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Friday, 16 February 2018

Hackers stole $6 million in attack on SWIFT system, Russian central bank says


MAGNITOGORSK, Russia (Reuters) - Unknown hackers stole 339.5 million rubles ($6 million) in an attack on the SWIFT international payments messaging system in Russia last year, the Russian central bank said on Friday.

The disclosure, buried at the bottom of a central bank report on digital thefts at Russian banks, is the latest in a string of attempted and successful cyber heists using fraudulent wire-transfer requests.

The central bank said it had been sent information about ”one successful attack on the work place of a SWIFT system operator.

“The volume of unsanctioned operations as a result of this attack amounted to 339.5 million rubles,” the bank said.

The central bank declined to provide further details.

A spokeswoman for SWIFT, whose messaging system is used to transfer trillions of dollars each day, said the company does not comment on specific entities.

”When a case of potential fraud is reported to us, we offer our assistance to the affected user to help secure its environment,” said the spokeswoman, Natasha de Teran.

A central bank spokesman quoted Artem Sychev, deputy head of the regulator’s security department, as saying the hackers had withdrawn the money and this was “a common scheme, when they take control of a computer.”

Brussels-based SWIFT said late last year digital heists were becoming increasingly prominent as hackers use more sophisticated tools and techniques to launch new attacks.

In December, hackers tried to steal 55 million rubles from Russian state bank Globex using the SWIFT system, and digital thieves made off with $81 million from Bangladesh Bank in February 2016.

SWIFT has declined to disclose the number of attacks or identify any victims, but details on some cases have become public, including attacks on Taiwan’s Far Eastern International Bank and Nepal’s NIC Asia Bank.

Reference: Jack Stubbs

Dollar falls to three-year low, yen shrugs off Kuroda's BOJ reappointment


TOKYO (Reuters) - The dollar slipped to a three-year low against a basket of currencies on Friday, headed for its biggest weekly loss in two years, as bearish factors offset support the U.S. currency could take from rising Treasury yields.

Extending overnight losses, the dollar’s index against a group of six major currencies lost about 0.4 percent to 88.253 , the lowest since December 2014. The index was on track to lose more than 2 percent on the week in its largest decline since February 2016.

The U.S. currency has been weighed down by a variety of factors this year, including concerns that Washington might pursue a weak dollar strategy and the perceived erosion of its yield advantage as other countries start to scale back easy monetary policy.

Traders also suspect that confidence in the dollar has been eroded by mounting worries over the U.S. budget deficit which is projected to balloon to near $1 trillion in 2019 amid a government spending splurge and large corporate tax cuts.

“There really are no signs of the dollar recovering anytime soon. Participants are bracing for dollar/yen to head towards 105 and the euro to climb past $1.25,” said Shin Kadota, senior strategist at Barclays in Tokyo.

“It’s difficult for the market to see the dollar rebounding, especially as decent U.S. fundamentals seem to be providing no support for the currency,” Kadota said.

Indeed, the dollar failed to gain momentum after data on Wednesday showed U.S. inflation was stronger than expected in January, sending Treasury yields to four-year highs, as investors bet the Federal Reserve could increase interest rates as many as four times this year.

The euro was up 0.4 percent at $1.2553 after reaching a three-year top of $1.2556 and poised to gain 2.4 percent this week.

The Swiss franc reached 0.9190 franc per dollar, its strongest since June 2015.

KURODA REAPPOINTED BOJ GOVERNOR
The dollar was down 0.4 percent at 105.685 yen after slipping to 105.545, its lowest in 15 months. It was on track for a weekly loss of 2.9 percent.

The reappointment of Haruhiko Kuroda as Bank of Japan governor and the nomination of BOJ executive director Masayoshi Amamiya and Waseda University professor Masazumi Wakatabe as deputy governors had little impact on the yen, although the proposed leadership trio were seen certain to keep the central bank on an ultra-loose policy path.

