Cryptocurrencies have gained significant traction in recent
years as a revolutionary form of digital
currency. They operate on decentralized networks, commonly known as
blockchains, which ensure secure and transparent transactions. However, due to
their disruptive nature and potential for illicit activities, there is a
pressing need for regulation in the cryptocurrency space. In this article, we
will explore the regulation features associated with cryptocurrencies.

Regulatory Challenges

The decentralized nature of cryptocurrencies makes it
difficult for traditional regulatory authorities to track and control their
usage. This poses several challenges, including money laundering, terrorist
financing, tax evasion, and fraud. Without proper regulation, these risks can
undermine the trust and stability of the financial system.

Anti-Money Laundering (AML) and Know Your Customer (KYC)
Regulations

To address the concerns related to money laundering and
terrorist financing, many jurisdictions have implemented Anti-Money Laundering
(AML) and Know Your Customer (KYC) regulations. These regulations require
cryptocurrency exchanges and service providers to verify the identity of their
customers and maintain records of their transactions. By following these
guidelines, authorities can trace suspicious activities and prevent illegal
practices.

Licensing and Registration

To ensure compliance with regulatory standards, some
countries have introduced licensing and registration requirements for entities
involved in cryptocurrency-related activities. These requirements vary across
jurisdictions and may include obtaining specific licenses or permits to operate
legally. By imposing such regulations, authorities aim to promote transparency,
consumer protection, and the prevention of fraudulent schemes.

Securities Regulations

In certain cases, cryptocurrencies may qualify as
securities, subjecting them to additional regulations. If a cryptocurrency is
deemed a security, it must comply with existing securities laws, including
registration with regulatory bodies and adhering to disclosure requirements.
This classification aims to protect investors from fraudulent Initial Coin
Offerings (ICOs) and other investment scams.

Tax Regulations

Governments worldwide are recognizing the need to establish
tax regulations for cryptocurrencies. Taxation policies may vary depending on
the jurisdiction, but commonly include treating cryptocurrencies as assets
subject to capital gains tax. By imposing tax regulations, authorities aim to
ensure fair and equitable treatment of cryptocurrencies in relation to
traditional forms of currency.

Investor Protection

Cryptocurrency regulations often focus on safeguarding the
interests of investors. Measures such as mandatory risk disclosures, investor
education programs, and restrictions on high-risk investments aim to protect
individuals from potential financial harm. Regulatory frameworks also aim to
prevent market manipulation, insider trading, and other fraudulent activities
that can undermine market integrity.

International Cooperation

Given the borderless nature of cryptocurrencies,
international cooperation is crucial for regulating this emerging asset class
effectively. Countries are increasingly working together and collaborating with
international organizations to develop coordinated regulatory approaches.
Forums like the Financial Action Task Force (FATF) provide a platform for
global cooperation in combating money laundering and terrorist financing
related to cryptocurrencies.

Conclusion

While the decentralized nature of cryptocurrencies
challenges traditional regulatory frameworks, governments, and regulatory
bodies around the world are recognizing the importance of establishing
regulatory guidelines for this rapidly evolving sector. Through AML and KYC
regulations, licensing and registration requirements, securities regulations,
tax regulations, investor protection measures, and international cooperation,
authorities aim to strike a balance between innovation and the prevention of
illicit activities.

With appropriate regulations in place, cryptocurrencies have
the potential to serve as a legitimate
form of digital currency, driving economic growth while ensuring security
and trust in the financial system.

This article was written by FL Contributors at www.forexlive.com.

• Prior +2.5%
• Market index vs 165.9 prior
• Purchase index vs 129.0 prior
• Refinance index vs 347.3 prior
• 30-year mortgage rate % vs 7.61% prior

This article was written by Justin Low at www.forexlive.com.

2023 was supposed to be the year of the dollar demise. Instead, things did not pan out that way as the greenback proved to be rather resilient. And so the narrative has been constantly kicked down the road for many months now but is yesterday the tell that we have finally gone past the summit on the dollar’s journey?

The market thinking now is that the Fed is done with rate hikes and that is helping to dispel some deep-seated fear that we could see interest rates hit 6%. The talk now instead is about rate cuts and traders are seeing that come as soon as June next year. It’s a rather straightforward thinking that inflation is going to progressively return to the 2% mark while the US economy achieves a soft landing and perhaps even avoid a technical recession altogether.

That’s the hope and that is what markets are pricing in at the moment.

And if things do play out that way, perhaps we have already seen the dollar go past the apex and is set to fall further going into next year. That being said, this is the same kind of naive thinking that caught traders off-guard about the supposedly imminent demise of the dollar all through this year.

