas Europe seems to be a bit more subdued", said David Madden, an analyst at CMC Markets in London. He further said, "It's almost like European markets look for an excuse to selloff but it takes them a lot to be convinced to actually push higher". Shares in the energy sector, which weighed on shares earlier in Wall Street and Asia, rose in Europe, as oil prices recovered from a big fall on Wednesday. U.S. West Texas Intermediate crude futures traded at $56.13 per barrel in European trade, up 0.3 percent on the day. Brent futures gained 0.4 percent to $61.45 per barrel. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent as some technology bellwethers rebounded, with Tencent rising over 3 percent and Alibaba more than 2 percent. In Japan, the Nikkei jumped 1.5 percent, recouping much of its 2.0 percent loss the previous day, which was its biggest fall since late March. The price of copper, seen as a barometer of global economic health because of its extensive industrial use, also fell sharply earlier this week, raising worries about the world growth outlook. Copper traded at $6,576 a tonne, up 0.5 percent on the day and above a two-month low of $6,507.5 touched on Tuesday.

Dollar hits two-week high on US tax reform optimism, world shares climb

Authors: Co-Pierre Georg and Qobolwakhe Dube*

With the price of a bitcoin reaching record highs of more than $10,000, more and more ordinary people consider investing in the cryptocurrency. The recent price surge, however, comes with tremendous risks. Investors should be prepared for the possibility that they could lose their entire investment.

Bitcoin was launched in 2008 by an anonymous author under the name of Satoshi Nakamoto as a means of transacting among participants without the need for intermediaries. Since the beginning of this year, the price of bitcoin has increased by 1300 per cent as more and more consumers flock to it hoping to profit off its increasing popularity and the associated increase in value.

Cryptocurrencies are not currencies at all. As the Financial Times explains, bitcoin is a string of computer codes which means that new bitcoins can be created &ndash; up to an agreed limit &ndash; by computers that gain the right to do so by solving complex puzzles. Transactions are recorded in a database called a blockchain.

Bitcoin, like other assets like gold, doesn&rsquo;t yield income. You have to sell it to realise any value. And, like gold and other currencies, it can be transferred peer-to-peer.

Part of the nervousness about bitcoin is that, along with other cryptocurrencies, it challenges the traditional role of banks and central banks. In the classical world, banks act as intermediaries by providing loans out of the deposits they took and from funding from the central bank. The central bank uses the rate at which it provides this funding as a lever to ensure price stability. The introduction of cryptocurrencies threatens this model because banks are no longer necessary to intermediate funds and there is no central bank to ensure that prices are stable.

The more immediate fears about bitcoin center on the recent dramatic rise in its value. There&rsquo;s nervousness in the market that a flash crash might be imminent after the cryptocurrency tumble by more than $1,300 in minutes on the bitcoin exchange Bitfinex. It did recover to levels above $10,800.

The flash crash echoes long-standing warnings that the bitcoin party is set to end in tears. Most recently Jamie Dimon, CEO of JPMorgan, one of the world&rsquo;s largest investment banks declared that he would fire any employee trading bitcoin for being stupid.

In a highly unusual alliance, his words were echoed by economics Nobel Laureate Joseph Stiglitz, who has gone even further arguing that bitcoin ought to be outlawed.

All of these are clear warning signs that the professionals do not trust the lofty promises of crypto enthusiasts.

The blockchain factor

There is no doubt that Bitcoin &ndash; and in particular blockchain, the technology behind it &ndash; has the potential to revolutionise the financial services industry.

A blockchain functions as a transparent and incorruptible digital ledger of economic transactions, recorded in chronological order, that operates on a peer-to-peer network.

Fundamentally, the technology allows an exchange of value to occur in an environment of peers with conflicting interests without the need for trusted intermediaries. That, in effect, wipes out the need for banks or financial services companies which fulfil this role.

The use of the technology is not limited to financial transactions. Virtually anything of value can be traded on a blockchain.

But no matter how useful the underlying blockchain technology is, or how widely it can be applied, there are real and substantial risks involved in bitcoin.

Volatility versus returns

The first and most significant risk is that compared to any currency, share, or gold, bitcoin is extremely volatile. The volatility of bitcoin to US dollar is almost six times the volatility of the Rand to US dollar. While this is great in good times, it is potentially devastating for investors in bad times.

When professional investors decide on which assets to hold, they look at both the return and the volatility of the asset. Only investors with a healthy appetite for risk are willing to invest in risky, volatile assets. Usually these are finance professionals, for example in large investment banks or hedge funds.

Investors with a lower risk appetite, such as asset managers or pension funds, prefer assets with a somewhat lower return, but which are less volatile.

The rule of thumb is that the sophistication of an investor increases with the volatility of the asset she invests in. But with bitcoin, this rule of thumb doesn&rsquo;t hold true. More and more private investors have been flocking to bitcoin &lsquo;exchanges&rsquo; that have sprung up all over the internet and that are aggressively advertised on social media.

Overvalued

There is a huge risk that bitcoin is already overvalued.

The practical use cases for bitcoin are limited. It doesn&rsquo;t enable enough transactions to take place per second to be used as a replacement for a modern payment system. And it doesn&rsquo;t offer any functionality other than pseudonymous transactions &ndash; transactions where the true identity of the counterparties is hidden.

Bitcoin is favoured by pyramid schemes, including the infamous MMM pyramid scheme in Nigeria. In a recent article, the Financial Times called bitcoin itself a pyramid scheme, much to the dismay of crypto enthusiasts. (A pyramid scheme is usually an illegal operation in which participants pay to join and profit mainly from payments made by subsequent participants. If no new people come in, it collapses.)

Regulatory risk

The third, and possibly biggest risk is regulatory. In September 2017, the Chinese government outlawed bitcoin exchanges in mainland China, sending the price of bitcoin tumbling.

Despite the claim that bitcoin is a &ldquo;global currency&rdquo;, the reality is that 58 per cent of all bitcoin mining happens in China. If at any point the Chinese government should decide to make Bitcoin mining illegal the price is likely to plunge into oblivion.

Other countries have also voiced concern. The Russian Central Bank recently issued a warning to investors on the risks of investing in cryptocurrencies, citing concerns about a bubble. This suggests that there might be a concerted crackdown.

Cryptocurrencies are banned in India as their use is a violation of foreign exchange rules. The Australian Reserve Bank has taken a different approach. It monitors the cryptocurrency market in a bid understands the underlying technology.

The South African Reserve Bank has expressed its openness to blockchain technologies. But it has also highlighted potential risks to consumers.

A classic bubble

There are real risks that many consumers investing in cryptocurrency don&rsquo;t fully understand. Advertisements promise that bitcoin can make you rich fast. And social media is alive with stories about friends of neighbours or distant cousins who have made a lot of money through bitcoin.

Without a doubt, these cases are real, and those who invested early can reap large benefits. But this is true in every bubble &ndash; from the dotcom bubble to the tulip mania. It&rsquo;s also true in every pyramid scheme.

As always, investors should be extremely wary with any scheme that promises quick returns.

This article was originally published on <a href="http://theconversation.com" rel="nofollow">The Conversation</a>. Read the <a href="https://theconversation.com/bitcoin-is-a-highly-speculative-investment-why-caution-is-required-88440" rel="nofollow">original article</a>.

Qobolwakhe Dube: A PhD student at the African Institute of Financial Markets and Risk Management at University of Cape Town.

(Disclaimer: The author writes here in a personal capacity).

The astronomic rise of the price of bitcoin over the past 12 months raises fears that the cryptocurrency is set to crash which could see many people lose money

Authors: Co-Pierre Georg and Qobolwakhe Dube* With the price of a bitcoin reaching record highs of more than $10,000, more and more ordinary people consider investing in the cryptocurrency. The recent price surge, however, comes with tremendous risks. Investors should be prepared for the possibility that they could lose their entire investment. Bitcoin was launched in 2008 by an anonymous author under the name of Satoshi Nakamoto as a means of transacting among participants without the need for intermediaries. Since the beginning of this year, the price of bitcoin has increased by 1300 per cent as more and more consumers flock to it hoping to profit off its increasing popularity and the associated increase in value. Cryptocurrencies are not currencies at all. As the Financial Times explains, bitcoin is a string of computer codes which means that new bitcoins can be created – up to an agreed limit – by computers that gain the right to do so by solving complex puzzles. Transactions are recorded in a database called a blockchain. Bitcoin, like other assets like gold, doesn’t yield income. You have to sell it to realise any value. And, like gold and other currencies, it can be transferred peer-to-peer. Part of the nervousness about bitcoin is that, along with other cryptocurrencies, it challenges the traditional role of banks and central banks. In the classical world, banks act as intermediaries by providing loans out of the deposits they took and from funding from the central bank. The central bank uses the rate at which it provides this funding as a lever to ensure price stability. The introduction of cryptocurrencies threatens this model because banks are no longer necessary to intermediate funds and there is no central bank to ensure that prices are stable. The more immediate fears about bitcoin center on the recent dramatic rise in its value. There’s nervousness in the market that a flash crash might be imminent after the cryptocurrency tumble by more than $1,300 in minutes on the bitcoin exchange Bitfinex. It did recover to levels above $10,800. The flash crash echoes long-standing warnings that the bitcoin party is set to end in tears. Most recently Jamie Dimon, CEO of JPMorgan, one of the world’s largest investment banks declared that he would fire any employee trading bitcoin for being stupid. In a highly unusual alliance, his words were echoed by economics Nobel Laureate Joseph Stiglitz, who has gone even further arguing that bitcoin ought to be outlawed. All of these are clear warning signs that the professionals do not trust the lofty promises of crypto enthusiasts. The blockchain factor There is no doubt that Bitcoin – and in particular blockchain, the technology behind it – has the potential to revolutionise the financial services industry. A blockchain functions as a transparent and incorruptible digital ledger of economic transactions, recorded in chronological order, that operates on a peer-to-peer network. Fundamentally, the technology allows an exchange of value to occur in an environment of peers with conflicting interests without the need for trusted intermediaries. That, in effect, wipes out the need for banks or financial services companies which fulfil this role. The use of the technology is not limited to financial transactions. Virtually anything of value can be traded on a blockchain. But no matter how useful the underlying blockchain technology is, or how widely it can be applied, there are real and substantial risks involved in bitcoin. Volatility versus returns The first and most significant risk is that compared to any currency, share, or gold, bitcoin is extremely volatile. The volatility of bitcoin to US dollar is almost six times the volatility of the Rand to US dollar. While this is great in good times, it is potentially devastating for investors in bad times. When professional investors decide on which assets to hold, they look at both the return and the volatility of the asset. Only investors with a healthy appetite for risk are willing to invest in risky, volatile assets. Usually these are finance professionals, for example in large investment banks or hedge funds. Investors with a lower risk appetite, such as asset managers or pension funds, prefer assets with a somewhat lower return, but which are less volatile. The rule of thumb is that the sophistication of an investor increases with the volatility of the asset she invests in. But with bitcoin, this rule of thumb doesn’t hold true. More and more private investors have been flocking to bitcoin ‘exchanges’ that have sprung up all over the internet and that are aggressively advertised on social media. Overvalued There is a huge risk that bitcoin is already overvalued. The practical use cases for bitcoin are limited. It doesn’t enable enough transactions to take place per second to be used as a replacement for a modern payment system. And it doesn’t offer any functionality other than pseudonymous transactions – transactions where the true identity of the counterparties is hidden. Bitcoin is favoured by pyramid schemes, including the infamous MMM pyramid scheme in Nigeria. In a recent article, the Financial Times called bitcoin itself a pyramid scheme, much to the dismay of crypto enthusiasts. (A pyramid scheme is usually an illegal operation in which participants pay to join and profit mainly from payments made by subsequent participants. If no new people come in, it collapses.) Regulatory risk The third, and possibly biggest risk is regulatory. In September 2017, the Chinese government outlawed bitcoin exchanges in mainland China, sending the price of bitcoin tumbling. Despite the claim that bitcoin is a “global currency”, the reality is that 58 per cent of all bitcoin mining happens in China. If at any point the Chinese government should decide to make Bitcoin mining illegal the price is likely to plunge into oblivion. Other countries have also voiced concern. The Russian Central Bank recently issued a warning to investors on the risks of investing in cryptocurrencies, citing concerns about a bubble. This suggests that there might be a concerted crackdown. Cryptocurrencies are banned in India as their use is a violation of foreign exchange rules. The Australian Reserve Bank has taken a different approach. It monitors the cryptocurrency market in a bid understands the underlying technology. The South African Reserve Bank has expressed its openness to blockchain technologies. But it has also highlighted potential risks to consumers. A classic bubble There are real risks that many consumers investing in cryptocurrency don’t fully understand. Advertisements promise that bitcoin can make you rich fast. And social media is alive with stories about friends of neighbours or distant cousins who have made a lot of money through bitcoin. Without a doubt, these cases are real, and those who invested early can reap large benefits. But this is true in every bubble – from the dotcom bubble to the tulip mania. It’s also true in every pyramid scheme. As always, investors should be extremely wary with any scheme that promises quick returns. This article was originally published on The Conversation. Read the original article. Qobolwakhe Dube: A PhD student at the African Institute of Financial Markets and Risk Management at University of Cape Town. (Disclaimer: The author writes here in a personal capacity).

