INVEST AT YOUR OWN RISK: BANK NEGARA SAYS NO MOVE TO REGULATE DIGITAL CURRENCIES

PETALING JAYA – Bank Negara Malaysia (BNM) said yesterday its move to impose reporting obligations on digital currency exchanges is not a move to regulate digital currencies and that investors are going into the market at their own risk.

BNM advised the public to carefully evaluate the risks associated with dealings in digital currencies, including risks arising from high volatility in prices, the lack of deep markets and vulnerabilities to cyber attack which can lead to significant losses.

“Users of digital currencies will also not be covered under established disputed resolution arrangements which exist for regulated financial institutions in the event of any dispute or losses.”

The central bank said it will continue to monitor and assess the risks posed to the financial system by such activities to ensure that the integrity of the financial system is not compromised.

The central bank highlighted that the reporting obligation on the exchanges is the first step towards making digital currency activities more transparent in Malaysia, but it does not in any way connote the authorisation, licensing, endorsement or validation by BNM of any entities involved in the provision of digital currency exchange services.

Last month, BNM governor Tan Sri Muhammad Ibrahim said the central bank will designate persons converting cryptocurrencies into fiat money currencies as reporting institutions under the Anti-Money Laundering Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) beginning next year, which was seen as the central bank’s move to regulate digital currencies.

However, BNM stressed in a statement today that digital currencies are not legal tender in Malaysia and that digital currency businesses are not covered by prudential and market conduct standards or arrangements that are applicable to financial institutions regulated by the central bank.

“This is consistent with reporting obligations currently invoked under the AMLA on other reporting institutions such as legal or accounting firms and real estate agents which do not fall under the bank’s purview.”

The central bank is to hold a media briefing today on digital currencies.

Meanwhile, BNM yesterday issued for public consultation an exposure draft on the invocation of reporting obligations on digital currency exchange business as reporting institutions under AMLA, which aims to ensure that effective measures are in place against money laundering/terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currencies activities in Malaysia.

INVEST AT YOUR OWN RISK: BANK NEGARA SAYS NO MOVE TO REGULATE DIGITAL CURRENCIES

Failure to declare its details as reporting institutions or comply with the reporting obligations may subject the digital currency exchangers to the enforcement and non-compliance actions as provided under the AMLA as well as the potential termination or denial of use of financial services in Malaysia.

BNM is inviting written feedback on the specific requirements set out in the exposure draft on digital currencies, which must be submitted to the central bank by Jan 14, 2018.

In another development, World Bank Group lead financial sector specialist Jose De Luna Martinez said forming a framework to regulate cryptocurrencies could be a challenge for financial sector authorities.

“Our view is that the financial sector authorities have a challenge in terms of putting up a framework that can tell people to make a good choice,” he said at a panel discussion held in conjunction with the launch of the World Bank’s Malaysia Economic Monitor Report in Kuala Lumpur yesterday.

He also noted that the major concern is consumer protection as it is crucial for investors to be well informed on the risk associated with digital currencies, which can be volatile.

Meanwhile, World Bank director for regional partnership Malaysia and Thailand Dr Ulrich Zachau opined that there is a need for cryptocurrencies to be regulated and it could actually be helpful to have more exchanges in the future.

Bitcoin began trading on the Chicago Board Option Exchange on Dec 10. As at 8pm yesterday, bitcoin was trading at US$16,669 (RM68,000).

– Sundaily

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INVEST AT YOUR OWN RISK: BANK NEGARA SAYS NO MOVE TO REGULATE DIGITAL CURRENCIES

PETALING JAYA – Bank Negara Malaysia (BNM) said yesterday its move to impose reporting obligations on digital currency exchanges is not a move to regulate digital currencies and that investors are going into the market at their own risk.

BNM advised the public to carefully evaluate the risks associated with dealings in digital currencies, including risks arising from high volatility in prices, the lack of deep markets and vulnerabilities to cyber attack which can lead to significant losses.

“Users of digital currencies will also not be covered under established disputed resolution arrangements which exist for regulated financial institutions in the event of any dispute or losses.”