“There are no significant changes to the current BOJ regime with the governor chosen for another term, and a central banker and a reflationist academic picked as his deputies,” said Shusuke Yamada, chief Japan FX strategist at Bank of America Merrill Lynch.

“This should clear some uncertainty regarding BOJ personnel, but it unlikely to impact the currency market at a time when the dollar is broadly weaker,” Yamada said.

The pound rose 0.25 percent to $1.4134 , having gained about 2 percent on the week.

The Australian dollar added 0.25 percent to $0.7965 .

The Aussie, sensitive to shifts in risk sentiment, had slipped to near 1-1/2-month low of $0.7759 a week ago during a tumble in global equities before bouncing back.

Reporting by Shinichi Saoshiro

Asian shares extend bounce to fifth day, dollar sags to three-year low


TOKYO (Reuters) - Asian shares rose for a fifth straight day on Friday as investor confidence slowly returns after a sharp sell-off earlier in the month, while the dollar continued its descent, hitting a three-year low against a basket of major currencies.

U.S. debt yields rose near multi-year highs. Two-year note yields hit a 9 1/2-year high as bond prices fell on Federal Reserve officials’ signaling that recent volatility in U.S. stocks would not stop them raising interest rates in March.

European shares are expected to rise 0.3 to 0.4 percent at the opening, according to spread-betters.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 percent, though many Asian markets were closed on Friday for the Lunar New year.

Japan’s Nikkei rose 1.2 percent, with investors relieved to see the government appoint Bank of Japan Governor Haruhiko Kuroda for another term, suggesting the central bank will be in no rush to dial back its massive stimulus program.

Measured by the MSCI’s broadest gauge of the world’s stocks covering 47 markets, global shares have now reclaimed more than half of the 10.7 percent plunge from a record intraday high on Jan. 29 to a four-month intraday low a week ago.

Investors have been reassured by a fall in the Wall Street Vix index, the “fear gauge” that measures the one-month implied volatility of U.S. stocks.

The index dropped below 20 for the first time since its spike to 2 1/2-year high of 50.3 last week, a jump that caused massive losses among investors who bet equity markets would be stable on a combination of solid economic growth and moderate inflation.

The Vix futures fell back to more normal patterns, from the past several days of so-called backwardation, in which the front-month contract becomes the most expensive.

The return of a more usual curve suggested that the loss-cutting and position unwinding of “volatility short” strategies had run its course for now, easing investors’ nerves.

“I’ve said markets will be unstable until February, and that February will offer a good buying opportunity,” said Eiji Kinouchi, chief technical analyst at Daiwa Securities, noting that U.S investors were likely to book profits in January to take advantage of lower tax on capital gains.

The selling appears to have run its course and the fall in volatilities, both implied and actual, is likely to prompt investors to return to stocks, he said.

The U.S. dollar, on the other hand, slipped below its January low against a basket of major currencies to reach its lowest since late 2014.

The dollar index fell to as low as 88.37, and was on course to lose over 2 percent for the week, its biggest such loss in two years.

There is no strong consensus yet on what is driving the dollar’s persistent weakness, especially in light of rising yields. Some say it simply reflects a return of risk appetite and a shift to higher-yielding currencies, including many emerging market ones.

But others cite concerns that Washington might pursue a weak dollar strategy as well as talk that foreign central banks may be reallocating their reserves out of the dollar.

There are also worries President Donald Trump’s tax cuts and fiscal spending could stoke inflation and erode the value of the dollar.

“His protectionist policies could also fan inflation. Markets appear to have calmed down for now but fundamentally it is different from last year,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.

“You could say that right now, rather than stocks rising around the world, it is the dollar falling against almost everything,” he added.

The euro rose to $1.2556, its highest since December 2014. Having risen 2.37 percent so far this week, it could post its biggest weekly gain in nine months.

The dollar dropped to 105.545 yen, its lowest level since November 2016 and down 2.8 percent for the week, which would be the biggest in a year and a half.

The South African rand hit a three-year high of 11.6025 to the dollar on Thursday on hopes the resignation of President Jacob Zuma had paved the way for new leaders to speed up economic growth.