Opinion: Bitcoin is a highly speculative investment. Why caution is required

The benchmark BSE Sensex fell further by 100 points in early trade today due to selling in interest-sensitive stocks ahead of RBI&#39;s policy announcement later in the day.

The rupee&#39;s weakness against the dollar too dampened the overall mood.

The 30-share index fell 100.07 points, or 0.30 per cent, to 32,702.37, with sectoral indices of banking, auto, metal and PSU trading dropping up to 1.76 per cent.

The gauge had lost 67.28 points in the previous session.

The NSE Nifty too shed 39.15 points, or 0.38 per cent, to settle at 10,079.10.

Brokers said sentiment remained somewhat subdued as investors kept their positions at a low ebb amid expectation that the central bank may keep rates unchanged.

Major losers were SBI, ICICI Bank, HDFC Bank, Axis Bank, HDFC Ltd, Maruti Suzuki, Bajaj Auto, Hero MotoCorp, Tata Steel, ITC Ltd and Wipro.

Among the Asian bourses, Hong Kong&#39;s Hang Seng was down 1.12 per cent while Japan&#39;s Nikkei shed 0.90 per cent. Shanghai Composite Index too fell 0.61 per cent in early trade today.

The US Dow Jones Industrial Average ended 0.45 per cent lower yesterday.

The 30-share index fell 100.07 points, or 0.30 per cent, to 32,702.37

The benchmark BSE Sensex fell further by 100 points in early trade today due to selling in interest-sensitive stocks ahead of RBI's policy announcement later in the day. The rupee's weakness against the dollar too dampened the overall mood. The 30-share index fell 100.07 points, or 0.30 per cent, to 32,702.37, with sectoral indices of banking, auto, metal and PSU trading dropping up to 1.76 per cent. The gauge had lost 67.28 points in the previous session. The NSE Nifty too shed 39.15 points, or 0.38 per cent, to settle at 10,079.10. Brokers said sentiment remained somewhat subdued as investors kept their positions at a low ebb amid expectation that the central bank may keep rates unchanged. Major losers were SBI, ICICI Bank, HDFC Bank, Axis Bank, HDFC Ltd, Maruti Suzuki, Bajaj Auto, Hero MotoCorp, Tata Steel, ITC Ltd and Wipro. Among the Asian bourses, Hong Kong's Hang Seng was down 1.12 per cent while Japan's Nikkei shed 0.90 per cent. Shanghai Composite Index too fell 0.61 per cent in early trade today. The US Dow Jones Industrial Average ended 0.45 per cent lower yesterday.

Sensex down 100 points as RBI policy decision looms

Zimbabwe&rsquo;s financial system increasingly resembles a house of cards. Were one card to give way &ndash; for instance, if South Africa&rsquo;s power utility, Eskom, were to have the temerity to suggest that Zimbabwe actually pays for the electricity that it&rsquo;s supplying the country &ndash; the entire edifice would collapse.

To put it another way, the government is a bust. It is again printing money to cover its spiralling costs, and inflation is rising. And given that there&rsquo;s an election looming in 2018, Zimbabwe&rsquo;s ruling party, ZANU-PF doesn&rsquo;t want to cut-back. Far from it, it wants to carry on spending, as fast as it can.

The rot goes back to the early 2000&rsquo;s. ZANU-PF profligacy had been fuelled by a&nbsp;continuous cycle of simply printing more money and resultant runaway inflation. Mega-inflation meant that ordinary people lost their pensions and whatever savings they had, as the Zimbabwe dollar lost its value and people resorted to barter or the use of other currencies.

Ultimately, the government faced no choice but to accept reality. In 2008 it scrapped the Zimbabwe dollar in favour of a basket of other currencies, although within a short time, this meant in effect the reign of the US dollar.

&ldquo;Dollarisation&rdquo; allowed for the pursuit of more rational policies by the coalition Government of National Unity which followed the disputed 2008 election. However, its control of the electoral machinery ensured that ZANU-PF won a resounding victory in the 2013 election. Within a short space of time, it returned to its familiar policy mix of profligacy, corruption and populist economics.

Yet ZANU-PF faced major problems. Above all, &ldquo;dollarisation&rdquo; meant that the cost of Zimbabwe&rsquo;s exports on international markets was high. Worse, the dramatic collapse in agricultural production since the early 2000s (following the appropriation of white farms) alongside the decimation of the country&rsquo;s manufacturing industries meant that there was relatively little to export anyway. Tobacco production has recovered a little, but the quality is less than it used to be, so returns are relatively less.

Meanwhile, government insistence that mines should be 51 per cent&nbsp;Zimbabwean owned has done nothing to entice inward investment or boost exports.

In short, the capacity of the economy to earn US dollars by selling goods externally has fallen dramatically, and the supply of money circulating within the country has dried up. Unemployment stands at around 90 per cent.

President Robert Mugabe&rsquo;s latest response has been to replace finance minister Patrick Chinamasa, who had been warning of the structure&rsquo;s fragility in ever more urgent tones. The new finance minister is Ignatius Chombo, a party loyalist, who will brook no talk of any need for structural reform.

The bond notes

Faced with a looming crisis, the ZANU-PF government has resorted to three key strategies.

One has been the issue of &ldquo;bond notes&rdquo; (of different denominations) by the Reserve Bank of Zimbabwe. Officially, they&rsquo;re designed to swell the amount of money in circulation within the country. The problem is that apart from having no value outside the country, nobody trusts them as they have been issued by a ZANU-PF government, and it was this government that presided over the hyperinflation.

ZANU-PF&rsquo;s announcement that it was issuing bond notes was met with a run on the banks as depositors sought to withdraw dollars as fast as they could. Their assumption was that this was a government ploy to reintroduce the Zimbabwean dollar. The Reserve Bank of Zimbabwe responded by limiting the number of dollars individuals could withdraw.

People are reluctant to use the bond notes. But they&rsquo;re still sometimes forced to accept them because of the sheer shortage of &ldquo;real&rdquo; money. As a result, when they can, they rush off to the local bus station where they can sell them for dollars to currency traders &ndash; albeit illegally.

The second strategy has been the rapid expansion of country&rsquo;s ability to manage electronic transactions. Its aim has been to expand the amount of money in circulation without using up &ldquo;real&rdquo; dollars.

Accordingly, government employees are now largely paid electronically. Similarly, government employees (and everyone else) now pay nearly all their bills within the country electronically.

And Zimbabweans are rarely able to convert the notional sums of dollars they hold in the bank into real cash &ndash; unless they make use of the currency traders in illegal transactions.

Meanwhile, with the rate of inflation continuing to rise combined with the widespread lack of faith in the banks, many Zimbabweans spend their bank balances on consumer goods as quickly as possible rather than attempting to &ldquo;save&rdquo;. After all, if times get hard, you won&rsquo;t be able to get rid of your bond notes, but you may be able to sell your fridge.

Fanciful financial system

But it&rsquo;s the third strategy which the government has pursued which is really fuelling a fanciful financial system.

Since 2013, government expenditure has steadily increased year by year, despite the country earning very little internationally. The ZANU-PF government may have hoped to fund this by its old trick of literally printing money, that is, by expanding the supply of bond notes.

But such was the negative popular sentiment that the Reserve Bank of Zimbabwe seems to have restricted their issue. Supposedly the issue of bond notes is backed by a USD$200 loan by the Afreximbank, but no-one really knows how many have been issued because the central bank provides no information.

What the government has done instead is to fund its rising costs by issuing treasury bills (whereby the government touts for loans on the capital market against promises of later redemption). No-one in their right mind would want to buy them, but Zimbabwe&rsquo;s banks today have little option. As inward investment into the country has dried up to a trickle, there is little else for them to spend their money on, and the interest rates that the government promises to pay are, at face value, attractively high.

The coalition government of national unity recorded budget surpluses for three of the four full years in which the opposition controlled the Treasury. For its part, the ZANU-PF government recorded deficits of USD$186 million and USD$125 million in 2014 and 2015. Recently, the then finance minister Chinamasa projected a deficit of USD$1.41 billion for 2017. As of June 30, 2017, there were USD$2.5 billion worth of Treasury bills on the issue.

In other words, the spending will continue. Zimbabwe&rsquo;s financial system is living on borrowed time and borrowed money. It will again end in financial ruin, as it did in 2008. But all ZANU-PF cares about is ensuring that it wins the next election and allowing its political elite to &ldquo;eat&rdquo;.

This article was originally published in <a href="http://theconversation.com" rel="nofollow" target="blank">The Conversation</a>. Read the <a href="https://theconversation.com/zimbabwes-financial-system-is-living-on-borrowed-time-and-borrowed-money-86159" rel="nofollow" target="blank">original article</a>.

<a href="http://www.wionews.com/world/grace-mugabe-flees-zimbabwe-after-army-takes-over-reports-24301">Also read:&nbsp;Grace Mugabe flees Zimbabwe after army takes over: Reports</a>

<a href="http://www.wionews.com/world/zimbabwes-robert-mugabe-liberation-hero-turned-despot-24292">Also </a><a href="http://www.wionews.com/world/zimbabwes-robert-mugabe-liberation-hero-turned-despot-24292">read:</a><a href="http://www.wionews.com/world/zimbabwes-robert-mugabe-liberation-hero-turned-despot-24292">&nbsp;Zimbabwe&#39;s Robert Mugabe: Liberation hero turned despot</a>

<a href="http://www.wionews.com/world/main-zimbabwe-newspaper-completely-misses-news-of-coup-24321">Also read:&nbsp;Main Zimbabwe newspaper completely misses news of coup</a>

<a href="http://www.wionews.com/world/targeting-criminals-not-a-military-takeover-of-government-zimbabwe-military-24236">Also read:&nbsp;Targeting criminals, not a military takeover of government: Zimbabwe military</a>

<a href="http://www.wionews.com/world/army-takes-control-in-zimbabwe-president-mugabe-detained-report-24283">Also </a><a href="http://www.wionews.com/world/army-takes-control-in-zimbabwe-president-mugabe-detained-report-24283">read:</a><a href="http://www.wionews.com/world/army-takes-control-in-zimbabwe-president-mugabe-detained-report-24283"> Zimbabwe: President Mugabe under house arrest, army denies coup</a> 
&nbsp;

Years of political instability and economic mismanagement under the rule of ZANU-PF have left Zimbabwe?s financial system in chaos. The country is living on borrowed time and borrowed money.

