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BOJ Shock Heralds Currency War Return as Yen Drops Most in Year

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BOJ Shock Heralds Currency War Return as Yen Drops Most in Year – Bloomberg The yen dropped the most in more than a year after Bank of Japan Governor Haruhiko Kuroda unexpectedly adopted negative interest rates, risking another round of competitive devaluations.

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BOJ Stuns Market With Negative Interest Rate Surprise

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BOJ Stuns Markets With Negative Interest Rate Surprise – Reuters The Bank of Japan unexpectedly cut a benchmark interest rate below zero on Friday, stunning investors with another bold move to revive the economy as volatile markets and slowing global growth threaten its efforts to beat deflation.

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RBS Trader Fired in Currency Probe Wins Suit, But No Money

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RBS Trader Fired in Currency Probe Wins Suit, But No Money – Bloomberg A former senior trader at Royal Bank of Scotland Group Plc who lost his job amid the currency market rigging scandal won part of an employment lawsuit, but received no compensation because a London judge said he would have been fired anyway.

Fed Seen Keeping Interest Rates Steady Amid Market Volatility – Reuters The Federal Reserve is expected to leave interest rates unchanged on Wednesday and acknowledge that turmoil in financial markets threatens its upbeat view of the U.S. economy, leaving the chances of a March hike diminished but alive.

China Shares Tumble Again, Taking 2016 Losses to $2 Trillion – Reuters Chinese shares fell sharply again on Wednesday after plunging in the previous session, taking losses in 2016 to nearly 25 percent or 13 trillion yuan.

China Goes After George Soros – Fortune China’s state press is warning George Soros not to bet against its currency after the hedge fund star-turned philanthropist predicted a “hard landing” for its economy last week.

PBOC Said to Ask China Banks to Suspend Offshore Yuan Loans – Bloomberg China’s central bank gave guidance two weeks ago to some Chinese banks in Hong Kong to suspend offshore yuan lending to curb short selling and tighten liquidity.

Rates Trading Activity Keeps SEF Volumes Level – Profit & Loss On average, $380.3 billion per day was traded on swap execution facilities (SEFs) in December, roughly in line with November but up 22% from December 2014.

Automated Hedge Funds Make Millions in January’s Market Selloff – Wall Street Journal (subscription) Tumbling oil prices, decline in global stocks provide near-ideal conditions for computer-driven funds.

 

 

Regulatory News

Andrew Bailey appointed as New Chief Executive of the FCA HM Treasury have today announced the appointment of Andrew Bailey as the new permanent Chief Executive of the Financial Conduct Authority (FCA).

EU Says to Monitor, Not Regulate ‘Hyped’ Virtual Currencies – Reuters The European Union will monitor rather than regulate “hyped” virtual currencies for now, because too little is known to justify new rules beyond reining in specific risks like money-laundering.

 

 

Company News

RBS Warns of Loss After Raft of Charges – Wall Street Journal (subscription) Charges include provision for looming U.S. settlement over sale of mortgage-backed securities.

Hotspot Launches New Private Liquidity Pool Service – Profit & Loss Hotspot today announced the launch of a new service designed to allow its clients to build private FX liquidity pools.

Samsung Securities to Settle on CLS in South Korea – Profit & Loss Samsung Securities has become the first non-bank financial institution (NBFI) to join the CLS system via third party access in South Korea.

Bridgewater’s Dalio Now Has the Most Profitable Hedge Fund – Bloomberg Ray Dalio of Bridgewater Associates overtook billionaire George Soros in 2015 as the man behind the hedge fund that has made the most money for investors in the history of the industry.

Seabury, Spotex Unveil Joint Product Offering – Profit & Loss Seabury Financial Solutions has entered into an agreement for a joint product offering between its FXone execution and liquidity management solution and ECN Spotex.

CMC Seeks £736m Value as it Joins the Stock Market – The Telegraph The spread-betting group CMC Markets is seeking a value of between £678m and £794m as it prepares to join the London stock market.

ParFX Adds Currency Pairs – Profit & Loss Tradition’s ParFX has added six crosses to its list of currencies supported on the platform, including the Hungarian forint.

Eris Expands its Standard Swaps Futures Complex – Profit & Loss Eris Exchange has expanded its flagship Eris Standard US Dollar Interest Rate Swap Futures complex.

 

 

Market Savvy  

Fed Seen Keeping Interest Rates Steady Amid Market Volatility – Reuters The Federal Reserve is expected to leave interest rates unchanged on Wednesday and acknowledge that turmoil in financial markets threatens its upbeat view of the U.S. economy, leaving the chances of a March hike diminished but alive.

China GDP Growth Could Be as Low as 4.3%, Chinese Professor Says – Wall Street Journal (subscription) As growth in the world’s second-largest economy slows, the spotlight has intensified over the accuracy of China’s growth figures.

