USD/CAD Rates Jump to 2-month Highs After Federal Reserve Chair Powel's Testimony

The U.S. dollar rallied to a new 2-month high against its Canadian counterpart on Tuesday after Federal Reserve Chair Powell’s hawkish speech in front the US House Financial Services Committee.

Last week, the USD/CAD pair was given a boost following the release of abysmal Canadian retail sales numbers for December, which revealed that core retail sales - excluding automobiles - had tanked 1.8%.

The unexpected news pushed Canada's currency to a two-month low of 1.27585 vs. the USD, on February 22nd, as FX traders digested the numbers and started pricing in potential rate-hikes.

But since last week's bearish news, market participants began shifting their attention to Powell’s speech on Tuesday, which signaled further rate increases in 2018 due to improving labor markets, higher-than-expected wage growth and rising inflation expectations.

While the exchange rate between the USD and the CAD closed on Tuesday at a two-month high of 1.27757, continued short-term bullish momentum may push the FX pair towards the big resistance level of 2017, located at 1.2900.

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Hong Kong and Swiss Regulators Sign Fintech Cooperation Agreement

The Hong Kong Securities and Futures Commission (SFC) said today it has singed an agreement with the Swiss Financial Market Supervisory Authority (FINMA) to work on meeting regulatory challenges in the rapidly-growing financial technology space.

Per the agreement, the SFC and FINMA will share information on emerging Fintech trends and technologies that "have the potential to supplement or disrupt the financial services industry."

Additionally, the new deal opens up bilateral mechanism for referrals of Fintech firms seeking to operate in the jurisdiction of the SFC and/or FINMA.

Ashley Alder, Chief Executive Officer the SFC, had this to say:
"It will help both regulators keep abreast of innovation in financial services while providing innovative Fintech firms seeking to develop and grow their businesses internationally enhanced channels for communicating with regulators."

In related news, UK's Financial Conduct Authority signed a similar agreement last week with the US Commodity Futures Trading Commission.

FXOpen Launches CFD Trading Pairs on Bitcoin Cash, Ripple, Ethereum Classic, Monero, NEO, IOTA, EOS and OMNI

FXOpen UK, an FCA-regulated British FX broker, announced on Friday that new CFD trading pairs on eight new cryptocurrencies were activated on existing clients' crypto trading accounts.

According to FXOpen's email to clients, the new cryptocurrency additions were Bitcoin Cash, Ripple, Ethereum Classic, Monero, NEO, IOTA, EOS and OMNI. The new coins were selected from the Top-20 list on

"With the latest additions, FXOpen now offers 15 Crypto-Currencies across 39 markets allowing trading against USD, EURO and Bitcoin.," said FXOpen in a separate blog post.

The London-based broker explained it will be constantly monitoring global rankings and actively scouting for "new and emerging cryptocurrencies."

Traders will be limited to trading the new CFD pairs with maximum leverage of 1:3.

French Regulators Tell Forex Dealers to Stop Online Ads of Cryptocurrency CFDs and Binary Options

The Autorité des marchés financier, France's financial regulator, published a release yesterday, advising FX trading platforms offering cryptocurrency derivatives (like Bitcoin/Litecoin CFDs) to adhere to existing industry rules. The French agency also told business to cease advertise these offerings to the general public via electronic means.

The agency also explained that the burgeoning cryptocurrency industry has pushed many online Forex brokerages to offer binary options and cryptocurrency CFDs instruments, where the underlying asset is a cryptocurrency like bitcoin. Retail investors are lured into making bets on the future price movements of these very volatile assets, but without actually holding the cryptocurrency itself (Bitcoin, Litecoin, Ether, etc..).

According to the AMF's legal research, instruments such as Bitcoin CFDs and binary options do not fall under existing EU MiFID framework, which deals mainly with options, futures and swaps. But the agency clarified that "cash-settled cryptocurrency contract" may be considered a type of derivative, regardless of the legal standing of cryptocurrencies under existing EU laws.

Based on this reasoning, the AMF stated that derivateives dealers that offer these instruments to European retails investors must follow the rules of existing MiFID 2 legislation:
"Above all, these products are subject to the provisions of the Sapin 2 law, and notably the ban of advertisements for certain financial contracts."

Cyprus Financial Regulator Says Cryptocurrencies Not Suitable for Retirement Planning

The Cyprus financial authority, the CySEC, issued a warning last week on cryptocurrencies. The agency specifically directed consumers to read the European Securities and Markets
Authority’s warning on ICOs.

Additionally, the CySEC described cryptocurrencies as "digital representation" of value that are neither issued nor guaranteed by any central bank or public authority, and that these assets have no legal status of currency within Cyprus:

"They are highly risky, generally not backed by any tangible assets and unregulated under EU law, and do not, therefore, offer any legal protection to consumers.," said the CySEC.