Zimbabwe’s financial system increasingly resembles a house of cards. Were one card to give way – for instance, if South Africa’s power utility, Eskom, were to have the temerity to suggest that Zimbabwe actually pays for the electricity that it’s supplying the country – the entire edifice would collapse. To put it another way, the government is a bust. It is again printing money to cover its spiralling costs, and inflation is rising. And given that there’s an election looming in 2018, Zimbabwe’s ruling party, ZANU-PF doesn’t want to cut-back. Far from it, it wants to carry on spending, as fast as it can. The rot goes back to the early 2000’s. ZANU-PF profligacy had been fuelled by a continuous cycle of simply printing more money and resultant runaway inflation. Mega-inflation meant that ordinary people lost their pensions and whatever savings they had, as the Zimbabwe dollar lost its value and people resorted to barter or the use of other currencies. Ultimately, the government faced no choice but to accept reality. In 2008 it scrapped the Zimbabwe dollar in favour of a basket of other currencies, although within a short time, this meant in effect the reign of the US dollar. “Dollarisation” allowed for the pursuit of more rational policies by the coalition Government of National Unity which followed the disputed 2008 election. However, its control of the electoral machinery ensured that ZANU-PF won a resounding victory in the 2013 election. Within a short space of time, it returned to its familiar policy mix of profligacy, corruption and populist economics. Yet ZANU-PF faced major problems. Above all, “dollarisation” meant that the cost of Zimbabwe’s exports on international markets was high. Worse, the dramatic collapse in agricultural production since the early 2000s (following the appropriation of white farms) alongside the decimation of the country’s manufacturing industries meant that there was relatively little to export anyway. Tobacco production has recovered a little, but the quality is less than it used to be, so returns are relatively less. Meanwhile, government insistence that mines should be 51 per cent Zimbabwean owned has done nothing to entice inward investment or boost exports. In short, the capacity of the economy to earn US dollars by selling goods externally has fallen dramatically, and the supply of money circulating within the country has dried up. Unemployment stands at around 90 per cent. President Robert Mugabe’s latest response has been to replace finance minister Patrick Chinamasa, who had been warning of the structure’s fragility in ever more urgent tones. The new finance minister is Ignatius Chombo, a party loyalist, who will brook no talk of any need for structural reform. The bond notes Faced with a looming crisis, the ZANU-PF government has resorted to three key strategies. One has been the issue of “bond notes” (of different denominations) by the Reserve Bank of Zimbabwe. Officially, they’re designed to swell the amount of money in circulation within the country. The problem is that apart from having no value outside the country, nobody trusts them as they have been issued by a ZANU-PF government, and it was this government that presided over the hyperinflation. ZANU-PF’s announcement that it was issuing bond notes was met with a run on the banks as depositors sought to withdraw dollars as fast as they could. Their assumption was that this was a government ploy to reintroduce the Zimbabwean dollar. The Reserve Bank of Zimbabwe responded by limiting the number of dollars individuals could withdraw. People are reluctant to use the bond notes. But they’re still sometimes forced to accept them because of the sheer shortage of “real” money. As a result, when they can, they rush off to the local bus station where they can sell them for dollars to currency traders – albeit illegally. The second strategy has been the rapid expansion of country’s ability to manage electronic transactions. Its aim has been to expand the amount of money in circulation without using up “real” dollars. Accordingly, government employees are now largely paid electronically. Similarly, government employees (and everyone else) now pay nearly all their bills within the country electronically. And Zimbabweans are rarely able to convert the notional sums of dollars they hold in the bank into real cash – unless they make use of the currency traders in illegal transactions. Meanwhile, with the rate of inflation continuing to rise combined with the widespread lack of faith in the banks, many Zimbabweans spend their bank balances on consumer goods as quickly as possible rather than attempting to “save”. After all, if times get hard, you won’t be able to get rid of your bond notes, but you may be able to sell your fridge. Fanciful financial system But it’s the third strategy which the government has pursued which is really fuelling a fanciful financial system. Since 2013, government expenditure has steadily increased year by year, despite the country earning very little internationally. The ZANU-PF government may have hoped to fund this by its old trick of literally printing money, that is, by expanding the supply of bond notes. But such was the negative popular sentiment that the Reserve Bank of Zimbabwe seems to have restricted their issue. Supposedly the issue of bond notes is backed by a USD$200 loan by the Afreximbank, but no-one really knows how many have been issued because the central bank provides no information. What the government has done instead is to fund its rising costs by issuing treasury bills (whereby the government touts for loans on the capital market against promises of later redemption). No-one in their right mind would want to buy them, but Zimbabwe’s banks today have little option. As inward investment into the country has dried up to a trickle, there is little else for them to spend their money on, and the interest rates that the government promises to pay are, at face value, attractively high. The coalition government of national unity recorded budget surpluses for three of the four full years in which the opposition controlled the Treasury. For its part, the ZANU-PF government recorded deficits of USD$186 million and USD$125 million in 2014 and 2015. Recently, the then finance minister Chinamasa projected a deficit of USD$1.41 billion for 2017. As of June 30, 2017, there were USD$2.5 billion worth of Treasury bills on the issue. In other words, the spending will continue. Zimbabwe’s financial system is living on borrowed time and borrowed money. It will again end in financial ruin, as it did in 2008. But all ZANU-PF cares about is ensuring that it wins the next election and allowing its political elite to “eat”. This article was originally published in The Conversation. Read the original article. Also read: Grace Mugabe flees Zimbabwe after army takes over: Reports Also read: Zimbabwe's Robert Mugabe: Liberation hero turned despot Also read: Main Zimbabwe newspaper completely misses news of coup Also read: Targeting criminals, not a military takeover of government: Zimbabwe military Also read: Zimbabwe: President Mugabe under house arrest, army denies coup

Robert Mugabe's Zimbabwe is in deep mess

Asian stocks edged higher on Thursday as tensions between the United States and North Korea came off the boil, while the Federal Reserve&#39;s concerns about weak US&nbsp;inflation weighed on the dollar.

MSCI&#39;s broadest index of Asia-Pacific shares outside Japan added 0.5 per cent.

Japan&#39;s Nikkei slipped 0.1 per cent, weighed down by a stronger yen as the dollar wilted and shrugging off data showing the country&#39;s exports rose for an eighth straight month in July.

Australian shares gained 0.1 per cent and the Australian dollar inched up 0.1 per cent to $0.7931 after the country added 27,900 jobs in July, beating expectations for an increase of 20,000.

The unemployment rate remained at 5.6 per cent, as expected, although full-time employment fell by 20,300.

South Korean shares advanced 0.5 per cent after the leaders of both North Korea and the United States appeared to back off from their heated rhetoric from last week.

Trump on Wednesday praised North Korean leader Kim Jong Un for a &quot;wise&quot; decision not to fire missiles towards the US&nbsp;Pacific territory of Guam, after North Korean media reported that Kim had delayed to decision while he waited to see what the US&nbsp;did next.

While that helped Wall Street close in positive territory overnight, concerns on the home front sent the dollar into reverse.

Trump announced the disbanding of two high-profile business advisory councils on Wednesday after eight executives quit in protest over his remarks blaming weekend violence in Virginia not only on white nationalists but also on anti-racism activists who opposed them.

Moreover, minutes from the Fed&#39;s July meeting released on Wednesday showed the central bank grew more wary about recent weak inflation, with some policymakers wanting to halt interest rate hikes until it was clear the trend was temporary.

Money market futures are now pricing in about a 40 per cent chance the Fed will raise rates by December, compared to just under 50 per cent before the Fed&#39;s minutes.

&quot;The Federal Open Market Committee minutes confirmed one thing, which is that the committee members are not on the same page and there is no clear date when the Fed will initiate the process of reducing the size of the balance sheet,&quot; Naeem Aslam, chief market analyst at Think Markets in London, wrote in a note.

&quot;Trump dissolving his major business groups makes the investment community even more pessimistic because this sets the stage for even more failure for him.&quot;

The dollar fell 0.3 per cent to 109.79 yen, extending Wednesday&#39;s 0.4 per cent slide.

The dollar index, which tracks the greenback against a basket of six major peers, dropped 0.2 per cent to 93.357 after Wednesday&#39;s 0.3 per cent loss.

The euro rose 0.1 per cent to $1.17835, extending its 0.3 per cent gain overnight, after the euro zone&#39;s second-quarter growth was revised to 2.2 per cent from a year earlier, from 2.1 per cent previously.

Bitcoin, which has surged over $1,500 this month on speculative demand for the digital currency, slipped slightly.

It fell about 1.5 per cent to $4,308.48 but remained within a whisker of its all-time high of $4,400 touched earlier this week.

In commodities, oil prices edged up but remained close to a 3-1/2 week low touched on Wednesday as rising US&nbsp;production offset a decline in stockpiles by the most in a year.

US&nbsp;crude was about 0.2 per cent higher at $46.88 a barrel, failing to make up most of Wednesday&#39;s 1.6 per cent slide.

Global benchmark Brent gained 0.4 per cent to $50.47, after the previous session&#39;s 1 per cent drop.

Industrial metals held gains following their surge overnight, underpinned by expectations of strong global demand and tight supplies.

Benchmark zinc on the London Metal Exchange set a new decade high of $3,145 a tonne on Thursday and was last up 0.2 per cent from its previous close at $3,126.

London copper gained 0.2 per cent to $6,545 a tonne, after hitting $6,580, its highest level since November 2014, earlier in the session.

Gold advanced 0.4 per cent to $1,287.51 an ounce, adding to Wednesday&#39;s 0.9 per cent jump.

Money market futures are now pricing in about a 40 per cent chance the Fed will raise rates by December, compared to just under 50 per cent before the Fed's minutes

Asian stocks edged higher on Thursday as tensions between the United States and North Korea came off the boil, while the Federal Reserve's concerns about weak US inflation weighed on the dollar. MSCI's broadest index of Asia-Pacific shares outside Japan added 0.5 per cent. Japan's Nikkei slipped 0.1 per cent, weighed down by a stronger yen as the dollar wilted and shrugging off data showing the country's exports rose for an eighth straight month in July. Australian shares gained 0.1 per cent and the Australian dollar inched up 0.1 per cent to $0.7931 after the country added 27,900 jobs in July, beating expectations for an increase of 20,000. The unemployment rate remained at 5.6 per cent, as expected, although full-time employment fell by 20,300. South Korean shares advanced 0.5 per cent after the leaders of both North Korea and the United States appeared to back off from their heated rhetoric from last week. Trump on Wednesday praised North Korean leader Kim Jong Un for a "wise" decision not to fire missiles towards the US Pacific territory of Guam, after North Korean media reported that Kim had delayed to decision while he waited to see what the US did next. While that helped Wall Street close in positive territory overnight, concerns on the home front sent the dollar into reverse. Trump announced the disbanding of two high-profile business advisory councils on Wednesday after eight executives quit in protest over his remarks blaming weekend violence in Virginia not only on white nationalists but also on anti-racism activists who opposed them. Moreover, minutes from the Fed's July meeting released on Wednesday showed the central bank grew more wary about recent weak inflation, with some policymakers wanting to halt interest rate hikes until it was clear the trend was temporary. Money market futures are now pricing in about a 40 per cent chance the Fed will raise rates by December, compared to just under 50 per cent before the Fed's minutes. "The Federal Open Market Committee minutes confirmed one thing, which is that the committee members are not on the same page and there is no clear date when the Fed will initiate the process of reducing the size of the balance sheet," Naeem Aslam, chief market analyst at Think Markets in London, wrote in a note. "Trump dissolving his major business groups makes the investment community even more pessimistic because this sets the stage for even more failure for him." The dollar fell 0.3 per cent to 109.79 yen, extending Wednesday's 0.4 per cent slide. The dollar index, which tracks the greenback against a basket of six major peers, dropped 0.2 per cent to 93.357 after Wednesday's 0.3 per cent loss. The euro rose 0.1 per cent to $1.17835, extending its 0.3 per cent gain overnight, after the euro zone's second-quarter growth was revised to 2.2 per cent from a year earlier, from 2.1 per cent previously. Bitcoin, which has surged over $1,500 this month on speculative demand for the digital currency, slipped slightly. It fell about 1.5 per cent to $4,308.48 but remained within a whisker of its all-time high of $4,400 touched earlier this week. In commodities, oil prices edged up but remained close to a 3-1/2 week low touched on Wednesday as rising US production offset a decline in stockpiles by the most in a year. US crude was about 0.2 per cent higher at $46.88 a barrel, failing to make up most of Wednesday's 1.6 per cent slide. Global benchmark Brent gained 0.4 per cent to $50.47, after the previous session's 1 per cent drop. Industrial metals held gains following their surge overnight, underpinned by expectations of strong global demand and tight supplies. Benchmark zinc on the London Metal Exchange set a new decade high of $3,145 a tonne on Thursday and was last up 0.2 per cent from its previous close at $3,126. London copper gained 0.2 per cent to $6,545 a tonne, after hitting $6,580, its highest level since November 2014, earlier in the session. Gold advanced 0.4 per cent to $1,287.51 an ounce, adding to Wednesday's 0.9 per cent jump.

Asia shares up as North Korea tensions ease, wary Fed weighs on dollar

Gold prices tread lower on Wednesday as the dollar steadied, with investors awaiting minutes from the US&nbsp;Federal Reserve&#39;s last meeting in July for clues on the pace of potential interest rate hikes.

Spot gold had slipped 0.2 per cent to $1,269.11 per ounce by 0712 GMT, following two sessions of falls.