The central bank said it will continue to monitor and assess the risks posed to the financial system by such activities to ensure that the integrity of the financial system is not compromised.

The central bank highlighted that the reporting obligation on the exchanges is the first step towards making digital currency activities more transparent in Malaysia, but it does not in any way connote the authorisation, licensing, endorsement or validation by BNM of any entities involved in the provision of digital currency exchange services.

Last month, BNM governor Tan Sri Muhammad Ibrahim said the central bank will designate persons converting cryptocurrencies into fiat money currencies as reporting institutions under the Anti-Money Laundering Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) beginning next year, which was seen as the central bank’s move to regulate digital currencies.

However, BNM stressed in a statement today that digital currencies are not legal tender in Malaysia and that digital currency businesses are not covered by prudential and market conduct standards or arrangements that are applicable to financial institutions regulated by the central bank.

“This is consistent with reporting obligations currently invoked under the AMLA on other reporting institutions such as legal or accounting firms and real estate agents which do not fall under the bank’s purview.”

The central bank is to hold a media briefing today on digital currencies.

Meanwhile, BNM yesterday issued for public consultation an exposure draft on the invocation of reporting obligations on digital currency exchange business as reporting institutions under AMLA, which aims to ensure that effective measures are in place against money laundering/terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currencies activities in Malaysia.

INVEST AT YOUR OWN RISK: BANK NEGARA SAYS NO MOVE TO REGULATE DIGITAL CURRENCIES

Failure to declare its details as reporting institutions or comply with the reporting obligations may subject the digital currency exchangers to the enforcement and non-compliance actions as provided under the AMLA as well as the potential termination or denial of use of financial services in Malaysia.

BNM is inviting written feedback on the specific requirements set out in the exposure draft on digital currencies, which must be submitted to the central bank by Jan 14, 2018.

In another development, World Bank Group lead financial sector specialist Jose De Luna Martinez said forming a framework to regulate cryptocurrencies could be a challenge for financial sector authorities.

“Our view is that the financial sector authorities have a challenge in terms of putting up a framework that can tell people to make a good choice,” he said at a panel discussion held in conjunction with the launch of the World Bank’s Malaysia Economic Monitor Report in Kuala Lumpur yesterday.

He also noted that the major concern is consumer protection as it is crucial for investors to be well informed on the risk associated with digital currencies, which can be volatile.

Meanwhile, World Bank director for regional partnership Malaysia and Thailand Dr Ulrich Zachau opined that there is a need for cryptocurrencies to be regulated and it could actually be helpful to have more exchanges in the future.

Bitcoin began trading on the Chicago Board Option Exchange on Dec 10. As at 8pm yesterday, bitcoin was trading at US$16,669 (RM68,000).

– Sundaily

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EPF MEMBERS CAN MAKE WITHDRAWALS OF ANY AMOUNT BEGINNING JANUARY 2018

KUALA LUMPUR – The Employees Provident Fund (EPF) has “enhanced and simplified” its policies to enable members aged 55 and 60 to make partial withdrawals of any amount at any time beginning next January.

This is opposed to the withdrawal policies that allows members to withdraw a minimum of RM2,000 once every 30 days.

Members who choose to make monthly withdrawals will also be able to withdraw from as low as RM100 per month, a reduction from RM250 currently.

EPF chief executive officer Datuk Shahril Ridza Ridzuan said the improvements were made based on the feedback from members.

Shahril also announced that members would have the option to appoint Amanah Raya Berhad as the nominee or administrator trustee for their EPF savings.

This, he said, would enable faster and equitable distribution of their savings to the next-of-kin, upon the death of members.

– ANN

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DOW NOTCHES RECORD CLOSE AFTER FED HIKES RATES

The Dow Jones industrial average posted a record close on Wednesday after the Federal Reserve felt confident enough in the economy to raise rates yet again. Investors also digested news of Congressional leaders reaching a tentative agreement on a tax overhaul plan.

The 30-stock index rose 80.63 points to 24,585.43, with Caterpillar leading advancers. The Dow also posted an intraday record. The Nasdaq composite advanced 0.2 percent to close at 6,875.80.