The dollar’s fall came even as U.S. bond yields remained near a multi-year high.

The 10-year U.S. Treasuries yield hit a four-year peak of 2.944 percent on Thursday and last stood at 2.910 percent.

Shorter-dated yields also rose as investors grew convinced that the correction in stock prices in recent weeks would not prevent the Fed from raising interest rates in March and twice more this year.

Cleveland Fed president Loretta Mester said on Tuesday the recent stock market sell-off and jump in volatility will not damage the economy’s overall strong prospects. Mester is being considered a leading candidate for the Fed’s Vice Chair.

The two-year yield rose to as high as 2.213 percent, its highest since Sept 2008, on Thursday and last stood at 2.210 percent.

Oil prices maintained this week’s gains, with U.S crude futures trading at $61.65 per barrel, up 4.1 percent so far this week.

Elsewhere, virtual currency bitcoin recovered the $10,000 mark for the first time in two weeks, gaining more than 70 percent from its near three-month low of $5,920.7, before easing back a tad to $9,925.

Reporting by Hideyuki Sano

Forex trading up sharply in 2018 as volatility returns


LONDON (Reuters) - Foreign exchange trading volumes have risen sharply since the start of this year, new data showed on Thursday, as investors ramped up bets on a weaker dollar and uncertainty about the end of the era of cheap money stoked volatility.

Foreign exchange volatility has slumped in recent years as record levels of liquidity provided by central banks calmed markets and left investors with fewer ways to wring a profit from trading currencies.

But the continued depreciation of the dollar this year, accelerated by the U.S. Treasury Secretary’s comments welcoming a weaker dollar, as well as signs that central banks will begin dialling back their stimulus, have fired up currency markets.

Electronic trading platforms are also reporting a sharp increase in fixed income trading volumes.

CLS, a major settler of trades in the FX market, said the average daily traded volume submitted to it had risen to $1.805 trillion in January, up 24 percent from a year earlier and up 15.6 percent from December.

“This year we’ve observed a much more substantial increase as FX volatility has risen. For the last six months of 2017, we saw a broader trend of year-on-year increases...but in January the market has really taken off,” said David Puth, CLS’s CEO.


CLS said trading had accelerated further in early February, possibly as the equity sell-off starting in late January increased volatility even more.

In the first four days of last week, Feb. 5 to Feb. 8, volumes rose by a further 14 percent over January’s numbers to $2.054 trillion, CLS said.

Currency market swings, however, have been far more measured than in stocks, with volatility still below long-term average levels.

Thomson Reuters said this week that FX trading volumes on its platforms had hit a record high in January, the first month following the introduction of sweeping European regulations, known as MiFID II or Markets in Financial Instruments Directive II.

Average daily volumes topped $432 billion in January compared with an average of more than $407 billion, the company said.

The new European rules, designed to increase market transparency, have also driven electronic fixed income trading volumes.

MarketAxess, one of the bigger platforms, said this month that average daily trading volumes hit a record $7.3 billion in January, up 22 percent from a year earlier.

RISING VOL
The uptick in volatility will be welcomed by investment bank trading desks, which can make more money when prices swing wider but have faced years of calmer markets.

“January was active because it was the start of the next phase of the dollar’s depreciation, and then you had the ECB,” JP Morgan’s Head of Currencies and Emerging Markets Trading in EMEA, Stephen Jefferies, told Reuters, referring to minutes from the European Central Bank that raised speculation of monetary tightening in the euro zone.

Still, Jefferies noted that volatility in the world’s most traded currency pair, the euro/dollar, remains below its long-term average even after the recent rise.

When stocks tumbled earlier this month, Jefferies said currencies did not move as much as many had expected, suggesting “positions might not have been as big as you thought”.

But with central banks expected to accelerate unwinding of their balance sheets as inflation expectations rise, currency volatility is set to rise.

“This shift in central bank thinking has some serious implications for currencies as well,” said Neil Jones, London-based head of hedge fund currency sales at Mizuho bank.