US&nbsp;gold futures for December delivery were down about 0.4 per cent at $1,274.90 an ounce.

Minutes of the Federal Open Market Committee meeting are due later in the day.

&quot;The bullish dollar is shifting the focus away from the safe havens,&quot; said Naeem Aslam, chief market analyst at Think Markets.

&quot;The increasing odds of the US&nbsp;interest rate hike could push the gold price below the $1,250 level and this could happen if the upcoming FOMC minutes deliver some hawkish tone.&quot;

Higher interest rates could boost the dollar, making commodities priced in the greenback more expensive for holders of other currencies.

The dollar index was little changed at 93.895.

The dollar hoarded hefty gains on Wednesday after strong US&nbsp;retail sales revived the chance of another Federal Reserve rate hike this year, while Asia stocks inched ahead as North Korean leader Kim Jong Un delayed a decision on firing missiles towards Guam.

&quot;We probably saw some of the selling (in gold) that came in as tensions eased between North Korea and the United States become a bit overdone. Certainly, the underlying issues that started emerging last week are far from evaporated,&quot; said ANZ analyst Daniel Hynes.

Spot gold may test a resistance at $1,278 per ounce, a break above which could lead to a gain to the next resistance at $1,286, Reuters technical analyst Wang Tao said.

Among other precious metals, silver was up 0.1 per cent at $16.61 per ounce and platinum rose 0.26 per cent to $959.50 per ounce.

Palladium was mostly unchanged at $885.25 after touching its lowest in over a week earlier in the session.

US?gold futures for December delivery were down about 0.4 per cent at $1,274.90 an ounce

Gold prices tread lower on Wednesday as the dollar steadied, with investors awaiting minutes from the US Federal Reserve's last meeting in July for clues on the pace of potential interest rate hikes. Spot gold had slipped 0.2 per cent to $1,269.11 per ounce by 0712 GMT, following two sessions of falls. US gold futures for December delivery were down about 0.4 per cent at $1,274.90 an ounce. Minutes of the Federal Open Market Committee meeting are due later in the day. "The bullish dollar is shifting the focus away from the safe havens," said Naeem Aslam, chief market analyst at Think Markets. "The increasing odds of the US interest rate hike could push the gold price below the $1,250 level and this could happen if the upcoming FOMC minutes deliver some hawkish tone." Higher interest rates could boost the dollar, making commodities priced in the greenback more expensive for holders of other currencies. The dollar index was little changed at 93.895. The dollar hoarded hefty gains on Wednesday after strong US retail sales revived the chance of another Federal Reserve rate hike this year, while Asia stocks inched ahead as North Korean leader Kim Jong Un delayed a decision on firing missiles towards Guam. "We probably saw some of the selling (in gold) that came in as tensions eased between North Korea and the United States become a bit overdone. Certainly, the underlying issues that started emerging last week are far from evaporated," said ANZ analyst Daniel Hynes. Spot gold may test a resistance at $1,278 per ounce, a break above which could lead to a gain to the next resistance at $1,286, Reuters technical analyst Wang Tao said. Among other precious metals, silver was up 0.1 per cent at $16.61 per ounce and platinum rose 0.26 per cent to $959.50 per ounce. Palladium was mostly unchanged at $885.25 after touching its lowest in over a week earlier in the session.

Gold treads lower ahead of Fed minutes

The dollar hoarded hefty gains on Wednesday after strong US&nbsp;retail sales revived the chance of another Federal Reserve rate hike this year, while Asia stocks inched ahead as tensions in the Korean peninsula went off the boil.

European bourses looked set for a somnolent start with Eurostoxx 50 futures steady, while E-Mini futures for the S&amp;P 500 were also barely changed.

North Korean leader Kim Jong Un has delayed a decision on firing missiles towards Guam while he waits to see what the United States does, as Washington said any dialogue was up to Kim.

The break in threat and counter-threat was enough for South Korean stocks to bounce 0.5 per cent, though they remain well short of a record peak touched last month.

The next flash point could be a joint US-South Korean military exercise starting on Aug. 21.

MSCI&#39;s broadest index of Asia-Pacific shares outside Japan edged up 0.3 per cent and Japan&#39;s Nikkei lost 0.1 per cent.

There was no clear lead from Wall Street, where the Dow ended on Tuesday up 0.02 per cent. The S&amp;P 500 lost 0.05 per cent and the Nasdaq 0.11 per cent.

The economic news, however, was much more emphatic, with US&nbsp;retail sales rising the most in seven months in July as consumers spent more on 10 of 13 retail sectors.

Importantly, upward revisions to sales for both May and June countered concerns that consumption had entered a downtrend and lifted the outlook for economic growth.

Investors reacted by narrowing odds on the Fed tightening again this year and sent two-year Treasury yields up to 1.36 per cent, from 1.29 per cent on Friday.

Minutes of the Fed&#39;s July meeting are due later in the session and should show how the debate on rate hikes is shifting within the central bank.

&quot;The minutes will show a Committee that is likely to announce a change in balance sheet policy at the September meeting,&quot; wrote analysts at JPMorgan in a note.

&quot;We think the minutes will be less forthright about the timing of the next rate hike, which we still expect to occur in December.&quot;

The dollar duly rallied to its highest level against a basket of major currencies in nearly three weeks and was last holding at 93.824.

The euro dipped to $1.1740, though it had found solid support around $l.1686 overnight.

The yen took an added blow from the easing in risk aversion and sagged to 110.64 per dollar. The dollar&#39;s 1.4 per cent jump on Tuesday was the biggest daily rise since April.

Sterling also slumped after UK inflation numbers came in below forecast, breaching key support levels against both the euro and dollar. The pound was last at $1.2863, having shed 1.1 per cent the previous session.

All that action paled in comparison to the digital currency Bitcoin, which has surged over $1,200 so far this month to reach $4,100 amid fevered speculative demand.

&quot;Interest in digital currencies has spiked recently as proponents tout benefits such as a lack of centralised control and limited supply,&quot; said William O&#39;Loughlin, an investment analyst at Rivkin Securities.

&quot;However, anyone thinking of buying the currency should realise that it is incredibly volatile and could fall in value as quickly as it rose.&quot;

In commodity markets, the revival in risk appetite dragged gold back to $1,272.90 an ounce, and away from Friday&#39;s two-month top of $1,291.86.

Oil prices nudged higher after data from the American Petroleum Institute showed a much larger fall in crude inventories than expected.

US&nbsp;crude added 21 cents to $47.76 per barrel, while Brent firmed 26 cents to $51.06.

The dollar duly rallied to its highest level against a basket of major currencies in nearly three weeks and was last holding at 93.824

The dollar hoarded hefty gains on Wednesday after strong US retail sales revived the chance of another Federal Reserve rate hike this year, while Asia stocks inched ahead as tensions in the Korean peninsula went off the boil. European bourses looked set for a somnolent start with Eurostoxx 50 futures steady, while E-Mini futures for the S&P 500 were also barely changed. North Korean leader Kim Jong Un has delayed a decision on firing missiles towards Guam while he waits to see what the United States does, as Washington said any dialogue was up to Kim. The break in threat and counter-threat was enough for South Korean stocks to bounce 0.5 per cent, though they remain well short of a record peak touched last month. The next flash point could be a joint US-South Korean military exercise starting on Aug. 21. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.3 per cent and Japan's Nikkei lost 0.1 per cent. There was no clear lead from Wall Street, where the Dow ended on Tuesday up 0.02 per cent. The S&P 500 lost 0.05 per cent and the Nasdaq 0.11 per cent. The economic news, however, was much more emphatic, with US retail sales rising the most in seven months in July as consumers spent more on 10 of 13 retail sectors. Importantly, upward revisions to sales for both May and June countered concerns that consumption had entered a downtrend and lifted the outlook for economic growth. Investors reacted by narrowing odds on the Fed tightening again this year and sent two-year Treasury yields up to 1.36 per cent, from 1.29 per cent on Friday. Minutes of the Fed's July meeting are due later in the session and should show how the debate on rate hikes is shifting within the central bank. "The minutes will show a Committee that is likely to announce a change in balance sheet policy at the September meeting," wrote analysts at JPMorgan in a note. "We think the minutes will be less forthright about the timing of the next rate hike, which we still expect to occur in December." The dollar duly rallied to its highest level against a basket of major currencies in nearly three weeks and was last holding at 93.824. The euro dipped to $1.1740, though it had found solid support around $l.1686 overnight. The yen took an added blow from the easing in risk aversion and sagged to 110.64 per dollar. The dollar's 1.4 per cent jump on Tuesday was the biggest daily rise since April. Sterling also slumped after UK inflation numbers came in below forecast, breaching key support levels against both the euro and dollar. The pound was last at $1.2863, having shed 1.1 per cent the previous session. All that action paled in comparison to the digital currency Bitcoin, which has surged over $1,200 so far this month to reach $4,100 amid fevered speculative demand. "Interest in digital currencies has spiked recently as proponents tout benefits such as a lack of centralised control and limited supply," said William O'Loughlin, an investment analyst at Rivkin Securities. "However, anyone thinking of buying the currency should realise that it is incredibly volatile and could fall in value as quickly as it rose." In commodity markets, the revival in risk appetite dragged gold back to $1,272.90 an ounce, and away from Friday's two-month top of $1,291.86. Oil prices nudged higher after data from the American Petroleum Institute showed a much larger fall in crude inventories than expected. US crude added 21 cents to $47.76 per barrel, while Brent firmed 26 cents to $51.06.

Dollar revives over North Korea respite

2017 Forbes ranking of the<a href="https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/billionaires/list/3/&amp;refURL=http://www.forbesindia.com/article/special/101-indian-billionaires-on-forbess-list-of-worlds-richest-people/46365/1&amp;referrer=http://www.forbesindia.com/article/special/101-indian-billionaires-on-forbess-list-of-worlds-richest-people/46365/1#version:static_country:India"> richest billionaires has 101 Indians </a>making it to the list. The Indian ranking is led by Mukesh Ambani at a net worth of $23.2 billion followed by Lakshmi Mittal with a net worth of $16.4 billion.&nbsp;

But what&rsquo;s new about Forbes ranking this time?&nbsp;

The 101 list of Indian richest people, features four women billionaires we hardly ever hear about. These are women who are heading the biggest industries in the country and are at a crucial position:&nbsp;

<h3>Savitri Devi Jindal: #303</h3>

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Savitri Jindal (Source: Wikipedia) (Others)
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Her real time net worth is $5.8 billion&nbsp;as of 21st March, 2017&nbsp;

She is the mother of former Congress MP Naveen Jindal. Savitri Jindal is the richest women in India, serving as the non-executive chairperson of Jindal Steel &amp; Power Limited. The matriarch has seen the shares of the company fall and rise as soon she came to control things. She was a minister in Haryana government and a member of the Haryana Vidhan Sabha (Legislative Assembly) from Hisar constituency.&nbsp;

<h3>Smita Crishna-Godrej: #814&nbsp;&nbsp; &nbsp;</h3>

&nbsp;

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Smita Crishna Godrej (Source: Be Movement) (Others)
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Her real time net worth is $2.6&nbsp;billion&nbsp;as of 21st March, 2017.

Smita Crishna-Godrej is industrialist Jamshyd Godrej&rsquo;s sister and is married to Vijay Crishna, a director on the board of Godrej Industries Limited. She has one-fifth stake in the family assets. She was in the news recently for having bought a heritage bungalow in south Mumbai in 2014 that once belonged to Homi Bhabha, India&#39;s atomic energy pioneer.

<h3>Kiran Mazumdar-Shaw: #973</h3>

&nbsp;

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Kiran Mazumdar Shaw (Source: Wikimedia Commons) (Others)
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Her real time net worth is $2.3&nbsp;billion&nbsp;as of 21st March, 2017.

Kiran Mazumdar Shaw carries the baton of being India&#39;s richest self-made woman. Her listed company Biocon has more than doubled in the past year. The company is Asia&#39;s largest insulin producer and aims to capture a 10% share of the global market. Mazumdar Shaw is the recipient of Chevalier de l&#39;Ordre National de la L&eacute;gion d&#39;Honneur, France&#39;s highest civilian honour, for her outstanding contribution to bioscience.

<h3>Leena Gandhi Tewari: #1030</h3>

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Leena Gandhi Tewari (Source: Wikipedia) (Others)
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Her real time net worth is $2.1&nbsp;billion&nbsp;as of 21st March, 2017.