The S&P 500 closed just below breakeven at 2,662.85 as financials had their worst session since Nov. 7, falling 1.3 percent. The index posted an intraday all-time high earlier in the session.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 24585.43
80.63 0.33%
S&P 500 S&P 500 Index 2662.85
-1.26 -0.05%
NASDAQ NASDAQ Composite 6875.80
13.48 0.20%

The move by the Fed lifts the target range to 1.25 percent to 1.5 percent. The Fed was widely expected to raise rates at this meeting.

The central bank also raised its 2018 GDP estimate to 2.5 percent from 2.1 percent in September.

“There were no major surprises [in the announcement] and inflation remains below the Fed’s target,” said Jeff Carbone, managing partner of Cornerstone Financial Partners. “The one thing to look out for is whether the economy starts to heat up. That could force the Fed to raise rates quicker.”

The consumer price index — a key metric used to gauge inflation — rose 0.4 percent last month, as expected. Excluding food and energy, consumer prices rose 0.1 percent.

Members of the Fed’s policymaking committee also kept their interest-rate forecasts unchanged for 2018 and 2019. Treasury yields ticked lower following the Fed’s announcement. The benchmark 10-year yield traded at 2.348 percent, while the two-year yield slipped to 1.782 percent.

“The market was looking for a changed in the dot plot but there wasn’t one,” said Ninh Chung, head of investment strategy and portfolio management at Silicon Valley Bank. “The lack of a fourth rate hike for 2018 could be spurring some buying here.”

Wall Street also looked to Congress on Wednesday. House and Senate leaders struck a tentative deal to pass sweeping changes to the U.S. tax code. The Associated Press first reported the news, and CNBC later confirmed the report. The plan would likely lower the corporate tax rate.

“This supports current levels, but I don’t think we’ll get another significant boost from tax reform,” said Jennifer Ellison, principal at Bingham, Osborn & Scarborough. “Some of this was already anticipated a few weeks ago.”

The prospect of lower corporate taxes has been a boon for U.S. stocks this year.

DOW NOTCHES RECORD CLOSE AFTER FED HIKES RATES

Getty Images
A trader works on the floor of the New York Stock Exchange.

In corporate news, Finisar shares surged 22.8 percent after Apple awarded it $390 million. Finisar makes optical communications components which are used in Apple’s iPhone X.

Verizon and AT&T both closed lower after T-Mobile announced it bought Layer3 TV and said it plans to launch “a disruptive new TV service.” T-Mobile shares finished 0.6 percent higher.

Caterpillar’s stock climbed 3.6 percent after the company reported strong machine sales for September, October and Novemeber.

– https://www.cnbc.com

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DOLLAR WEAKENS ON RATE HIKE AS FED LEAVES OUTLOOK UNCHANGED, EURO GAINS

The U.S. dollar weakened Wednesday after the Federal Reserve hiked interest rates by 0.25 percent in a widely expected move, but left its rate outlook for the coming years unchanged.

Officials acknowledged in their latest forecasts that the economy had gained steam in 2017 by raising their economic growth forecasts and lowering the expected unemployment rate for the coming years.

The Fed reinforced it would stand by outgoing Chair Janet Yellen’s policy of gradually raising interest rates, as economic conditions demand. Projections point to three rate hikes in 2018 and 2019 before a long-run level of 2.8 percent is reached. That is unchanged from the last round of forecasts in September.

“The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the Federal Reserve wrote in a statement.

Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari dissented against the rate hike decision, according to the Fed’s policy statement on Wednesday.

“Although widely expected, some policymakers have expressed concerns at today’s rate hike at a time when wage growth remains stagnant and inflation is only crawling northwards,” Dennis De Jong, managing director of UFX.com said.

Outgoing Federal Reserve Chair Janet Yellen later addressed the decision and how the Trump administration’s tax overhaul could affect the U.S. economy.

“We did discuss tax policy and let me say that most of my colleagues factored in the prospect of fiscal stimulus along the lines of what is being contemplated by Congress into their projections,” Yellen said.

“Changes in the projections you have seen since September should not be viewed as an estimate of the impact of the tax package. In particular, broader expectations of fiscal policy have been reflected in financial market conditions over the past year,” she added.