Reference: Tommy Wilkes

Thursday, 15 February 2018

Sterling gains as dollar extends sell-off


LONDON (Reuters) - Sterling rose against the dollar on Thursday, cementing gains on the back of a broadly weakened dollar, with traders eyeing earnings data next week to give the pound fresh momentum.

After a strong start to the year on the back of growing expectations that the Bank of England will raise rates faster than previously thought, and optimism Britain can secure itself more favourable terms from the European Union when it leaves next year, sterling has stumbled in recent weeks.

Renewed concern about whether it can agree a transition deal with the EU have overshadowed more hawkish comments from the BoE about the need for rate rises sooner and to a little bit more of an extent that it flagged last year.

A BoE survey published on Wednesday that showed British workers in line for their biggest pay rises since 2008 could also fuel policymaker concerns over inflationary pressures.

Markets are pricing in around a 70 percent chance of a rate hike as soon as May.

But it was the falling dollar that gave sterling its lift on Thursday. The greenback tumbled as worries over twin deficits in the United States mounted amid a government spending splurge and large corporate tax cuts.

The pound gained 0.5 percent to trade at $1.4072 and its best level since Feb. 5.

Against the euro, the pound was up 0.2 percent to 88.79 pence per euro.

“This is largely a dollar story today,” said Jane Foley, London-based FX strategist at Rabobank.

Foley said we would need “to see very strong earnings data” next week to push sterling, in the absence of further dollar weakness, much higher and back towards the $1.4346 it hit in January, its highest level since the vote to leave the European Union in June 2016.

Analysts at ING said the period leading up to the late March EU leaders’ summit would be noisy for sterling but the pound’s “relative resilience is telling of a different Brexit trading environment to what we saw in 2017”.

Reporting by Tommy Wilkes

Stocks climb despite rise in U.S. inflation; dollar on defensive



TOKYO (Reuters) - Asian stocks rose on Thursday after Wall Street brushed aside strong U.S. inflation data and surged, in a move that also saw the dollar pinned to two-week lows even as Treasury yields jumped in anticipation of more rapid U.S. interest rate hikes.

Spreadbetters expected European stocks to also open higher, with Britain’s FTSE seen rising 0.5 percent, Germany’s DAX gaining 1 percent and France’s CAC advancing 0.8 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.3 percent.

Australian stocks climbed 1.15 percent and South Korea’s KOSPI added 1.1 percent. Japan’s Nikkei advanced 1.5 percent following three successive days of losses that took it to a four-month low the previous day.

U.S. shares surged on Wednesday, with the Dow up 1 percent and the S&P 500 climbing 1.34 percent, as investors shrugged off the stronger-than-expected inflation data and snapped up shares of Facebook, Amazon.com and Apple.

S&P mini futures rose 0.4 percent on Thursday.

The VIX index - Wall Street’s “fear gauge” and a measure of market volatility - has declined below 20, less than half the 50-point peak touched last week.

U.S. consumer prices rose slightly more than forecast in January as Americans paid more for gasoline, rental accommodation and healthcare, further raising inflation concerns and worries that the Federal Reserve may hike interest rates more than earlier expected.


That drove U.S. Treasury yields on most maturities higher, with those on benchmark 10-year notes hitting a four-year high of 2.928 percent.

Other data on Wednesday showed U.S. retail sales fell 0.3 percent in January to mark the biggest decline in 11 months. This was well below forecasts for an increase of 0.2 percent, suggesting slower growth could accompany higher inflation.

“The combination of stellar U.S. CPI and weak retail sales data leaves investors in a precarious situation,” wrote strategists at CitiFX.

“Strong price data presents hawkish risks for the Fed’s dots at the March meeting. Three dots have been the baseline and now four seems a greater risk. Meanwhile, retail sales results have caused a downgrade of GDP estimates across the Street.”

Dot plots represent Fed officials’ expectations for interest rate hikes.

The dollar index against a basket of currencies slipped 0.3 percent to 88.879 after losing more than 0.6 percent overnight despite the strong inflation number.