Leena Gandhi Tewari is the chairperson of USV Limited and one of the richest women in India. USV Limited is a leading pharmaceutical firm with leadership in diabetes and cardiovascular fields in India. Currently a $385 million revenue company, USV was started by her late father as a joint venture with Revlon in 1961.&nbsp;

(WION) 
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There are 101 Indians in the 2017 Forbes richest billionaires list

2017 Forbes ranking of the richest billionaires has 101 Indians making it to the list. The Indian ranking is led by Mukesh Ambani at a net worth of $23.2 billion followed by Lakshmi Mittal with a net worth of $16.4 billion. But what’s new about Forbes ranking this time? The 101 list of Indian richest people, features four women billionaires we hardly ever hear about. These are women who are heading the biggest industries in the country and are at a crucial position: Savitri Devi Jindal: #303 Savitri Jindal (Source: Wikipedia) (Others) × Her real time net worth is $5.8 billion as of 21st March, 2017 She is the mother of former Congress MP Naveen Jindal. Savitri Jindal is the richest women in India, serving as the non-executive chairperson of Jindal Steel & Power Limited. The matriarch has seen the shares of the company fall and rise as soon she came to control things. She was a minister in Haryana government and a member of the Haryana Vidhan Sabha (Legislative Assembly) from Hisar constituency. Smita Crishna-Godrej: #814 Smita Crishna Godrej (Source: Be Movement) (Others) × Her real time net worth is $2.6 billion as of 21st March, 2017. Smita Crishna-Godrej is industrialist Jamshyd Godrej’s sister and is married to Vijay Crishna, a director on the board of Godrej Industries Limited. She has one-fifth stake in the family assets. She was in the news recently for having bought a heritage bungalow in south Mumbai in 2014 that once belonged to Homi Bhabha, India's atomic energy pioneer. Kiran Mazumdar-Shaw: #973 Kiran Mazumdar Shaw (Source: Wikimedia Commons) (Others) × Her real time net worth is $2.3 billion as of 21st March, 2017. Kiran Mazumdar Shaw carries the baton of being India's richest self-made woman. Her listed company Biocon has more than doubled in the past year. The company is Asia's largest insulin producer and aims to capture a 10% share of the global market. Mazumdar Shaw is the recipient of Chevalier de l'Ordre National de la Légion d'Honneur, France's highest civilian honour, for her outstanding contribution to bioscience. Leena Gandhi Tewari: #1030 Leena Gandhi Tewari (Source: Wikipedia) (Others) × Her real time net worth is $2.1 billion as of 21st March, 2017. Leena Gandhi Tewari is the chairperson of USV Limited and one of the richest women in India. USV Limited is a leading pharmaceutical firm with leadership in diabetes and cardiovascular fields in India. Currently a $385 million revenue company, USV was started by her late father as a joint venture with Revlon in 1961. (WION)

Four Indian women billionaires in the Forbes list you didn't know about!

Asian stocks edged up to fresh 19-month highs on Thursday, helped by an extended rally on Wall Street and strong US&nbsp;data though the Dollar stepped back after a recent bounce.

MSCI&#39;s broadest index of Asia-Pacific shares outside Japan&nbsp;was up 0.2 per cent, rising to its highest since July 2015. It is up by a tenth so far this year partly underpinned by more optimistic earnings expectations and a gradual unwinding of bearish emerging market bets.

Australian stocks&nbsp;advanced 0.4 per cent in early deals with looming jobs data the key event risk on the day. A strong showing would set the market up for further gains with technical indicators helping.

&quot;The index has now closed above the key technical resistance level at 5,800 which is a bullish sign opening up further gains in the coming months back towards 6,000,&quot; said James Woods, global investment analyst at Rivkin Securities in Sydney.

The Australian employment data is due at 00:30 GMT with market expectations centering around 10,000 jobs being created.

Wall Street pushed further into record-high territory on Wednesday, with the S&amp;P 500 notching a seven-session winning streak, helped by robust economic data and optimism that President Donald Trump will cut corporate taxes. That optimism was not shared in the currency markets with the dollar&#39;s recent bounce running out of steam as investors took profits even as fresh data showed a pick up in inflationary pressures.

US&nbsp;consumer prices recorded their biggest increase in nearly four years in January, backing expectations for the Federal Reserve to raise interest rates at a steady pace over the course of the year.

Fed Chair Janet Yellen, in her second day of economic testimony before Congress, offered no additional insight on the timing of the central bank&#39;s next rate hike after her comments a day earlier had hinted at a fairly hawkish policy stance.

Traders may also be leaning towards a rate increase delayed beyond the Fed&#39;s March meeting, with the futures markets only pricing a 27 per cent chance of a tightening next month.

The Dollar index, which measures the currency against a trade-weighted basket of six major peers, slipped to 101.02. It rallied to a one-month high of 101.76 on Wednesday.

In commodity markets, oil prices softened as record high US&nbsp;crude and gasoline inventories fed concerns about a global glut. US crude&nbsp;was down 0.15 per cent at $53.03 a barrel and Brent was flat at $55.75 a barrel.

(Reuters)

Wall Street pushed further into record-high territory, helped by robust economic data and optimism Trump will cut corporate taxes

Asian stocks edged up to fresh 19-month highs on Thursday, helped by an extended rally on Wall Street and strong US data though the Dollar stepped back after a recent bounce. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent, rising to its highest since July 2015. It is up by a tenth so far this year partly underpinned by more optimistic earnings expectations and a gradual unwinding of bearish emerging market bets. Australian stocks advanced 0.4 per cent in early deals with looming jobs data the key event risk on the day. A strong showing would set the market up for further gains with technical indicators helping. "The index has now closed above the key technical resistance level at 5,800 which is a bullish sign opening up further gains in the coming months back towards 6,000," said James Woods, global investment analyst at Rivkin Securities in Sydney. The Australian employment data is due at 00:30 GMT with market expectations centering around 10,000 jobs being created. Wall Street pushed further into record-high territory on Wednesday, with the S&P 500 notching a seven-session winning streak, helped by robust economic data and optimism that President Donald Trump will cut corporate taxes. That optimism was not shared in the currency markets with the dollar's recent bounce running out of steam as investors took profits even as fresh data showed a pick up in inflationary pressures. US consumer prices recorded their biggest increase in nearly four years in January, backing expectations for the Federal Reserve to raise interest rates at a steady pace over the course of the year. Fed Chair Janet Yellen, in her second day of economic testimony before Congress, offered no additional insight on the timing of the central bank's next rate hike after her comments a day earlier had hinted at a fairly hawkish policy stance. Traders may also be leaning towards a rate increase delayed beyond the Fed's March meeting, with the futures markets only pricing a 27 per cent chance of a tightening next month. The Dollar index, which measures the currency against a trade-weighted basket of six major peers, slipped to 101.02. It rallied to a one-month high of 101.76 on Wednesday. In commodity markets, oil prices softened as record high US crude and gasoline inventories fed concerns about a global glut. US crude was down 0.15 per cent at $53.03 a barrel and Brent was flat at $55.75 a barrel. (Reuters)

Asian stocks at one-and-a-half year highs on robust Wall St; Dollar retreats

A key suspect in the Indore-Patna Express derailment in Kanpur&nbsp;was arrested from Nepal&#39;s Tribhuvan International Airport on Monday&nbsp;after he was deported from Dubai.&nbsp;

A special team comprising of Nepal police captured Samshul Hoda along with three others.&nbsp;

During interrogation, Brij Kishor Giri, Ashish Singh and Umesh Kumar Kurmi, provided leads about the Indore-Patna Express derailment which left 150 dead.&nbsp;

The three belong to Kalaiya district in southern Nepal.

Deputy inspector general of police (DIG) Pashupati Upadhyaya said, &quot;We have heard that Hoda is wanted in a railway accident that took place in Kanpur last year killing 150 people.&quot;

&quot;Nepal Police will also work in close coordination with the Indian Police for Hoda&#39;s alleged involvement in criminal activities in India.&quot;

Hoda is believed to be an ISI agent after three people arrested by the Bihar police said they were working for the Pakistan intelligence agency to carry out attacks on Indian railways.&nbsp;

The Bihar police said&nbsp;the three were paid Rs three lakh (approx. $4,500) by a Nepali man who had links to Hoda.

(WION with inputs from agencies)

Spot gold was down 0.4 per cent at $1,225.42 per ounce by 0326 GMT. On Wednesday, it touched its highest since November 11 at $1,244.67

A key suspect in the Indore-Patna Express derailment in Kanpur was arrested from Nepal's Tribhuvan International Airport on Monday after he was deported from Dubai. A special team comprising of Nepal police captured Samshul Hoda along with three others. During interrogation, Brij Kishor Giri, Ashish Singh and Umesh Kumar Kurmi, provided leads about the Indore-Patna Express derailment which left 150 dead. The three belong to Kalaiya district in southern Nepal. Deputy inspector general of police (DIG) Pashupati Upadhyaya said, "We have heard that Hoda is wanted in a railway accident that took place in Kanpur last year killing 150 people." "Nepal Police will also work in close coordination with the Indian Police for Hoda's alleged involvement in criminal activities in India." Hoda is believed to be an ISI agent after three people arrested by the Bihar police said they were working for the Pakistan intelligence agency to carry out attacks on Indian railways. The Bihar police said the three were paid Rs three lakh (approx. $4,500) by a Nepali man who had links to Hoda. (WION with inputs from agencies)

Gold falls on Trump tax pledge, US rate hike expectations

The rupee crashed to a near&nbsp;39-month low of 68.84, plummeting by another 27&nbsp;paise against the US dollar in early trade today, close to surpassing its previous record low of 68.85 on&nbsp;August 28, 2013.&nbsp;

Demonetisation and outflows from emerging markets have hit the rupee hard this month, causing the Reserve Bank of India to intervene in the foreign exchange market.&nbsp;

Forex dealers said besides strong month-end demand for the dollar from importers, continued capital outflows by foreign funds and the dollar&#39;s bull run on an imminent hike in the Fed&#39;s interest rates weighed heavily on the rupee.

Further, a lower opening of the domestic equity market also put pressure on the rupee, they said.

The rupee had shed 31 paise to close at a new nine-month low of 68.56 against the dollar yesterday.

The Indian currency shrunk 2.92 per cent since Donald Trump&#39;s victory in the US Presidential polls earlier this month.

A huge outflow of capital by foreign investors has been weakening the rupee as they apprehend an impact on the economy in the short-term following the India&#39;s move to demonetise Rs 500 and Rs 1,000 banknotes.

Surging US bond yields and a strong dollar overseas are also contributing to the rupee&#39;s fall.

Meanwhile, the BSE Sensex fell by 145.97 points, or 0.56 per cent, to 25,905.84 points in early trade.

(PTI)&nbsp;

The previous record low was 68.85 on?August 28, 2013

The rupee crashed to a near 39-month low of 68.84, plummeting by another 27 paise against the US dollar in early trade today, close to surpassing its previous record low of 68.85 on August 28, 2013. Demonetisation and outflows from emerging markets have hit the rupee hard this month, causing the Reserve Bank of India to intervene in the foreign exchange market. Forex dealers said besides strong month-end demand for the dollar from importers, continued capital outflows by foreign funds and the dollar's bull run on an imminent hike in the Fed's interest rates weighed heavily on the rupee. Further, a lower opening of the domestic equity market also put pressure on the rupee, they said. The rupee had shed 31 paise to close at a new nine-month low of 68.56 against the dollar yesterday. The Indian currency shrunk 2.92 per cent since Donald Trump's victory in the US Presidential polls earlier this month. A huge outflow of capital by foreign investors has been weakening the rupee as they apprehend an impact on the economy in the short-term following the India's move to demonetise Rs 500 and Rs 1,000 banknotes. Surging US bond yields and a strong dollar overseas are also contributing to the rupee's fall. Meanwhile, the BSE Sensex fell by 145.97 points, or 0.56 per cent, to 25,905.84 points in early trade. (PTI)

Rupee near all-time low, tumbles 27 paise to 68.84

Asian markets were on tenterhooks on Wednesday as early state exit polls in the US&nbsp;presidential election showed wins for both candidates and no clear trend as yet, causing a nervous shift back to safe haven assets.