President Donald Trump‘s legislative agenda may be harder to push through, however, following Tuesday’s victory by Democrat Doug Jones in the bitter fight for a U.S. Senate seat in deeply conservative Alabama.

The dollar index dropped 0.65 percent to 93.48, the lowest level it’s seen since hitting Dec. 7.

The euro last climbed 0.64 percent at 1.1815 against the dollar.

Early in the day, the dollar weakened after consumer price data showed sluggish inflation, adding to concerns the Federal Reserve will be less able to execute multiple rate increases next year.

Excluding the volatile food and energy components, consumer prices ticked up 0.1 percent in November, with the annual increase in the core CPI slowing to 1.7 percent in November from 1.8 percent in October.

“The focus is on the core measure of inflation, that came in weaker than the market expected,” said Vassili Serebriakov, a foreign exchange strategist at Credit Agricole in New York.

– https://www.cnbc.com

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MALAYSIA’S LONG-TERM POTENTIAL GROWTH TO STAY ROBUST – MOODY’S

KUALA LUMPUR – Malaysia will be able to maintain its strong growth trend with the economy’s long-term potential growth to stay robust at around 5%, significantly stronger than most other A-rated sovereigns, says Moody’s Investors Service.

In its recently-released report titled, “Government of Malaysia: FAQ On Credit Resilience To High Leverage and External Vulnerability Risks”, Moody’s said Malaysia’s highly diversified and competitive economic structure underpinned stable and relatively robust growth trends that have proven to be resilient to external headwinds.

“Its (Malaysia) resilient economic growth, deep domestic capital markets, large international asset position and large export proceeds mitigate the sovereign’s vulnerability to sudden shocks,” the rating agency said.

On whether household debt presented challenges to Malaysia’s macro-financial stability and growth, Moody’s said at 84.6% of gross domestic product (GDP) at end-September 2017, the country’s household debt levels while stable posed downside risks to growth.

Nevertheless, it said such debt did not pose material threats to financial stability.

MALAYSIA’S LONG-TERM POTENTIAL GROWTH TO STAY ROBUST – MOODY’S

“Households have large liquid financial assets to buffer the impact of a potential shock to debt servicing capacity. Moreover, ongoing macro prudential measures will help contain potential further increases in debt,” it added.

Moody’s said Malaysia’s fiscal deficit would narrow from 2.8% of GDP in 2018, as and when strong nominal GDP growth boost revenue.

As a result, the debt burden would likely stabilise around the current level of 50.9% of GDP recorded in June 2017, significantly higher than the A-rated peer median of 40.5% at year-end 2016.

Moody’s believed debt affordability would remain constrained by a narrow revenue base.

With government guarantees, Moody’s said such guarantees were unlikely to present material contingent liability risk, because they were issued through a stringent selection process and most companies that benefitted from them were profitable and competently managed.

At end-2016, the total debt of non-financial public sector corporations stood at 16.6% of GDP, two-thirds of which were guaranteed by the government.

Moody’s also pointed out that Malaysia’s reserves were insufficient to meet maturing external long-term debt repayments and short-term debt.

“Nonetheless, a sizeable net asset position, large export proceeds and deep domestic capital markets (will) moderate external vulnerability,” it added.

– Bernama

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‘AIRASIA SHARES WORTH RM6’ – TONY FERNANDES DENIES RETIREMENT, CASHING-OUT RUMOURS

PETALING JAYA – AirAsia Bhd, which is currently trading at RM3.22, is worth RM6, according to co-founder and group CEO Tan Sri Tony Fernandes.

Fernandes, an avid user of Twitter, also laughed off retirement rumours.

AirAsia shares gained three sen, or 0.94% to RM3.22 in early trade Wednesday while AirAsia X was unchanged at 33.5 sen.

“I told analysts we we were worth RM3  when we were 0.70 cents. Now I say we are worth 6.00.

“There is no airline that has as much growth as airaosa (AirAsia) with a huge digital strategy that has assets worth more than our present market capitalisation,” Fernandes tweeted this morning.