The recovery in broader risk sentiment was seen weighing on the dollar, which had gained during the market turmoil earlier in the month.

The U.S. currency has been weighed down by a variety of factors this year, including concerns that Washington might pursue a weak dollar strategy and the perceived erosion of its yield advantage as other countries start to scale back their easier monetary policy. Concerns about the growing U.S. fiscal deficit have also intensified.

The dollar stretched overnight losses against the Japanese yen to touch a 15-month low of 106.300, having declined more than 2 percent so far this week, causing the Nikkei to underperform its global peers.

“Japanese stocks could act as drag to their regional counterparts if the stronger yen hampers its performance. In that respect the strong yen could be seen as a factor preventing the stabilisation in global markets,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

The euro extended gains to reach a 10-day high of $1.2473 after surging 0.8 percent the previous day.

The South African rand traded at 11.73 per dollar and near a 2-1/2-year high of 11.66 set overnight after the country’s ruling African National Congress (ANC) said it would proceed with a vote to remove President Jacob Zuma from office.

The Australian dollar added to the previous day’s rally and reached a 10-day top of $0.7946.

In commodities, Brent crude futures were up 1.1 percent at $65.06 per barrel after prices surged the previous day as U.S. crude stocks rose less than expected and Saudi Energy Minister Khalid al-Falih said major oil producers would prefer tighter markets than end supply cuts too early.

Crude also benefited from the dollar’s weakness. Oil tends to move inversely to the dollar, and has also of late been trading in tandem with stocks.

Spot gold rose to a 10-day top of $7,195 per ounce and on track for a weekly gain of more than 6 percent, supported by the sagging dollar and as the metal drew demand as a hedge against inflation following the rise in U.S. inflation.

Reporting by Shinichi Saoshiro

Dollar hits 15-month lower vs. yen, some see further slide


SINGAPORE (Reuters) - The dollar extended its losses against the yen and hit a new 15-month low on Thursday, with market participants bracing for further near-term weakness in the U.S. currency.

The dollar dropped below Wednesday’s low of 106.725 yen and fell as far as 106.30 yen, its weakest level since November 2016. That marked a drop of 3.8 percent from its early February peak near 110.50 yen.

The U.S. currency later pared some of its losses and was last down 0.4 percent at 106.56 yen.

”There’s nothing specific, it’s just a continuation of dollar selling that we’ve seen everywhere overnight, said Tareck Horchani, head of sales trading in Asia Pacific for Saxo Markets in Singapore.

Traders and analysts said the next support level for the dollar was around 105 yen.

Some market participants said speculative buying of the yen initially helped drag the dollar lower, with stop-loss dollar selling later adding to the fall against the Japanese currency.

On Wednesday, the dollar gained a lift from a stronger-than-expected rise in U.S. consumer prices in January that bolstered bets the Federal Reserve might raise interest rates four times in 2018.

But that gain for the dollar proved short-lived, and the greenback ended up retreating broadly against major peers despite the change in expectations for U.S. interest rates.

In Thursday’s Asian trade, the euro edged up 0.1 percent to $1.2459, after gaining 0.8 percent on Wednesday. Sterling was steady at $1.4004, after also having risen 0.8 percent the previous day.

In the wake of the dollar’s sharp drop against the yen over the past couple of weeks, there was increased focus on whether Japanese exporters and Japanese investors would step up moves to hedge their exposure to the U.S. currency.

“As a defensive mechanism I think they will probably be more inclined to sell dollars here to protect downside risk for further U.S. dollar weakness,” said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.

“Obviously I think we’re going to have the verbal lashing from Japan’s currency officials. But I still think we’re not close to the point of overt intervention and I think the market’s going to take us down to the 105s,” Innes said.

Japanese Finance Minister Taro Aso said on Thursday that he doesn’t see current yen moves as being strong or weak enough to warrant intervention, adding that there was no plan now to respond to FX moves.

Reporting by Masayuki Kitano