FOREX NEWS & BLOG

Bank of Japan expected to raise rates this week – but there is a hurdle to overcome first

Bank of Japan expected to raise rates this week – but there is a hurdle to overcome first

January 20, 2025 3:03 am |

Market expectations are high for a Bank of Japan rate hike at their January 23 and 24 meeting this week.

Check out this graph from Reuters on inflation sitting above target since late 2022:

The hurdle to a rate hike this week is any unexpected market volatility following Trump’s swearing in later today, January 20.

The BoJ is watching market response to any immediate policy moves from Trump. The hints we have had just today are moves on immigration and oil:

This article was written by Eamonn Sheridan at www.forexlive.com.

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Recapping Japan’s core machinery orders in November, results exceeding expectations

Recapping Japan’s core machinery orders in November, results exceeding expectations

January 20, 2025 2:46 am |

Japan’s core machinery orders rose 3.4% in November, exceeding expectations and signaling a recovery in capital expenditure ahead of the Bank of Japan’s interest rate review.

Orders from manufacturers jumped 6.0%

  • non-manufacturers saw a 1.2% increase

Analysts attribute the strength to labor shortages and digitalization-driven investment.

Despite uncertainties, including the incoming U.S. Trump presidency, business sentiment has improved.

This article was written by Eamonn Sheridan at www.forexlive.com.

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PBOC sets one and five year loan prime rates unchanged

PBOC sets one and five year loan prime rates unchanged

January 20, 2025 2:39 am |

People’s Bank of China Loan Prime Rate (LPR) setting.

1-year set at 3.1%

  • expected 3.1% and prior 3.1%

5-year set at 3.6%

  • expected 3.6%, prior 3.6%

***

As I posted earlier:

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. The one-year LPR and the over-five-year LPR are currently at 3.10% and 3.60%, respectively.

Recent moves:

  • July 22, 2024: The one-year LPR was reduced by 10 basis points to 3.35%, and the over-five-year LPR was lowered by 10 basis points to 3.85%.

  • In August and September 2024, the People’s Bank of China (PBOC) maintained the Loan Prime Rates (LPR) at the levels set in July.

  • October 21, 2024: The one-year LPR was further reduced by 25 basis points to 3.10%, and the over-five-year LPR was decreased by 25 basis points to 3.60%.

  • November 20, 2024: Both the one-year LPR and the over-five-year LPR were maintained at 3.10% and 3.60%, respectively.

  • December 20, 2024: The PBOC kept both the one-year LPR and the over-five-year LPR unchanged.

This article was written by Eamonn Sheridan at www.forexlive.com.

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South Korea’s Crypto Exchange Upbit Faces Suspension Over KYC Violations

South Korea’s Crypto Exchange Upbit Faces Suspension Over KYC Violations

January 20, 2025 12:53 am |

South Korea’s top cryptocurrency exchange, Upbit, is
facing a regulatory storm. Accused of breaching Know Your Customer (KYC)
obligations, the platform faces a suspension that could bar it from registering
new users for six months.

According to local media publication Naver, The
Financial Intelligence Unit (FIU), part of South Korea’s Financial Services
Commission, issued the suspension notice following a review of Upbit’s business
license renewal.

FIU Cracks Down on KYC Failures

According to the report, the regulator discovered
between 500,000 and 700,000 instances of improper KYC verification. This
revelation could reportedly result in fines totaling $34.3 billion, with
penalties of up to $68,600 per violation under the country’s Special Financial
Transactions Act.

Additionally, authorities allege that Upbit violated
laws restricting transactions with unregistered foreign crypto service
providers. An FIU spokesperson stated the enforcement action highlights a
commitment to restoring order and fairness in the cryptocurrency space.

While the proposed sanctions would only limit new user
registrations, the reputational and financial fallout could be far-reaching.
Upbit, which controls over 70% of South Korea’s crypto trading volume, reported
daily trades exceeding $7 billion in 2024, according to CoinGecko data.

With its business license renewal still under review,
the timing of these penalties could complicate its ability to operate smoothly
in the future. The FIU will reportedly finalize its decision on January 21,
following Upbit’s opportunity to present its case by January 20.

This disciplinary action signals a broader regulatory
push to strengthen anti-money laundering and counter-terrorism financing measures in the cryptocurrency space.

Tightening Regulations

The Virtual Asset User Protection Act, implemented in
July 2024, has already reshaped the compliance landscape, forcing exchanges to
navigate stricter requirements.

The digital asset market is closely monitoring the
situation, with fears that Upbit’s case may set a precedent for harsher
enforcement across the industry. The controversy followed the 2017 data breach at
Bithumb, another major South Korean exchange, which exposed 31,000 user
accounts.

South Korea’s regulators have since tightened their
grip on crypto businesses, as seen in this high-profile action against Upbit. The industry now awaits the FIU’s final ruling, which
will determine Upbit’s fate and the regulatory trajectory for South Korea’s
crypto sector.

This article was written by Jared Kirui at www.financemagnates.com.

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Nomura are expecting a March Fed rate cut then a US inflationary shock due to tariffs

Nomura are expecting a March Fed rate cut then a US inflationary shock due to tariffs

January 20, 2025 12:29 am |

A brief summary of a note from Nomura re their outlook for Federal Reserve monetary policy:

  • foresee a single 25 basis point rate cut occurring in March 2025, after which the Federal Reserve is likely to hold rates steady for an extended period due to inflationary pressures stemming from tariffs.
  • In the early stages of a potential second Trump administration, economic policy discussions will primarily centre around tariffs and tax regulations.
  • By mid-2025, inflation driven by tariffs is expected to prompt the Federal Reserve to halt its rate-cutting cycle for an extended duration.
  • The job market is showing signs of slowing, with risks tilted toward further weakening. However, a gradual decline is more probable than a sudden downturn.

This article was written by Eamonn Sheridan at www.forexlive.com.

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