“Laughable that there is a rumour I’m retiring. My announcement is an exciting one that charts our future of AIRASIA,” he said.

He followed up that tweet with another one: “So not going anywhere. Exciting times ahead.”

– ANN

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KL, JB, GEORGE TOWN AMONG CHEAPEST ASIAN CITIES FOR EXPATS – SURVEY

KUALA LUMPUR – Malaysia’s cities are among the cheapest in Asia for expatriates to live in, although over half of the world’s 50 most expensive cities are also located in the same region, a global survey of 262 cities showed.

According to ECA International’s biannual study, a total of 26 of the top 50 most expensive cities this year were from Asia, including 14 cities from China, as compared to four from the European Union (EU) and three from the United States (US).

Lee Quane, ECA International’s regional director for Asia, noted the curiosity for many companies that move their employees within Asia.

“Asia is home to some of the world’s most expensive locations as well its cheapest. This level of variety is only matched in Africa which is home to both the world’s most expensive location and its cheapest,” Quane said in a statement today on ECA International’s results from its latest survey in September.

“Although Ulaanbaatar, Mongolia, claims the status as Asia’s cheapest location, it is closely followed by locations in Malaysia — with Kuala Lumpur down to 213th in the global rankings,” ECA International said.

“Ulaanbaatar is joined by Johor Baru, George Town (Penang), Yangon and Karachi in making up the cheapest locations in Asia, with all these locations falling in our global rankings over the past 12 months,” it said.

The statement did not state the global rank based on living costs for Malaysia’s Johor Baru or George Town, or explain why these two cities were among the cheapest regionally to live in.

ECA International said Asian cities such as Singapore and those in Japan had fallen in the global ranking on living costs, owing to their relatively weaker currencies.

KL, JB, GEORGE TOWN AMONG CHEAPEST ASIAN CITIES FOR EXPATS – SURVEY

A table showing the top 20 most expensive cities out of 262 cities surveyed by ECA International. — Pix courtesy of ECA International

For Singapore, it fell by five places to become the world’s 21st most expensive city this year, marking the city’s lowest rank since 2014.

On Singapore falling out of the top 20 most expensive cities globally, Quane attributed this to the Singapore dollar being outpaced by strong-performing European currencies over the past 12 months.

“This has resulted in Singapore slipping down the rankings slightly, with some of the more expensive European cities rising above it in the table,” Quane said.

Japan’s capital Tokyo had fallen from its ranking as the most expensive city globally last year to the eighth place this year, but retains its last year’s rankings as the priciest Asian city.

Japan’s Yokohama, Nagoya and Osaka similarly fell out of the global top ten rankings last year to rank as the 18th, 19th and 20th priciest cities worldwide this year.

Quane commented that “Japanese cities have dropped in the rankings as the yen has weakened in the last year. However, with four cities in the global top 20 Japan is still an expensive place for expatriates.”

Although Hong Kong had briefly fallen out from the world’s top ten priciest cities last year, it has generally risen in the global rankings over the past five years and has now reclaimed its spot in the top ten most expensive cities, Quane said.

Hong Kong is now ranked ninth globally.

“Hong Kong now has the second cost of living of any city in the Asia-Pacific region, up from fifth this time last year,” Quane said.

KL, JB, GEORGE TOWN AMONG CHEAPEST ASIAN CITIES FOR EXPATS – SURVEY

The ECA International said it has been researching living costs for over 45 years, with its surveys on living costs conducted to help companies calculate cost of living allowances to ensure no compromise on the spending power of their staff while on international assignments.

It said its biannual surveys use a basket of similar consumer goods and services commonly bought by those assigned to work in 470 locations worldwide such as groceries, household goods, recreational goods, leisure services, clothing, electrical goods, motoring, meals out, alcohol and tobacco.

The surveys exclude data on accommodation rental, utilities, car purchases and school fees, which are usually covered by separate allowances given by companies to expatriates.

– Malay Mail

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REALLY? M;SIAN BANKS’ EXPOSURE IN O&G MINIMAL, SAYS ABM

PETALING JAYA – The Association of Banks in Malaysia (ABM) said the oil and gas (O&G) industry’s risks to the banking system remained limited as it only accounted for about 6.5% of total exposure.