The agency told consumers that cryptocurrencies and ICOs can be very risky and are usually highly speculative, as well as prone to bubbles and extreme volatility. The CySEC also warned retirees and pensioners that cryptocurrency investments are not suitable for retirement planning.

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French Financial Watchdog To Share Information With France's National Cybersecurity Agency

In light of the threat to the financial sector, France's financial regulator (AMF) and the French National Cybersecurity Agency (ANSSI) have agreed to work together more closely protect IT and financial markets infrastructure. On the 16th of February, both agencies signed a letter of intent.

"The financial industry and the markets are particularly vulnerable to digital risks and cyberattacks," said the AMF.

The AMF is responsible for ensuring the orderly operation of French equities, FX and bond markets. As such, it shares joint responsibility with ANSSI for the digital security of this sensitive sector.

ANSSI, as the national cybersecurity authority, is tasked with tackling threats against public infrastructure and private industry, in particular IT system of vital importance to the state.

The AMF said in their press release that both agencies will closely collaborate by sharing information regarding incidents that affect the security of various information systems, as well as managing of crises.

While both institutions already have a working relationship, this letter of intent is the next step in strengthening those ties:
"This agreement follows a similar initiative with the Autorité de Contrôle Prudentiel et de Resolution in the banking and insurance sectors, to promote coordinated action in response to digital security challenges."

Israeli Financial Startup Launches First Bitcoin ATM in Jerusalem

Although the city of Tel Aviv had a total of three Bitcoin ATMs since the middle of last year, Jerusalem, the capital city of the Jewish state and an emerging hi-tech hub, didn't have a single cryptocurrency ATM machine.

But thanks to BitMarket, a Jerusalem-based financial services startup founded by two young Israeli entrepreneurs, the capital city finally got its first Bitcoin ATM in December, 2017.

In an interview with Israeli news service Ynet, BitMarket founders Idan Mizrahi, 28, and Or-Chai Levi, 24, said they were following the cryptocurrency markets develop for several years before deciding to venture into the space with their own company:

" a certain stage, out of belief in technology, we decided to take the plunge and set up the company.," Mizrahi told Ynet.

BitMarket's ATM, manufactured by Lamassu, only support fiat-to-bitcoin transactions at this time, and charges a 6.95% fee, according to CoinATMRadar.

U.S. Dollar Dipped 1.4% Last Week Despite Strong January CPI Readings

The dollar had its biggest weekly loss in two years, slipping to a three-year low against several currencies on Friday.

Extending overnight losses, the dollar’s index traded as low as 88.25 on Friday morning, the lowest since December of 2014. The index was on track to lose more than 2 percent on the week, but a strong equities rally sent the index into the green in the closing hours of trading on Friday afternoon.

The USD has been weighed down by a variety of factors in the first two months of the year, including worries that the Trump administration's tax cuts may exacerbate the growing budget deficit, which is projected to increase close to $1 trillion by the end of 2019.

And despite a stronger-that-expected U.S. inflation report on Wednesday, which showed January CPI gaining 0.2% and Core CPI gaining 0.1%, the dollar failed to gain momentum as investors began to consider the possibility of additional rate-hikes by the Federal Reserve later this year.

The dollar index finished on Friday closed at 89.08 with a modest gain of 0.52 percent, but booked losses of approximately 1.4 percent for the week.

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South African Rand Boosted to 3-Year High Against U.S. Dollar After Zuma's Resignation

South African stocks were boosted on Thursday by as much as 5 percent (biggest one-day gain in more than three years) after the resignation of Jacob Zuma, South Africa's president of nine years.

Market participants perceived Zuma's resignation as a net-positive for South Africa's economic growth prospects.

Zuma's reluctant exit was also sharply reflected in the strengthening South African rand. In the wake of Zuma’s exit, the rand soared to its highest level against the U.S. dollar since February of 2015. On Friday, the rand was trading at a 3-year high of 11.5575 against the USD.

Shares of South African banks, which are widely viewed within economic circles as a barometer of economic strength, rose considerably in the aftermath of Zuma's exit. The banking index jumped higher by almost 6 percent.

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Foreign Investors Start Reducing Their Exposure to Canadian Debt Securities

Statistics Canada issued its International Transactions in Securities report yesterday, which showed that foreign investors have begun reducing their holdings of Canadian securities by $2.0 billion in December of last year.

According to the report, foreign investors dumped Canadian debt securities but also made additions to their Canadian equities portfolios.

Key points from the report:

-Foreign investors poured in $188.5 billion into Canadian securities in 2017, led by strong acquisitions of Canadian bonds.

-Foreign investors reduced their holdings of Canadian bonds by $4.0 billion in December of 2017.