Asian stocks and US&nbsp;stock futures edged 0.5 per cent higher in volatile trade, while the Dollar slipped on the Yen and Euro as investors hedged against the risk of a shock win by Republican Donald Trump.

Both Trump and Democrat Hillary Clinton scored early victories in their bitter race, with Trump winning as expected in conservative Indiana, Kentucky and West Virginia and Clinton capturing liberal Vermont.

The victories in the four states were long predicted and not especially significant in a national race where opinion polls show Clinton has an edge.

Markets have tended to favour Clinton as a status quo candidate who would be considered a safe pair of hands at home on the world stage.

&quot;In contrast, a Trump victory would trigger massive uncertainty that would likely undermine risk assets at least initially, which in turn could preclude a Fed rate hike this year,&quot; warned Michelle Girard, chief US&nbsp;economist at RBS.

Much of the action was in the currency markets where the Mexican peso has become a touchstone for sentiment on the election as Trump&#39;s trade policies are seen as damaging to its export-heavy economy.

The dollar jumped 1.2 per cent on the peso as the early results were reported, after hitting its lowest in two months overnight.

The dollar backtracked 0.7 per cent on the safe haven yen to 104.48 Yen, while the Euro rose to $1.1048. Against a basket of currencies, the Dollar was off 0.2 per cent at 97.678.

Yields on 10-year US&nbsp;Treasury yields inched down to 1.849 per cent, after touching a high of 1.876 per cent.

In share markets, MSCI&#39;s broadest index of Asia-Pacific stocks outside Japan was still up 0.4 per cent, but the Nikkei rose 0.8 per cent.

Wall Street had added somewhat to Monday&#39;s stellar gains with the Dow ending up 0.4 per cent. The S&amp;P 500 gained 0.38 per cent and the Nasdaq 0.53 per cent.

Shane Oliver, head of investment strategy at fund manager AMP Capital, said the most positive outcome for US&nbsp;equities would be a Clinton win with a split Congress.

&quot;Historically, since 1927 US&nbsp;total share returns have been strongest at an average 16.7 per cent per year when there has been a Democrat president and Republican control of the House, the Senate or both.&quot;

The return only averaged 8.9 per cent when the Republicans controlled the presidency and Congress.

In commodity markets, gold edged up to $1,278.46 an ounce as the Dollar eased.

Oil took a knock from data showing a surprisingly large rise in crude stocks. US&nbsp;crude eased 19 cents to $44.79, while Brent was untraded early in the Asian day.

(Reuters)

Asian stocks and US stock futures edged 0.5 per cent higher in volatile trade, while the Dollar slipped on the Yen and Euro

Asian markets were on tenterhooks on Wednesday as early state exit polls in the US presidential election showed wins for both candidates and no clear trend as yet, causing a nervous shift back to safe haven assets. Asian stocks and US stock futures edged 0.5 per cent higher in volatile trade, while the Dollar slipped on the Yen and Euro as investors hedged against the risk of a shock win by Republican Donald Trump. Both Trump and Democrat Hillary Clinton scored early victories in their bitter race, with Trump winning as expected in conservative Indiana, Kentucky and West Virginia and Clinton capturing liberal Vermont. The victories in the four states were long predicted and not especially significant in a national race where opinion polls show Clinton has an edge. Markets have tended to favour Clinton as a status quo candidate who would be considered a safe pair of hands at home on the world stage. "In contrast, a Trump victory would trigger massive uncertainty that would likely undermine risk assets at least initially, which in turn could preclude a Fed rate hike this year," warned Michelle Girard, chief US economist at RBS. Much of the action was in the currency markets where the Mexican peso has become a touchstone for sentiment on the election as Trump's trade policies are seen as damaging to its export-heavy economy. The dollar jumped 1.2 per cent on the peso as the early results were reported, after hitting its lowest in two months overnight. The dollar backtracked 0.7 per cent on the safe haven yen to 104.48 Yen, while the Euro rose to $1.1048. Against a basket of currencies, the Dollar was off 0.2 per cent at 97.678. Yields on 10-year US Treasury yields inched down to 1.849 per cent, after touching a high of 1.876 per cent. In share markets, MSCI's broadest index of Asia-Pacific stocks outside Japan was still up 0.4 per cent, but the Nikkei rose 0.8 per cent. Wall Street had added somewhat to Monday's stellar gains with the Dow ending up 0.4 per cent. The S&P 500 gained 0.38 per cent and the Nasdaq 0.53 per cent. Shane Oliver, head of investment strategy at fund manager AMP Capital, said the most positive outcome for US equities would be a Clinton win with a split Congress. "Historically, since 1927 US total share returns have been strongest at an average 16.7 per cent per year when there has been a Democrat president and Republican control of the House, the Senate or both." The return only averaged 8.9 per cent when the Republicans controlled the presidency and Congress. In commodity markets, gold edged up to $1,278.46 an ounce as the Dollar eased. Oil took a knock from data showing a surprisingly large rise in crude stocks. US crude eased 19 cents to $44.79, while Brent was untraded early in the Asian day. (Reuters)

Dollar spooked in Asia as US polls too close to call

A new Australian&nbsp;banknote, which went into circulation from September 1, 2016, is good news for the visually impaired. The&nbsp;A$5 note has two raised dots on both&nbsp;long sides, allowing those who cannot see to identify its value. This is&nbsp;the country&#39;s first note to feature tactile markings, and is being hailed as a major breakthrough. The authorities feel that this will bring about a change in the lives of the 360,000 Australians who are visually impaired.&nbsp;

 
<iframe allowfullscreen="" frameborder="0" height="480" src="https://www.youtube.com/embed/lX5U_mzKHGc?list=PLmWa9ZZLlCjt0Jlg7kN3JBNX4LH1sRsGh" width="970"></iframe>

The new design follows a 2012 petition by teenager Connor McLeod,&nbsp;who is blind from birth.&nbsp;The petition&nbsp;gathered more than 57,000 signatures and is being credited with persuading the Reserve Bank of Australia to make the change.&nbsp;

Australia is making efforts to make theirs a disabled-friendly country

A new Australian banknote, which went into circulation from September 1, 2016, is good news for the visually impaired. The A$5 note has two raised dots on both long sides, allowing those who cannot see to identify its value. This is the country's first note to feature tactile markings, and is being hailed as a major breakthrough. The authorities feel that this will bring about a change in the lives of the 360,000 Australians who are visually impaired. The new design follows a 2012 petition by teenager Connor McLeod, who is blind from birth. The petition gathered more than 57,000 signatures and is being credited with persuading the Reserve Bank of Australia to make the change.

Video: Why a new Australian banknote is a blessing for the visually impaired

The British pound slumped to a fresh three-year low against the euro Monday and edged lower on the dollar, as signs of weakness mounted in the British economy. 
 
At 86.80 pence on the euro, the pound was at its weakest level since August 2013. 
 
Meanwhile sterling fell to $1.2883, just barely above its $1.2798 post-Brexit vote level that marked a three-decade low against the US greenback. 
 
The currency&#39;s fall came as data from Britain showed London residential rents fell for the first time in six years in July, amid worries the June 23 vote to exit the European Union was already having an impact on the economy. 
 
The rental data came on the heels of numbers showing home prices fell for the second straight month. 
 
&quot;In the month of August, the British pound has been the weakest currency and the trend continued today,&quot; said Kathy Lien of BK Asset Management. 
 
&quot;The main reason why the currency is weak is because investors are worried about this week&#39;s UK economic reports.&quot; 
 
Even if the formal moves to leave the European Union will not be taken by the government until next year, Lien said, &quot;the damage has been done and consequences are just beginning to appear.&quot; 
 
2100 GMT Monday Friday 
 
EUR/USD 1.1183 1.1165 
 
EUR/JPY 113.23 113.07 
 
EUR/CHF 1.0877 1.0882 
 
EUR/GBP 0.8680 0.8643 
 
USD/JPY 101.25 101.27 
 
USD/CHF 0.9726 0.9747 
 
GBP/USD 1.2883 1.2918

The currency's fall comes as data showed London residential rents fell for the first time in six years in July

The British pound slumped to a fresh three-year low against the euro Monday and edged lower on the dollar, as signs of weakness mounted in the British economy. At 86.80 pence on the euro, the pound was at its weakest level since August 2013. Meanwhile sterling fell to $1.2883, just barely above its $1.2798 post-Brexit vote level that marked a three-decade low against the US greenback. The currency's fall came as data from Britain showed London residential rents fell for the first time in six years in July, amid worries the June 23 vote to exit the European Union was already having an impact on the economy. The rental data came on the heels of numbers showing home prices fell for the second straight month. "In the month of August, the British pound has been the weakest currency and the trend continued today," said Kathy Lien of BK Asset Management. "The main reason why the currency is weak is because investors are worried about this week's UK economic reports." Even if the formal moves to leave the European Union will not be taken by the government until next year, Lien said, "the damage has been done and consequences are just beginning to appear." 2100 GMT Monday Friday EUR/USD 1.1183 1.1165 EUR/JPY 113.23 113.07 EUR/CHF 1.0877 1.0882 EUR/GBP 0.8680 0.8643 USD/JPY 101.25 101.27 USD/CHF 0.9726 0.9747 GBP/USD 1.2883 1.2918

British Pound slumps to three-year low against Euro

The Dollar slumped today as dealers awaited the release of minutes from the Federal Reserve&#39;s&nbsp;last meeting, while an overnight jump in oil prices lifted emerging Asian currencies. 
 
The US central bank is on Wednesday due to release minutes of its July 26-27 meeting, when it left key interest rates unchanged. 
 
But the Fed acknowledged an improved performance in the world&#39;s top economy, suggesting a rate hike may still be on the horizon this year. 
 
A rise in borrowing costs would tend to stoke demand for the Dollar-denominated assets, boosting the green back. 
 
&quot;The market really has not moved to price in any more chance of Fed tightening,&quot; Daniel Katzive, head of foreign-exchange strategy for North America at BNP Paribas, told Bloomberg News. 
 
&quot;That&#39;s sapped the Dollar of any momentum.&quot; 
 
In Tokyo, the Dollar slipped to 100.44 yen from 101.25 yen Monday in New York and its lowest level in about a month, while the euro was at $1.1191 against $1.1183. 
 
The common currency weakened to 112.41 yen from 113.23 yen in US trade. 
 
The pound traded at $1.2902 against $1.2883 in the US, still near its weakest levels in more than 30 years touched in the aftermath of Britain&#39;s&nbsp;June vote to leave the European Union. 
 
The Dollar also dropped against higher-yielding emerging market currencies, which benefited from stronger oil prices and an uptick in investor sentiment. 
 
The oil-linked Malaysian ringgit, the South Korean won, Singapore and Taiwan Dollars, Philippine peso and Indonesian rupiah all rose against the US unit.&nbsp; 
 
&quot;A recovery in risk appetite is sending emerging currencies stronger,&quot; said Wu Mingze, a Singapore-based foreign-exchange trader at INTL FCStone Inc. 
 