The association said in a statement today that the delinquent loans ratio for the O&G sector stood at 0.1% while impaired loans ratio increased to 5% in the third quarter of 2017, due mainly to cash flow issues observed in service providers in certain upstream segments.

“Corresponding figures for the second quarter of 2017 were 0.2% and 4.5%.”

The association was responding to an article in a business weekly entitled “ Oil and Gas Conundrum” published over the weekend, which highlighted financing issues faced by oil and gas corporations here.

Nonetheless, ABM said its members have remained supportive and will continue to provide access to financing for viable businesses including O&G sector.

“All O&G cases have been given due consideration by the banks. Credit evaluation is conducted on O&G companies similar to loan applications by any other industries.”

ABM highlighted that feasibility studies such as stress test analyses, due diligence and credit evaluation are conducted as part of the standard assessment procedure to determine the eligibility and viability.

“Common reasons for loan rejection beyond ineligibility include incomplete loan documentation and inadequate supplementary information required to support banks’ assessment of cash flows and financial buffers of companies.”

ABM said the banking industry together with Bank Negara Malaysia have been engaging with the Malaysian Petroleum Resources Corporation to better understand developments in the O&G sector and also to disseminate information on avenues for assistance available for financially distressed companies.

“Viable corporate borrowers with multiple financial creditors can approach the Corporate Debt Restructuring Committee for assistance to work out feasible and market-driven debt resolutions through mediation.”

The association added that viable small and medium enterprises (SMEs) which are facing financial difficulties, can seek assistance from the Small Debt Resolution Scheme.

“Assistance offered include restructuring or rescheduling of financing facilities and provision of financing (where appropriate) to stabilise business cashflow whilst SMEs implement business turnaround plan.”

ABM comprises of 27 commercial banks in Malaysia.

– Sundaily

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DOLLAR HITS ONE-MONTH HIGHS AS FED SEEN SET TO RAISE RATES

The U.S. dollar rose to three-week highs against a basket of currencies on Tuesday as the Federal Reserve begins a two-day policy meeting where it is widely expected to raise interest rates for the fifth time since 2015.

Investors will be watching for any signals that Fed officials are more optimistic on the prospect of faster growth as lawmakers appear close to passing a large overhaul of the tax code for clues on how many further rate increases are likely next year.

People are looking for a little more confidence on the fact that tax legislation is set to pass, Sireen Harajli, a foreign exchange strategist at Mizuho in New York. The general theme is that the dollar will continue to find support as we approach the end of the year.

The dollar index hit 94.219, the highest since Nov. 14, before falling back to 94.07. The greenback rose more than 1 percent last week, its biggest weekly rise since the end of October, but is down around 9 percent this year.

DOLLAR HITS ONE-MONTH HIGHS AS FED SEEN SET TO RAISE RATES

What to expect from this week’s Fed meeting  

Investors will also be watching the Feds statement at the conclusion of the meeting on Wednesday for concern about tepid inflation.

Fed forecasters expect three additional rate hikes next year though bond markets are pricing in only two.

“Deflationary risks generally around the world are slowly receding and probably further in the rear view mirror these days than at the start of the year,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto. “Global central banks seem to be more optimistic about the outlook.”

U.S. producer price data on Tuesday showed an increase in wholesale inflation, increasing hopes that price pressures may be rising from sluggish levels.

The Labor Department said its producer price index for final demand increased 0.4 percent last month.

In the 12 months through November, the PPI shot up 3.1 percent. That was the biggest gain since January 2012 and followed a 2.8 percent rise in October.

Consumer Price Index (CPI) data on Wednesday will be a key data focus for further clues on price pressures.

DOLLAR HITS ONE-MONTH HIGHS AS FED SEEN SET TO RAISE RATES

Will the market rally run into 2018?  

The New Zealand dollar set a one-month high as investors welcomed the appointment of national pension fund chief Adrian Orr to head the Reserve Bank from March.

The kiwi was last up 0.35 percent against the U.S. dollar at $0.6934.

– https://www.cnbc.com/

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