Top Headlines

BIS Paper: Should FX Swaps be Visible on Balance Sheets? – Profit & Loss

A new paper published by the Bank for International Settlements (BIS) asks the question, what would balance sheets look like if the borrowing through FX swaps and forwards were recorded on-balance sheet, as the functionally equivalent repo debt is?

Global Central Banks Can’t Ignore the Bitcoin Boom, BIS Says – Bloomberg

The world’s central banks can’t ignore the growth in cryptocurrencies and may at some point have to consider whether it makes sense for them to issue their own digital currencies, according to the Bank for International Settlements.

HSBC Jury to Weigh If Forex Trader Was Front-Running or Hedging – Bloomberg

HSBC Holdings code-named a $3.5 billion currency trade “Project Shine” and swore traders to secrecy to reassure its client it would get the best price.

Dollar Hits Eight-Week High vs. Yen as Traders Wait for Fed Signal – Reuters

The dollar hit an eight-week high against the yen, supported by a rise in US Treasury yields, as traders eyed a Federal Reserve meeting starting the next day for clues on whether interest rates could rise again by year-end.

Sterling Retreats from 15-Month Highs Before BoE Governor’s Speech – Reuters

Sterling hit a 15-month high against the dollar before retreating a notch as investors wound back some of last week’s bets on a Bank of England rate rise ahead of a speech by the central bank’s governor Mark Carney.

HSBC: ‘We Were Wrong’ on Bearish Sterling Call – Financial Times (subscription)

HSBC has conceded “defeat” on its call for a drop in the pound to $1.20, saying that the currency “has happily ignored the political intrigue of Brexit throughout 2017.”

Pain Trade to Turn to Joy for EM Investors Calling Euro Top – Bloomberg

BNP Paribas Asset Management, Amundi and Fidelity International are seeing opportunities in betting on a weakening euro to profit from attractive carry in emerging-market currencies.

Target2 Balances Reflect Euro Area’s Potential to Be Better Than Traditional Exchange Rate Peg Regime – Financial Times (subscription)

The intriguing aspect is that each national central bank in the euro area can borrow from – or lend to – the rest of the system through the Target2 network.

Are We Really Seeing Unprecedented Events in FX? – Profit & Loss (subscription)

This 25th anniversary highlights how little market behaviour has really changed.

What the Surging Yuan Means for China’s Economy – Bloomberg

The yuan’s surge this year is proving a double-edged sword, risking hurting the nation’s exports even while boosting the chances of currency and capital control reforms.

The Cycle of Opportunity – Profit & Loss (subscription)

It remains fashionable to deride the famous quote from New York Yankees’ legend Yogi Berra who once said, “It’s déjà vu all over again”, but in financial markets’ circles the admittedly mangled aphorism has value because technical analysis is very much the study of repeat events and economists expend much energy talking about an economic cycle.

Think Tank Sessions Highlight Day One at Forex Network Chicago – Profit & Loss

More than 500 are already registered for Profit & Loss Forex Network Chicago, the biggest two-day FX conference in the industry. 

Regulatory News

ECB Nouy: Banks Have Plenty of Scope to Evade Rules – Wall Street Journal (subscription)

ECB Supervisory Board chair wants European authorities to take tougher line on banking regulations.

EU to Make Banks Pay to Centralize Markets Supervision – Reuters

The European Union wants to centralize market supervision and make banks pay for it, the bloc’s financial services chief said, signaling how it will seek to regroup after Britain leaves.

Investors Left in the Dark Over the Shape of a ‘Trumpian’ Fed – Financial Times (subscription)

Job openings at US central bank give president the option to reshape it.

Brexit Kicks EU Financial Transaction Tax Into the Long Grass – Bloomberg

The 10 European Union countries still plotting a tax on financial transactions tied the proposal’s fate to the outcome of the Brexit negotiations, pushing any decision on the six-year-old plan even farther into the indefinite future.

SEC Is Set to Monitor Digital Coin Sales as Market Tops $2 Billion – Bloomberg

The US Securities and Exchange Commission warned the industry in July that if these tokens are effectively securities such as stocks or bonds, they must be registered with the regulator. 

What Is Mifid II and How Will It Affect EU’s Financial Industry? – Financial Times (subscription)

Far-reaching rules will have a big impact on everything from banks to brokers.

Company News

We Asked Four Global Banking Bosses What They’re Doing About Brexit. Here’s What They Said – CNBC

As UK Prime Minster Theresa May prepares to relaunch her Brexit strategy, global banking bosses meeting nearly 7,000 miles away from London are drawing their own road maps in the event she fails.

US Super-Regionals Step Up FX game – FX Week (subscription)

Citizens Bank and SunTrust Bank have been expanding and investing more in their FX platforms and talent.

CME to Exit CDS Clearing Business, Cedes Ground to ICE – Financial Times (subscription)

CME Group will no longer clear credit default swaps, ceding ground to rival Intercontinental Exchange in a business established after the financial crisis.

China’s Bitcoin Gloom May be Hong Kong’s Boon as Crypto Issuers Switch to City’s Exchanges – South China Morning Post

China’s clampdown on cryptocurrencies and the subsequent trading halts on a number of crypto exchanges have caught hundreds of mainland investors unaware and unprepared, driving some entrepreneurs to seek alternative listing of their tokens in Hong Kong to raise funds.

Market Savvy

China’s Yuan Inches Up After Last Week’s Biggest Slide Since November – The Business Times

China’s yuan edged up against the US dollar, following the central bank’s fixing of a slightly firmer midpoint.

Bitcoin Surges 30% from Friday’s Lows – Financial Times (subscription)

And we’re back. It looked on Friday as though the much-discussed bitcoin bubble was bursting spectacularly, with the currency sliding below $3,000 – now it’s back to almost $4,000.