 

 

Press Releases

Intercontinental Exchange Announces Senior Management Promotions Intercontinental Exchange, Inc, a leading operator of global exchanges, clearing houses and data services, announced the following leadership appointments effective Monday, February 1, 2016, each of which will report directly to ICE Chairman and CEO Jeffrey C. Sprecher.

 

 

Industry Events

 
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China’s Central Bank Prioritizes Strong Yuan When Managing Liquidity

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China’s Central Bank Prioritizes Strong Yuan When Managing Liquidity –Wall Street Journal (subscription) China’s central bank faces a tough balancing act, trying to ease credit in the financial system without adding to pressures weakening the Chinese currency.

Desperate in Davos: Policymakers Struggle for Answers – Reuters Angela Merkel was missing from Davos this year, but the German leader’s optimistic mantra “we can do this” echoed through the snowy resort in the Swiss Alps.

Dollar Edges Down But Close to Recent Highs; Fed, BOJ in Focus – Reuters The dollar edged down on Monday but remained well off recent lows as markets started the week on a calmer note and investors turned their attention to upcoming central bank meetings.

There’s a Giant Elephant at the Bank of England – Bloomberg It’s a new year and Bank of England officials have been sharing their views on the outlook for the U.K. and the risks. Well, some of the risks.

China to Set Up its Own Virtual Currency – The Register The People’s Bank of China (PBOC), China’s central bank, hopes to launch its own virtual currency to cut the cost of handling paper money and to give the government more control of the country’s money supply.

Russian Officials Seek to Reassure Markets They Have Control Over Ruble – Wall Street Journal (subscription) Top Russian officials Friday sought to reassure markets they have control over the ruble and that its drop to all-time lows has a silver lining.    ‘

No Crisis’ Norway Holds Talks on Economic Cost of Oil’s Plunge – Bloomberg Norway’s prime minister, finance minister and central bank governor are holding an extraordinary meeting to assess just how bad the deepening plunge in the price of oil will be for the overall economy of Western Europe’s biggest petroleum producer.

 

 

Regulatory News

Kuroda Advises China to Impose Capital Controls to Defend Yuan – Bloomberg Bank of Japan Governor Haruhiko Kuroda said China should impose capital controls to defend the yuan rather than keep burning through currency reserves.

CFTC Grants Final Registration to 18 SEFs – Profit & Loss The US Commodity Futures Trading Commission (CFTC) has granted final registration to 18 swap execution facilities (SEFs). Prior to this, the SEFs had been operating under a temporary registration status.

Canadian Securities Regulators Implement Derivatives Reporting Rules – MondoVisione Securities regulators in Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Saskatchewan and Yukon (the participating jurisdictions) today announced the implementation of new Multilateral Instruments 91-101 Derivatives: Product Determination and 96-101 Trade Repositories and Derivatives Data Reporting.

U.S. Banks Cut Off Mexican Clients, as Regulatory Pressure Increases – Wall Street Journal (subscription) U.S. banks are cutting off a growing number of customers in Mexico, deciding that business south of the border might not be worth the risks in the wake of mounting regulatory warnings.

 

 

Company News

Cross Joins HSBC GAM – Profit & Loss Former head of the FX division at the Bank of England, Michael Cross, has joined HSBC Global Asset Management.

Asset Managers Need to Get Ready for a Big Tech Shift – eFinancialNews Asset management chief executives yet to develop a digital strategy should be locked in a dark room with their mobile phones until they find one.

IBM, Apple Profit Have Forex Risk as Hedges Come Off in 2016, Says Morgan Stanley – Barrons The disappointing profit outlook offered by International Business Machines (IBM) on Tuesday afternoon is a harbinger of pain to come for tech from foreign exchange this year, writes Morgan Stanley’s hardware analyst, Katy Huberty, in a note to clients.

 

 

Market Savvy  

Offshore Yuan Advances as Xinhua Claims Short Sellers Will Lose – Bloomberg The offshore yuan rose for the first time in five days after China stepped up verbal defense of its currency to ward off speculators betting on depreciation.

Market Volatility Did the Work of Four Fed Rate Hikes: Morgan Stanley – Bloomberg Volatility in financial markets since the Federal Reserve last month announced its first interest-rate increase in nearly a decade is having the same effect as four additional quarter-point hikes, according to Morgan Stanley.

Hong Kong Dollar Likely to Come Under Additional Pressure This Week – South China Morning Post The battle between currency speculators and Hong Kong Monetary Authority will remain in focus this week amid a gloomy market sentiment worldwide.

Currency Woes Lead Brazil to Offer Support for Companies – Financial Times Brazil’s central bank is helping Brazilian companies to cope with market volatility by offering programmes to hedge currency risk.