Sure, we’re starting to see the dollar finally crack lower significantly but it is still trading up 14.7% higher against the yen this year, 1.1% up against the loonie, 4.3% up against the aussie, and 4.8% up against the kiwi. It is only European currencies that have outperformed the dollar in any way and a large part of that is thanks to gains in the last two weeks. If you put that aside, the dollar has held up rather well against all the calls of it set to fall apart since the end of last year already.

So, is there a chance that traders might get blindsided by the greenback again?

I would say the odds of that is lower this time around but the current market positioning is a dangerous one that could result in squeezes.

The dollar might not be in a good spot technically at the moment (as outlined earlier via EUR/USD, AUD/USD, and GBP/USD) and could be set for a further decline in the near-term.

But in the overall picture, the US economy continues to outshine its peers and the Fed looks most likely to be in a stronger position to keep rates higher for longer than other major central banks. And when you throw in the fact that Treasury yields are likely to stay underpinned amid the waves of supply coming through, a reversal in the bond market may not be too forceful given a counter-force that will warrant selling pressures.

All of that are supportive factors for the dollar to some extent and depending on how the market focus shifts and what the data tells us, it will offer traders some clues on the degree of resilience that we might see in the greenback heading into next year.

To summarise, yes we might be past the summit already for the dollar’s climb higher. However, to say that we will see a protracted and steep decline in the greenback next is to think that the market isn’t going to throw you any curveballs along the way. And as we already have seen this year, that’s not exactly how things work most of the time.

This article was written by Justin Low at www.forexlive.com.

GBP

• The BoE kept interest rates
  unchanged as expected at the last meeting.
• The central bank is leaning towards
  keeping interest rates “higher for longer”, although it keeps a door open for
  further tightening if inflationary pressures were to be more persistent.
• BoE Governor Bailey repeated that
  they will keep rates high for long enough to get inflation back to target.
• The latest employment report beat
  expectations across the board with the unemployment rate ticking lower and wage
  growth ticking higher.
• The UK CPI today missed expectations
  across the board which favours the BoE’s “on hold” stance.
• The UK PMIs showed further
  contraction in the services sector, which accounts for 80% of UK’s economic
  activity.
• The market doesn’t expect the BoE to
  hike anymore.

JPY

• The BoJ kept its monetary policy basically
  unchanged but formally widened the YCC to 1% on the 10-year JGBs stating that
  it will be a reference cap.
• Governor Ueda repeated once again
  that they won’t hesitate to take easing measures if needed and that they are
  not foreseeing sustainable price increases.
• The recent Japanese CPI showed that inflationary pressures remain high with
  the core-core reading hovering at the cycle highs.
• The Unemployment Rate remained
  unchanged near cycle lows.
• The Japanese Manufacturing PMI
  matched the prior reading remaining in contraction with the Services PMI
  falling but holding on in expansion.
• The latest Japanese wage data beat
  expectations. As a reminder the BoJ is focusing on wage growth to decide
  whether to tweak its monetary policy.
• The market expects the BoJ to keep
  interest rates unchanged at the next meeting as well.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY broke
above the key resistance around the 183.70 level and continued higher targeting
the high. The pair yesterday broke right through the high following the miss in
the US CPI data which weakened the USD across the board and strengthened the
other currencies.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective the buyers will be better off waiting for a pullback
into the trendline where they will also find the confluence with the broken
high, the 38.2% Fibonacci retracement level and the red 21 moving average. This
is where the buyers should step in with a defined risk below the trendline to
position for another rally into new highs.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bullish setup with the support zones marked with green boxes. Given
that there’s also a good support around the 61.8% Fibonacci retracement level,
the buyers might want to split their long position in half and place orders
both at the 38.2% and the 61.8% Fibonacci retracement levels. The sellers, on
the other hand, will want to see the price breaking below the trendline to
invalidate the bullish setup and position for a drop into the 183.50 level.

Upcoming Events

Today, we have the US
Retail Sales and PPI data with the market likely giving more importance to the
Retail Sales data. Tomorrow, we will see the latest US Jobless Claims figures
where the market will want to see how fast the labour market is softening.
Finally, on Friday we conclude with the UK Retail Sales figures.

This article was written by FL Contributors at www.forexlive.com.

• 2023 economic growth forecast lowered to 0.6% from 0.8% previously
• 2024 economic growth forecast seen at 1.2%, then 1.6% in 2025
• 2023 inflation forecast seen at 5.6%, then 3.2% in 2024, then 2.2% in 2025
• High inflation, interest rates, and weaker external demand took a heavier toll on growth than anticipated

The Commission said that while the economy is to grow more slowly this year, a technical recession should be avoided. Adding that „economic activity is expected to gradually pick up as consumption recovers on the back of a steadily robust labour market, sustained wage growth and continued easing of inflation“.