-The divestment activity was focused mainly in provincial government bonds.

-Foreign investment in Canadian money markets came to $401 million in December.

-In December, Canadian short-term interest rates were up by 17 basis points and the Canadian dollar appreciated against the USD by 2.1 US cents.

-The Canadian equity market received foreign inflows of $1.7 billion in December.

And while foreign investors were reducing their exposure to Canadian bonds, Canadian investors were acquiring foreign securities by to the tune of $22.0 billion in December. Canadian investors in December purchased foreign equities totaling a record $19.8 billion - $11.4 billion went into the US market while $8.4 billion to other foreign markets.

"In 2017, Canadian investment in foreign securities reached $84.7 billion compared with $13.8 billion in 2016.," said Stats Canada.

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Weiss Rating Tells Cryptocurrency Investors to Steer Clear of Tether and Exchanges with USDT Pairs

In a strongly-worded blog post this week, Weiss Cryptocurrency Ratings - the division of Weiss Ratings that focuses solely on cryptocurrency analysis - issued a strong warning against the dollar-pegged Tether (USDT) token.

Weiss analyst Juan Villaverde told cryptocurrency investors to avoid storing digital assets on exchanges (Bianance, Bittrex, Poloniex etc..) that use Tether, as well as not to trade any USDT-based pairs.

Previous warnings regarding Tether, usually made on various social media channels by concerned investors, were disregarded by skeptics on the grounds that Tether's market capitalization is a minuscule portion of the overall value of the entire crypto market.

This line of thinking was successfully used by skeptics to assuage investors' worries, but Villaverde says that Tether's daily turnover figures paint a very different picture:

"Tether is the third-largest cryptocurrency by trading volume, behind Bitcoin and Ethereum, which are also used as liquidity.," writes Villaverde.

Additionaly, Villaverde postulates that a run and/or failures of Tether has the potential to "cause exchange failures."

To drive his point home, Villaverde also pointed out that Tether management has not provided an audit from a reputable firm, despite repeatedly being asked to do so:
"The big issue: There’s never been an audit, and the folks behind Tether have not been transparent when asked. They have continuously claimed their tokens are backed 100% by actual dollars, yet they have failed to present evidence to support this claim."
On a more positive note, Villaverde concludes that even in a worst-case scenario where Tether turns out to be fraudulent and goes under, cryptocurrencies will survive due to their revolutionary impact on "everything from finance to the legal industry to society itself."

First Bitcoin ATM Goes Live in Mongolia

Although the vast majority of Bitcoin ATMs are located in Europe and America, even countries like Mongolia that have a relatively small but growing cryptocurrency ecosystems, are seeing Bitcoin ATMs popping up.

On January 21, 2018, the first Bitcoin ATM - a model by manufacturer Genesis Coin - was installed in the city of Ulaanbaatar, the capital of Mongolia. The new ATM is operated by TRADE Digital Exchange (TDX), a Mongolian cryptocurrency exchange with 12,000+ clients based out of Ulaanbaatar.

According to ATM tracking site CoinATMRadar, TDX's first Bitcoin ATM was installed inside the National Information Technology Park, an IT center launched in 2002 by the Mongolian Government with assistance from the South Korean government.

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Deutsche Bank Securities Fined Millions by SEC in Commercial Mortgage-backed Securities Scheme

Deutsche Bank Securities agreed to pay more than $3.7 million to customers as a result of an enforcement action by the SEC. The fine also included a $1.48 million in disgorgement.

The SEC found out in the course of their investigation that Deutsche traders made false statements while negotiating sales of commercial mortgage-backed securities (CMBS). The agency also found that customers overpaid for these instruments because they were misled about the prices at which Deutsche acquired the commercial mortgage-backed securities.

The German bank failed to have the appropriate compliance and surveillance processes in place which should have prevented the misconduct that led to the firm’s ill-gotten profits on CMBS transactions to the detriment of its customers.

The SEC said that Benjamin Solomon, the former head trader of Deutsche Bank’s CMBS trading division, did not take appropriate steps after becoming aware of false statements made to customers by traders under his watch.

Daniel Michael, Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit, had this to say:
“Deutsche Bank and Solomon failed to keep watch as traders generated profits for the firm at the expense of CMBS customers by misrepresenting purchase prices and other important details.”
As part of the settlement with the SEC, Deutsche Bank agreed to repay clients the full amount of profits earned on any CMBS deals in which a misrepresentation was made, which amounts to more than $3.7 million.

The bank will also have to pay an additional penalty of $750,000. Solomon was given a penalty of $165,000, as well as a 12-month suspension from the securities industry.

According to the SEC, Deutsche Bank and Solomon agreed to the SEC’s order without admitting or denying the findings. There was also substantial cooperation by Deutsche Bank and Solomon during the SEC’s investigation.

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