&quot;Commodities are rallying, lifting stock prices and commodity currencies.&quot; 
 
(AFP)

A rise in borrowing costs would tend to stoke demand for Dollar-denominated assets, boosting the green back

The Dollar slumped today as dealers awaited the release of minutes from the Federal Reserve's last meeting, while an overnight jump in oil prices lifted emerging Asian currencies. The US central bank is on Wednesday due to release minutes of its July 26-27 meeting, when it left key interest rates unchanged. But the Fed acknowledged an improved performance in the world's top economy, suggesting a rate hike may still be on the horizon this year. A rise in borrowing costs would tend to stoke demand for the Dollar-denominated assets, boosting the green back. "The market really has not moved to price in any more chance of Fed tightening," Daniel Katzive, head of foreign-exchange strategy for North America at BNP Paribas, told Bloomberg News. "That's sapped the Dollar of any momentum." In Tokyo, the Dollar slipped to 100.44 yen from 101.25 yen Monday in New York and its lowest level in about a month, while the euro was at $1.1191 against $1.1183. The common currency weakened to 112.41 yen from 113.23 yen in US trade. The pound traded at $1.2902 against $1.2883 in the US, still near its weakest levels in more than 30 years touched in the aftermath of Britain's June vote to leave the European Union. The Dollar also dropped against higher-yielding emerging market currencies, which benefited from stronger oil prices and an uptick in investor sentiment. The oil-linked Malaysian ringgit, the South Korean won, Singapore and Taiwan Dollars, Philippine peso and Indonesian rupiah all rose against the US unit. "A recovery in risk appetite is sending emerging currencies stronger," said Wu Mingze, a Singapore-based foreign-exchange trader at INTL FCStone Inc. "Commodities are rallying, lifting stock prices and commodity currencies." (AFP)

Dollar slumps ahead of Fed meeting minutes

Traders said central banks of India and Korea sold dollars to curb fall of their currencies

At least two Asian central banks were suspected of intervening in their currency markets on Friday, according to traders, as global financial markets went into a tailspin after Britain voted to leave the European Union in a historic vote. Multiple traders said the Bank of Korea was thought to have sold dollars to curb the won's fall as the local currency dropped, while the Reserve Bank of India likely sold dollars through state-owned banks to prevent the rupee from falling further. An official at the Bank of Korea declined to comment, but South Korea's Vice Finance Minister Choi Sang-Mok said the government will make all efforts to minimize the impact from Brexit. "Regarding foreign exchange trade, we will use all usable options to stabilize markets, including launching smoothing operations,” he said. A senior policymaker aware of the Reserve Bank of India's plans for Brexit-related market management said that the central bank is "prepared to deal with any volatility." Separately, Japan's finance minister Taro Aso said he is carefully monitoring market developments and will respond as and when needed in the currency markets. A statement from the G7 group of leading industrial economies was expected on Friday. The question will be whether there is any coordinated intervention to ease monetary policy by global central banks, though room for maneuver is modest. "The ECB has few additional options left, yet it could announce more targeted purchases of peripheral sovereign bonds in the case investors start betting against the euro again,” said Markus Schomer, chief economist at Pinebridge Investments. The yen surging to its strongest levels against the dollar in two-and-a-half years, briefly breaking through the 100-yen-to-the-dollar level. Sterling suffered its biggest one-day fall of more than 9 percent against the dollar, hitting its lowest level in three decades. Japanese stocks sank, pushing the Nikkei 225 index down more than 8 percent to its lowest since October 2014, and a similar decline in the Nikkei futures triggered circuit breakers. Money markets were volatile. Fed fund futures effectively moved to pricing in a tiny U.S. rate cut from a rate increase in July. Japan's Deputy Chief Cabinet Secretary Hiroshige Seko told reporters the government was worried about market moves, saying sudden shifts because of the British vote were undesirable. The yen's strength due to its safe-haven status has been a frustration for Japanese authorities, who want a weaker currency to support exports and the economy. But they have been unable to garner support for intervention to weaken it from other major economies, most notably the United States. The 100-yen-per-dollar level has been seen as a pivotal point to test the patience of Japan's monetary officials on intervention. Morgan Stanley expects the dollar to fall to 90 yen as investors seek the Japanese currency out as a relative safe haven, and a further 15-20 percent downside for European equities from current levels. The Australian dollar, often sold off in times of heightened market stress, fell heavily against the dollar and the yen. Traditional stress markers such as interbank dollar funding rates in Singapore and Hong Kong were broadly steady, but treasury bill and front end government bond yields fell. "Because of this matter, we have made preparation in many aspects. We have reserved sufficient liquidity and we are able to handle in different situations," Hong Kong Financial Secretary John Tsang told reporters in the airport on Friday morning before he flew out to Beijing. The Hong Kong Monetary Authority has asked banks to maintain ample cash conditions with them. No unscheduled monetary liquidity injection operations have been taken so far, according to an HKMA spokeswoman. The Singapore stock exchange played its part in trying to reduce volatility by raising margins on Nikkei futures traded on its exchange. The People's Bank of China injected 170 billion yuan ($25.9 billion) on Friday, taking the net injection for the week to 340 billion yuan, the biggest in two months. But that was seen more about averting a cash squeeze at the end of the half year next week, as has happened previously, rather than responding to the Brexit vote. Still, the yuan fell to its weakest level against the U.S. dollar since January 2011 while its offshore counterpart slipped to its weakest level in more than four months. The Philippines' central bank said on Friday it was closely monitoring the foreign exchange market and remains prepared to act to ensure orderly transactions and smooth volatility. (Reuters)

Asian central banks, policymakers wade in to calm markets after Brexit vote

Asian shares edged up and Sterling stood close to its peak for the year on Thursday, as investors were cautiously optimistic that British voters would opt to remain in the European Union at a referendum later in the session.&nbsp; 
 
Two opinion polls published late on Wednesday, a few hours before voters were due to begin to cast their votes, showed the &quot;Remain&quot; camp gaining momentum in the closely divided campaign. 
 
MSCI&#39;s broadest index of Asia-Pacific shares outside Japan edged up 0.2 per cent in early trading, shrugging off modest overnight losses on Wall Street. 
 
Japan&#39;s Nikkei share average rose 0.3 per cent. 
 
&quot;Markets seem to have almost entirely priced in a &#39;Remain&#39; vote win, meaning that the market moves and volatility around the vote may be far less than many had been expected,&quot; wrote Angus Nicholson, market analyst at IG in Melbourne. 
 
&quot;Nonetheless, markets are still incredibly nervous and some sharp market moves are likely over the next 24 hours,&quot; he said. 
 
Sterling rose to $1.4847, its highest against the dollar in 2016, and was last up 0.6 per cent at $1.4798. 
 
The perceived safe-haven Yen also slipped on receding fears of the market turmoil that would likely follow if Britain were to pull out of the EU. 
 
The dollar added 0.2 per cent to 104.69 Yen , while the euro gained 0.5 percent to 118.54 yen . 
 
The euro rose 0.2 per cent to $1.1322 , while the dollar index, which tracks the greenback against a basket of six rival currencies, slipped 0.1 per cent to 93.582. 
 
On the US data front, home resales rose to a more than nine-year high last month against a backdrop of historically low mortgage rates, adding to recent upbeat second quarter data. 
 
Crude oil prices rose after settling down more than 1 per cent on Wednesday after the U.S. government reported a smaller-than-expected inventory drawdown. 
 
Brent added 0.7 per cent to $50.23 a barrel after shedding 1.5 per cent on Wednesday, while U.S. crude was up 0.8 per cent at $49.53 after giving up 1.4 per cent in the previous session. 
 
Spot gold plumbed a two-week low of $1,260.36 an ounce and was last down 0.4 per cent at $1,261.24. 
 
(Reuters) 
&nbsp;

Sterling rose to its highest against Dollar in 2016 and Yen slipped on diminishing fears of a market turmoil that would follow if Britain were to pull out of EU

Asian shares edged up and Sterling stood close to its peak for the year on Thursday, as investors were cautiously optimistic that British voters would opt to remain in the European Union at a referendum later in the session. Two opinion polls published late on Wednesday, a few hours before voters were due to begin to cast their votes, showed the "Remain" camp gaining momentum in the closely divided campaign. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2 per cent in early trading, shrugging off modest overnight losses on Wall Street. Japan's Nikkei share average rose 0.3 per cent. "Markets seem to have almost entirely priced in a 'Remain' vote win, meaning that the market moves and volatility around the vote may be far less than many had been expected," wrote Angus Nicholson, market analyst at IG in Melbourne. "Nonetheless, markets are still incredibly nervous and some sharp market moves are likely over the next 24 hours," he said. Sterling rose to $1.4847, its highest against the dollar in 2016, and was last up 0.6 per cent at $1.4798. The perceived safe-haven Yen also slipped on receding fears of the market turmoil that would likely follow if Britain were to pull out of the EU. The dollar added 0.2 per cent to 104.69 Yen , while the euro gained 0.5 percent to 118.54 yen . The euro rose 0.2 per cent to $1.1322 , while the dollar index, which tracks the greenback against a basket of six rival currencies, slipped 0.1 per cent to 93.582. On the US data front, home resales rose to a more than nine-year high last month against a backdrop of historically low mortgage rates, adding to recent upbeat second quarter data. Crude oil prices rose after settling down more than 1 per cent on Wednesday after the U.S. government reported a smaller-than-expected inventory drawdown. Brent added 0.7 per cent to $50.23 a barrel after shedding 1.5 per cent on Wednesday, while U.S. crude was up 0.8 per cent at $49.53 after giving up 1.4 per cent in the previous session. Spot gold plumbed a two-week low of $1,260.36 an ounce and was last down 0.4 per cent at $1,261.24. (Reuters)

Asia stocks, Sterling rise as Brexit anxiety abates

<div style="text-align: justify;">If Britons vote to take their country out of the European Union on June 23, no corner of the global financial market complex will emerge unscathed. 
The invisible thread that links assets as diverse as gold, bank stocks, the Japanese Yen and government bonds would be yanked sharply by Brexit, an event the Bank of England said on Thursday risks &quot;adverse spill-overs to the global economy&quot;. 
With global interest rates and bond yields the lowest on record, central banks running low on crisis-fighting tools and the post-2008 economic recovery flagging, that thread could quickly unravel, with serious consequences for all markets.&nbsp; 
So why will the will of one country&#39;s people in one referendum have such a profound impact on global markets? 
The answer is partly how inter-connected global markets are, and partly timing - the world economic cycle is already very long in the tooth and central banks have far fewer options open to them after nearly a decade of extraordinary policy support. 
Interest rates, yields 
 
Global interest rates are their lowest for 5,000 years, according to Bank of America, but central banks could still cut them further. That could mean the US&nbsp;Federal Reserve reversing its slow-starting tightening cycle, and European Central Bank and Bank of Japan rates going deeper into negative territory. 
Lower rates would also depress bond yields even further, tightening the screw on central and commercial banks. 
 
Over $8 trillion worth of sovereign bonds already carry a negative yield, according to JP Morgan. This means holders of Japanese, German and Swiss debt are paying these governments for the privilege of lending to them, in some cases out to 20 years. 
 
They are willing to accept they will not get all their money back. Even deeper negative yields would increase these losses, raising further doubt that these are truly &quot;safe haven&quot; assets. 
 
But the immediate economic and political uncertainty after a Brexit vote would likely be so great that demand for these bonds would rise anyway, pulling yields even lower. Yield curves, the difference between short- and longer-dated bond borrowing costs, would flatten further. 
 
They are already their flattest for years around the developed world, meaning the premium investors expect for holding longer-dated bonds is shrinking. This is often an ominous signal of low inflation or deflation, and slowing economic growth or possibly recession. 
 
If &quot;core&quot; bond yields would likely fall, yields on lower-rated and riskier bonds would likely rise, widening the spread between the two. This would increase the financing pressure on a wide range of companies around the world and governments in euro zone &quot;periphery&quot; countries like Greece, Italy and Spain. 
 
Banks - Central and Commercial 
 
Flat yield curves are bad news for banks, who make money from borrowing short-term at low rates and lending longer-term at higher rates. Financial stocks have been hit hard this year as the curve flattening has accelerated. 
 
Euro zone banks are down 30 per cent this year, Japanese banks 35 per cent, UK banks 20 per cent, and US banks 10 per cent. 
 
Banks are also being squeezed by negative deposit rates. The ECB, Bank of Japan and Swiss National Bank all charge banks for depositing cash. 
 
It may even become cheaper for banks to put billions of yen, Euros or Francs of their customers&#39; cash in vaults- a possibility German lender Commerzbank is examining. 
 
As for central banks, any move deeper into the uncharted world of negative interest rates would be taken reluctantly. 
 
In the case of the ECB, declining yields would further cut the amount of bonds eligible for purchase as part of its quantitative easing stimulus programme. That would make its inflation target of just under 2 per cent much harder to achieve, in turn putting its credibility under even greater scrutiny. 
 
Financial Planning 
 
Just as the 2007-08 financial crisis was caused by unprecedented stress in the banking system, analysts fear Brexit fallout could again threaten to block the global financial system&#39;s plumbing. 
 
Banks have recovered from 2007-08, but stresses are already appearing in more obscure pockets of dollar-based FX and rates markets that are hitting levels more associated with periods of crisis. The premium for Dollars over Yen in the cross currency basis market is its highest in years. 
 
Spreads between Libor rates and overnight index swap (OIS) rates, broadly a measure of investors&#39; perception of credit risk in the banking system, are also widening. In normal conditions, Libor/OIS spreads should be virtually zero. 
 
Stocks 
 
World stocks are in their longest bull run in history that began on March 9, 2009. But Wall Street&#39;s peak was reached over a year ago, profit growth has slumped, and companies are reluctant to reinvest their record cash piles. 
 