This article was written by Justin Low at www.forexlive.com.

• Prior €6.7 billion

The year-to-date euro area trade balance is seen at €16.3 billion and that marks a drastic improvement to last year, which was a deficit of €278.3 billion (which was heavily impacted by high energy imports).

This article was written by Justin Low at www.forexlive.com.

• Prior 90.8

This marks the 22nd straight month that the index sits below its 50-year average of 98. As such, it reaffirms that small business sentiment is still struggling somewhat and that most of the growth in the US economy is powered by the strong consumer again. Of note, 22% of business owners are still reporting that inflation is their single most important problem – down 1% from September.

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as
  expected with basically no change to the statement.
• Fed Chair Powell stressed
  once again that they are proceeding carefully as the full effects of policy
  tightening have yet to be felt.
• The recent US Core PCE came
  in line with expectations.
• The labour market is
  starting to show some weakness as Continuing Claims are now
  rising at a fast pace and the recent NFP report
  missed across the board.
• The US Consumer
  Confidence and University of
  Michigan Consumer Sentiment continue to fall.
• The recent US ISM
  Manufacturing PMI missed expectations by a big margin,
  followed by a disappointing ISM Services PMI,
  although the latter remained in expansion.
• The recent Fedspeak has been leaning on
  the hawkish side, but the inflation and labour market reports before the next
  meeting will decide whether they will indeed hike or not.
• The market doesn’t
  expect the Fed to hike anymore.

AUD

• The
  RBA raised the cash rate by 25 bps as expected as the central bank
  judged that the move was warranted to be more assured that inflation would
  return to target in a reasonable timeframe.
• The
  CPI report recently surprised to the upside
  prompting the market to price in a higher chance of another rate hike from the
  RBA in November, which is what we eventually got.
• The
  RBA Governor Bullock downplayed the beat in the CPI data
  and made the market to pare back the rate hike bets.
• The
  labour market continues to weaken as seen also
  recently with the miss in the employment change and the losses in full-time
  employment.
• The
  Australian Manufacturing PMI fell further into contraction with
  the Services PMI plummeting back into contraction as well.
• The
  market expects the RBA to hold rates steady at the next meeting.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD rejected
the key resistance around
the 0.65 handle and erased all the gains seen after the FOMC and the NFP
report. The pair has been ranging for months as the uncertainty in the market
remains high. We will likely need some strong fundamental catalyst to trigger a
more sustained trend.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the selloff
from the key resistance found some support around the upward trendline and the
0.64 handle, but eventually the price fell below it triggering even more
selling. The price since then pulled back into support now turned resistance where
the sellers stepped in once again with a defined risk above the level to
position for another drop into the lows.

AUDUSD Technical Analysis –
1 hour Timeframe

On the
1 hour chart, we can see that the last leg lower diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we got a pullback into the resistance, but the break
above the trendline is making things less clear. We should now have a mini
range between the 0.64 resistance and the 0.6365 support. A break on either
side is likely to lead to a more sustained move with the buyers targeting the
0.65 handle on the upside and the sellers targeting the 0.63 handle on the
downside.

Upcoming Events

This week we have some top tier economic releases. We
begin today with the US CPI report which might be one of the most important
events of the week. Tomorrow, we have the Australian Wages data and later in
the day the US Retail Sales and PPI reports. On Thursday, we conclude with the
Australian labour market report and the latest US Jobless Claims figures.

This article was written by FL Contributors at www.forexlive.com.

• Some measures of economic uncertainty, particularly for inflation, are elevated
• Policy decisions taken under uncertainty may look different from those optimal under certainty

The headline remarks points to the ongoing narrative that they are keeping the door open just in case inflation is stickier than expected. That is the playbook now for all major central banks, with the Fed taking the lead.

This article was written by Justin Low at www.forexlive.com.

This will be a much anticipated meeting as Kishida had previously touted for big wage hikes next year that will exceed what we have seen this year. Considering what is at stake, this is something worth keeping an eye out for as it tees up the upcoming spring wage negotiations next March. In turn, that will act as a cornerstone for the BOJ to start normalising monetary policy.

The meeting tomorrow will involve representatives from Japan’s largest labour group, Rengo, and business lobby, Keidanren, alongside other business leaders and labour unions.

This article was written by Justin Low at www.forexlive.com.