 

 

Press Releases

Falling EM Claims Lead to Lower Q3 Cross-Border Lending – BIS – Profit & Loss The latest quarterly international banking statistics from the Bank for International Settlements (BIS) show cross-border bank lending shrank for the second consecutive quarter, driven by falling claims on major emerging market economies.

 

 

Industry Events

 
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Microsoft Joins FXPA

Top Headlines

Microsoft Joins FXPA The Foreign Exchange Professionals Association (FXPA) is pleased to announce the addition of Microsoft as the newest Advisory Member of the FX trade group. “We look forward to serving as an Advisory Member, helping shape dialogue with a broad spectrum of stakeholders in the industry to maintain a strong FX market,” says Tahreem Kampton, Senior Director, Microsoft.

Hong Kong Dollar Forwards Sink to Weakest Since ’99 on Peg Bets – Bloomberg Hong Kong dollar forwards sank to their weakest level this century, interbank loan rates jumped the most in seven years and the Hang Seng Index tumbled as China’s market turmoil fueled speculation the city’s 32-year-old currency peg will end.

Hedge Fund That Called Subprime Crisis Urges 50% Yuan Drop – Bloomberg Mark Hart, the hedge fund manager whose bets against U.S. subprime mortgages and European sovereign debt proved prescient, said China should weaken its currency by more than 50 percent this year.

The Weak Spot in China’s $3.3 Trillion Foreign Reserve Stockpile – Bloomberg By almost all measures, China’s $3.3 trillion foreign reserves, the world’s largest, look formidable. Except one. Compared with the amount of yuan sloshing around in the economy, a proxy for potential capital outflows, China’s firepower seems limited.

European Experiment Comes to a Reckoning – Wall Street Journal (subscription) Stagnating growth and multiple crises show member countries’ self-interest trumps the cohesion of the union.

 

 

Regulatory News

Brazil Central Bank Cast Doubt on Rate Hike as Outlook Worsens – Reuters The Brazilian central bank on Tuesday signaled that a worsening recession could force it to abandon plans to aggressively raise interest rates to battle inflation at a 12-year high.

European CCPs Start Publishing Quant Data – Profit & Loss The European Association of CCP Clearing Houses (EACH) today announced that central counterparties (CCPs) are publishing a broad set of quantitative data on their websites in compliance with the international guidance provided by the Committee on Payment and Market Infrastructures and the International Organization of Securities Commissions (CPMI-Iosco).

 

 

Company News

Kraken Acquires Two Rival Bitcoin Exchanges – Profit & Loss San Francisco-based bitcoin exchange, Kraken, is set to acquire two other bitcoin exchanges, Coinsetter and Cavirtex.

 

 

Market Savvy  

Stocks Slide on Oil Rout – Wall Street Journal (subscription) Global stocks resumed their recent selloff as oil prices sank to a 12-year low and resurgent concerns about global growth snapped a brief bout of stabilization in financial markets.

Developed Economies Likely to Benefit While Emerging Economies Likely to Suffer in Fourth Industrial Revolution – UBS UBS today released a white paper titled Extreme automation and connectivity: The global, regional, and investment implications of the Fourth Industrial Revolution at the World Economic Forum Annual Meeting 2016 in Davos, Switzerland.

BoE’s Carney Says Tightening Still Unwarranted – Profit & Loss Bank of England Governor Mark Carney says that current market conditions do not yet warrant a tightening of monetary policy and that recent developments, both domestic and global, suggest that the Bank’s long-held inflation target will take longer to achieve than originally thought.

Saudi Arabia Said to Ban Betting Against Its Currency – Bloomberg Saudi authorities ordered banks to stop allowing cheap bets on a currency devaluation, according to five people with knowledge of the matter.

Ruble Trades at Record Low as Oil Collapse Eclipses Sanctions – Bloomberg The ruble plunged to a record low as the collapse in crude weighed on the world’s biggest energy exporter.

 

 

Press Releases

ITG Names Minder Cheng as Chairman of Board of Directors and Frank Troise Starts as CEO, President and Board Member – ITG ITG, a leading independent broker and financial technology provider, announced that Minder Cheng has been appointed Chairman of its Board of Directors and Frank Troise has joined the company as Chief Executive Officer, President and member of the Board of Directors, effective January 15, 2016.

 

 

Industry Events

 
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FXPA Welcomes Microsoft as Newest Member

The Foreign Exchange Professionals Association (FXPA) is pleased to announce the addition of Microsoft as the newest Advisory Member of the FX trade group. “We look forward to serving as an Advisory Member, helping shape dialogue with a broad spectrum of stakeholders in the industry to maintain a strong FX market,” says Tahreem Kampton, Senior Director, Microsoft. Read More