European stocks are down 13 per cent this year, Japan down 20 per cent, and Wall Street is flat. Would they be able to withstand the political, economic and investment shock a Brexit would likely deliver, especially with risk appetite so fragile? 
 
Currencies 
 
Like 2008, a vote for Brexit would almost certainly increase demand for the pre-eminent currency in global trade, banking and financial market trading: the Dollar. 
 
Dollar credit to non-US banks stands at almost $10 trillion, according to the Bank for International Settlements, of which $3.3 trillion is in emerging markets. A stronger Dollar will increase the overall debt burden for these companies, and many emerging market countries, who would be forced to draw down their FX reserves to counter the expected capital outflow and downward pressure on their currencies. 
 
Japan&#39;s Yen, another safe-haven currency, would probably rise too, perhaps as much as 14 per cent, according to Goldman Sachs. This would not be welcome in Tokyo, where policymakers are struggling to kill off deflation once and for all, stoke inflation, reflate the economy and heal the banking system. A higher exchange rate would be damaging on all those fronts. 
 
(Reuters)</div>

World stocks are in their longest bull run in history that began on 9 March, 2009

If Britons vote to take their country out of the European Union on June 23, no corner of the global financial market complex will emerge unscathed. The invisible thread that links assets as diverse as gold, bank stocks, the Japanese Yen and government bonds would be yanked sharply by Brexit, an event the Bank of England said on Thursday risks "adverse spill-overs to the global economy". With global interest rates and bond yields the lowest on record, central banks running low on crisis-fighting tools and the post-2008 economic recovery flagging, that thread could quickly unravel, with serious consequences for all markets. So why will the will of one country's people in one referendum have such a profound impact on global markets? The answer is partly how inter-connected global markets are, and partly timing - the world economic cycle is already very long in the tooth and central banks have far fewer options open to them after nearly a decade of extraordinary policy support. Interest rates, yields Global interest rates are their lowest for 5,000 years, according to Bank of America, but central banks could still cut them further. That could mean the US Federal Reserve reversing its slow-starting tightening cycle, and European Central Bank and Bank of Japan rates going deeper into negative territory. Lower rates would also depress bond yields even further, tightening the screw on central and commercial banks. Over $8 trillion worth of sovereign bonds already carry a negative yield, according to JP Morgan. This means holders of Japanese, German and Swiss debt are paying these governments for the privilege of lending to them, in some cases out to 20 years. They are willing to accept they will not get all their money back. Even deeper negative yields would increase these losses, raising further doubt that these are truly "safe haven" assets. But the immediate economic and political uncertainty after a Brexit vote would likely be so great that demand for these bonds would rise anyway, pulling yields even lower. Yield curves, the difference between short- and longer-dated bond borrowing costs, would flatten further. They are already their flattest for years around the developed world, meaning the premium investors expect for holding longer-dated bonds is shrinking. This is often an ominous signal of low inflation or deflation, and slowing economic growth or possibly recession. If "core" bond yields would likely fall, yields on lower-rated and riskier bonds would likely rise, widening the spread between the two. This would increase the financing pressure on a wide range of companies around the world and governments in euro zone "periphery" countries like Greece, Italy and Spain. Banks - Central and Commercial Flat yield curves are bad news for banks, who make money from borrowing short-term at low rates and lending longer-term at higher rates. Financial stocks have been hit hard this year as the curve flattening has accelerated. Euro zone banks are down 30 per cent this year, Japanese banks 35 per cent, UK banks 20 per cent, and US banks 10 per cent. Banks are also being squeezed by negative deposit rates. The ECB, Bank of Japan and Swiss National Bank all charge banks for depositing cash. It may even become cheaper for banks to put billions of yen, Euros or Francs of their customers' cash in vaults- a possibility German lender Commerzbank is examining. As for central banks, any move deeper into the uncharted world of negative interest rates would be taken reluctantly. In the case of the ECB, declining yields would further cut the amount of bonds eligible for purchase as part of its quantitative easing stimulus programme. That would make its inflation target of just under 2 per cent much harder to achieve, in turn putting its credibility under even greater scrutiny. Financial Planning Just as the 2007-08 financial crisis was caused by unprecedented stress in the banking system, analysts fear Brexit fallout could again threaten to block the global financial system's plumbing. Banks have recovered from 2007-08, but stresses are already appearing in more obscure pockets of dollar-based FX and rates markets that are hitting levels more associated with periods of crisis. The premium for Dollars over Yen in the cross currency basis market is its highest in years. Spreads between Libor rates and overnight index swap (OIS) rates, broadly a measure of investors' perception of credit risk in the banking system, are also widening. In normal conditions, Libor/OIS spreads should be virtually zero. Stocks World stocks are in their longest bull run in history that began on March 9, 2009. But Wall Street's peak was reached over a year ago, profit growth has slumped, and companies are reluctant to reinvest their record cash piles. European stocks are down 13 per cent this year, Japan down 20 per cent, and Wall Street is flat. Would they be able to withstand the political, economic and investment shock a Brexit would likely deliver, especially with risk appetite so fragile? Currencies Like 2008, a vote for Brexit would almost certainly increase demand for the pre-eminent currency in global trade, banking and financial market trading: the Dollar. Dollar credit to non-US banks stands at almost $10 trillion, according to the Bank for International Settlements, of which $3.3 trillion is in emerging markets. A stronger Dollar will increase the overall debt burden for these companies, and many emerging market countries, who would be forced to draw down their FX reserves to counter the expected capital outflow and downward pressure on their currencies. Japan's Yen, another safe-haven currency, would probably rise too, perhaps as much as 14 per cent, according to Goldman Sachs. This would not be welcome in Tokyo, where policymakers are struggling to kill off deflation once and for all, stoke inflation, reflate the economy and heal the banking system. A higher exchange rate would be damaging on all those fronts. (Reuters)

Tracing global market thread that could be unraveled by Brexit

Asian stocks were on a weak footing on Wednesday as a slip in crude oil prices dampened investors&#39; appetite for riskier assets, while the recently bullish dollar stalled against the Euro and Yen following a mixed bag of U.S. economic data.

Spreadbetters also expected a shaky start for European shares, forecasting Britain&#39;s FTSE, Germany&#39;s DAX and France&#39;s CAC to open flat to slightly lower.

Japan&#39;s Nikkei lost more than one percent as the yen firmed. Other decliners included Australian stocks&nbsp;which fell 1.0 percent.

Hong Kong&#39;s Hang Seng and South Korea&#39;s KOSPI stood little changed.

Shanghai see-sawed in and out of negative terrain, and was last up 0.1 percent, after rallying on Tuesday on expectations MSCI could add China&#39;s mainland stocks to its emerging market benchmark for the first time.

David Dai, Shanghai-based investor director at Nanhai Fund Management Co, said any market rally was unlikely to be sustainable at this stage.

&quot;The economy is still weak, and the Fed will likely raise rates soon. I don&#39;t think the market will go up much further. The best strategy now is to take profit.&quot;

There was little market reaction to the official and private surveys on China&#39;s manufacturing activity, which were roughly in line with expectations, suggesting the world&#39;s second-largest economy is still struggling to regain traction.

The Caixin/Markit Manufacturing Purchasing Managers&#39; index (PMI) showed activity at China&#39;s factories shrank for a 15th straight month in May. The official manufacturing May PMI painted a slightly more optimistic picture and stood unchanged from the previous month at 50.1

MSCI&#39;s broadest index of Asia-Pacific shares outside Japan recovered from an earlier dip and crawled up 0.1 percent.

The Dow shed 0.5 percent and the S&amp;P 500 dipped 0.1 percent on Tuesday, as energy shares weakened in the wake of a slip in oil prices and offset a rise in safe-haven utilities.

Crude pulled back from eight-month highs reached last week amid expectations that a global glut was easing, falling overnight to profit taking. U.S. crude was last down 0.7 percent at $48.76 a barrel and Brent fell 0.8 percent to $49.51.

The fall in oil prices was exacerbated after United Arab Emirates Oil Minister Suhail bin Mohammed al-Mazroui said he was happy with the oil market, noting that prices had been correcting higher.

The UAE oil minister&#39;s comments touched a nerve in a market wary that an OPEC meeting on Thursday may not pave the way for a production freeze.

&quot;The political will of the OPEC countries to enact a production freeze is clearly waning. A production freeze is unlikely to come up as an agenda at the June meeting,&quot; wrote Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo.

&quot;A sense of crisis among the oil producing countries appears to have receded following the recent spike in crude oil prices.&quot;

In currencies, the dollar was down 0.6 percent at 110.010 yen, having come off a one-month high of 111.455 struck on Monday after Federal Reserve Chair Janet Yellen&#39;s comments raised expectations for a near-term U.S. rate hike.

The Euro was at $1.1120, putting some distance between a 2-1/2-month low of $1.1097 touched on Monday.

U.S. data overnight saw personal income-related and housing indicators come in strong, while the Chicago manufacturing PMI and consumer confidence data proved disappointing.

The Australian Dollar was up 0.6 percent to $0.7277 helped by stronger-than-expected first quarter economic growth, which pushed it further away from last week&#39;s three-month low of $0.7145.

Sterling was on the defensive, last trading little changed at $1.4490 after dropping more than one percent on Tuesday, after polls showing those who support Brexit may be increasing.

investors lose hope as the price of oil slips further

Asian stocks were on a weak footing on Wednesday as a slip in crude oil prices dampened investors' appetite for riskier assets, while the recently bullish dollar stalled against the Euro and Yen following a mixed bag of U.S. economic data. Spreadbetters also expected a shaky start for European shares, forecasting Britain's FTSE, Germany's DAX and France's CAC to open flat to slightly lower. Japan's Nikkei lost more than one percent as the yen firmed. Other decliners included Australian stocks which fell 1.0 percent. Hong Kong's Hang Seng and South Korea's KOSPI stood little changed. Shanghai see-sawed in and out of negative terrain, and was last up 0.1 percent, after rallying on Tuesday on expectations MSCI could add China's mainland stocks to its emerging market benchmark for the first time. David Dai, Shanghai-based investor director at Nanhai Fund Management Co, said any market rally was unlikely to be sustainable at this stage. "The economy is still weak, and the Fed will likely raise rates soon. I don't think the market will go up much further. The best strategy now is to take profit." There was little market reaction to the official and private surveys on China's manufacturing activity, which were roughly in line with expectations, suggesting the world's second-largest economy is still struggling to regain traction. The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) showed activity at China's factories shrank for a 15th straight month in May. The official manufacturing May PMI painted a slightly more optimistic picture and stood unchanged from the previous month at 50.1 MSCI's broadest index of Asia-Pacific shares outside Japan recovered from an earlier dip and crawled up 0.1 percent. The Dow shed 0.5 percent and the S&P 500 dipped 0.1 percent on Tuesday, as energy shares weakened in the wake of a slip in oil prices and offset a rise in safe-haven utilities. Crude pulled back from eight-month highs reached last week amid expectations that a global glut was easing, falling overnight to profit taking. U.S. crude was last down 0.7 percent at $48.76 a barrel and Brent fell 0.8 percent to $49.51. The fall in oil prices was exacerbated after United Arab Emirates Oil Minister Suhail bin Mohammed al-Mazroui said he was happy with the oil market, noting that prices had been correcting higher. The UAE oil minister's comments touched a nerve in a market wary that an OPEC meeting on Thursday may not pave the way for a production freeze. "The political will of the OPEC countries to enact a production freeze is clearly waning. A production freeze is unlikely to come up as an agenda at the June meeting," wrote Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo. "A sense of crisis among the oil producing countries appears to have receded following the recent spike in crude oil prices." In currencies, the dollar was down 0.6 percent at 110.010 yen, having come off a one-month high of 111.455 struck on Monday after Federal Reserve Chair Janet Yellen's comments raised expectations for a near-term U.S. rate hike. The Euro was at $1.1120, putting some distance between a 2-1/2-month low of $1.1097 touched on Monday. U.S. data overnight saw personal income-related and housing indicators come in strong, while the Chicago manufacturing PMI and consumer confidence data proved disappointing. The Australian Dollar was up 0.6 percent to $0.7277 helped by stronger-than-expected first quarter economic growth, which pushed it further away from last week's three-month low of $0.7145. Sterling was on the defensive, last trading little changed at $1.4490 after dropping more than one percent on Tuesday, after polls showing those who support Brexit may be increasing.

Asia wavers as oil slip sinks sentiment, dollar stalls

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