Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets. Asian market sentiment is likely to remain subdued on Tuesday following the release of mixed Chinese economic data the day before, as investors digest unnerving political events in key developed economies ahead of several G10 central bank interest rate decisions later this week.The resignation of Canada’s finance minister and vote of no confidence in Germany’s Chancellor on Monday come on the heels of a surprise credit rating downgrade for France on Friday. While not impacting emerging markets directly, these could all encourage investors to reduce risk exposure ahead of the central bank policy blitz.On the other hand, the dollar and U.S. bond yields were very well contained and U.S. stocks rose sharply again on Monday – the Nasdaq clocked its 36th closing record high of the year – as investors anticipate a rate cut from the Federal Reserve on Wednesday.The Japanese yen fell for a sixth consecutive day on Monday to a one-month low through 154.00 per dollar as traders cool on the prospect of a rate hike from the Bank of Japan this week or even in January. Some of Japan’s recent economic indicators have been fairly strong, which on top of the national wage growth settlements being agreed, would appear to bolster the case for the BOJ moving sooner rather than later.On the other hand, Japan’s economic surprises index last week hit its lowest in two and a half years. BOJ officials will also be nervously eyeing the heating up of U.S.-China trade tensions and pondering the potential fallout if Beijing allows a significant depreciation of its currency. A slim majority of economists in a Reuters poll published on Friday said the BOJ will keep borrowing costs on hold again this week. Last month’s poll showed a slim majority predicting a hike.Elsewhere in Asian currency markets, the South Korean won sold off again on Monday, as the country’s Constitutional Court began reviewing the impeachment of President Yoon Suk Yeol over his Dec. 3 martial law proclamation. The process will decide if he will be removed from office, while investigators plan to question him this week on criminal charges.The won is within sight of the low of 1443 per dollar on Dec. 3, its weakest level in two years. A break below 1445 per dollar will mark its weakest point since March 2009.Sentiment towards Chinese assets remains mixed. Official data from Beijing on Monday showed that foreign institutions cut holdings in Chinese onshore bonds for the third month in a row. The official disclosure chimes with recent figures from the Institute of International Finance, which recorded outflows in both China’s bond and equity markets in November.Here are key developments that could provide more direction to markets on Tuesday:- Hong Kong unemployment (November)- Singapore trade (November)- Germany Ifo and ZEW surveys (December) More

The Australian Prudential Regulation Authority (APRA) found that while trustee capability and approach have generally improved since the last unlisted asset review in 2021, a proportion of trustees still showed material gaps in key areas.Key weaknesses in unlisted asset valuation governance included board oversight, conflict of interest management, revaluation triggers, valuation controls and fair value reporting, APRA’s review added. “APRA will not hesitate to take further action where necessary to enforce the provisions of SPS 530 and related regulations, including the responsibilities of relevant accountable persons under the upcoming Financial Accountability Regime,” APRA Deputy Chair Margaret Cole said. The SPS 530 standard requires licensees to establish measurable investment objectives, conduct thorough due diligence, regularly assess investment performance and implement annual stress testing. More

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“Fed funds futures now price less than a 20% probability of a follow-up cut on 29 January,” Standard Chartered said, adding that this was “too low.”The December labor market data will likely point to ongoing softness that would justify another cut in January.”Our baseline forecast is that it cuts again on 29 January, because we expect the incoming labour market data to soften further,” the bank said.”A higher unemployment rate or nonfarm payrolls growth of 125k or less should be enough [for the Fed to cut in January],” it added.With a December rate cut now widely expected, the Fed’s summary of economic (SEP) projections are likely to garner the bulk of investor attention amid expectations that the Fed could signal fewer cuts.But the Fed is likely to wait until at least March to make a major tweak to monetary policy, Standard Chartered said. The bank expects the Fed’s summary SEP to project an end-2025 federal funds rate at 3.625%, with a potential drop to 3.125%.While the bank believes the the Fed is poised to cut rates, the extent and timing of future cuts may be more measured than currently anticipated by the market. More

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WASHINGTON (Reuters) – Bitcoin hit a record high above $107,000 on Monday after President-elect Donald Trump reiterated plans to create a U.S. bitcoin strategic reserve, stoking the enthusiasm of crypto bulls. Here’s how the plan could work.WHAT IS A STRATEGIC RESERVE?A strategic reserve is a stock of a critical resource which can be released at times of crisis or supply disruptions. The best-known example is the U.S. Strategic Petroleum Reserve, the world’s largest supply of emergency crude oil, which was created by an act of Congress in 1975 after a 1973-74 Arab oil embargo throttled the U.S. economy. Presidents have tapped the stockpile to calm oil markets during war or when hurricanes hit oil infrastructure along the U.S. Gulf of Mexico. Canada has the world’s only strategic reserve of maple syrup, while China has strategic reserves of metals, grains and even pork products.HOW WOULD A U.S. STRATEGIC BITCOIN RESERVE WORK?Analysts and legal experts are divided on whether Trump could use his executive powers to create the reserve, or whether an act of Congress would be necessary. Some have argued Trump could create the reserve via an executive order directing the U.S. Treasury’s Exchange Stabilization Fund, which can be used to purchase or sell foreign currencies, and to also hold bitcoin.The reserve could include bitcoin that the government has seized from criminal actors. That stands at around 200,000 tokens, worth about $21 billion at the current price, according to bitcointreasuries.net. Trump suggested in a July speech unveiling his bitcoin reserve plan that this stockpile could be the starting point, although it remains unclear what the legal process would be for moving them out of the Justice Department. Trump has not said if the government would add to that stockpile by buying more bitcoin in the open market. To do that, the government may have to issue debt, although some proponents of a bitcoin reserve say the United States could sell some of its gold reserves and use the proceeds to buy bitcoin.Currently, the most concrete bitcoin reserve proposal circulating in Washington comes from pro-crypto Republican Senator Cynthia Lummis, who personally holds five bitcoins, she told CNBC last month. In July, she introduced a bill, yet to gain traction, that would create a reserve operated by the Treasury. The bill envisages that the Treasury would create a program to buy 200,000 bitcoins annually for five years until the stockpile hit one million tokens. This would represent about 5% of the total global supply of bitcoin of around 21 million. The Treasury would fund the purchases with profits on Federal Reserve banks’ deposits and gold holdings.The bitcoin reserve would subsequently be maintained for a minimum of 20 years. WHAT ARE THE BENEFITS OF A BITCOIN RESERVE?In his July speech, Trump suggested a bitcoin reserve would help the U.S. dominate the global bitcoin market in the face of growing competition from China.Other proponents argue that by holding a stockpile of bitcoin, which they say is likely to continue appreciating over the long term, the U.S. could reduce its deficit without raising taxes, strengthening the U.S. dollar. In November, Lummis told Fox Business that her plan would allow the United States to cut its debt in half in 20 years. “What that does is help us protect ourselves against inflation and protect the U.S. dollar on the world stage,” she said. A strong dollar would in turn give the United States more leverage over foreign adversaries like China and Russia, proponents say. WHAT ARE THE RISKS?Crypto skeptics say that, unlike most other commodities, bitcoin has no intrinsic use and is not crucial to the functioning of the U.S. economy. Created in 2008, bitcoin remains too young and volatile to presume its value will continue to rise in the long term, while crypto wallets remain notoriously vulnerable to cyber attacks, they also argue. And given its volatility, any government purchases or sales could have an outsized impact on bitcoin’s price. More

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