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.

Currency War: US Hedge Funds Mount New Attacks on China’s Yuan – Wall Street Journal (subscription) Some of the biggest names in the hedge-fund industry are piling up bets against China’s currency, setting up a showdown between Wall Street and the leaders of the world’s second-largest economy.

El-Erian Says Countries Weakening Currencies in Fight for Global Growth – Reuters Mohamed El-Erian, the chief economic advisor at Allianz, said on Friday the Bank of Japan’s shocking move to take one of its main interest rates into negative territory underscored the country’s hope to weaken the yen to re-inflate its economy.

Currency Managers Close Out Tough Year on a Negative – Profit & Loss While currency managers were able to point to positive returns for 2015 a decline in performance in December put the stamp on a downbeat 2015, with the Parker FX Index falling 0.51% on a reported basis and 0.23% on a risk-adjusted basis.

‘Seismic’ Shock Awaits Bond Liquidity – Financial Times (subscription) Fund managers have made a last-ditch attempt to convince European regulators to water down proposed trading rules designed to prevent a repeat of the market turmoil encountered during the financial crisis.

Where is China’s Central Bank Chief? – South China Morning Post Doubts over yuan’s direction grow, but no-one’s seen or heard from Zhou Xiaochuan.

FX Prime Brokerage Enters New Era – Euromoney The past 12 months have seen fees rise in FX prime brokerage, with many admitting there is probably more to come this year – but it has not all been bad news for clients, with the business benefiting from innovation, with technology, and particularly risk-management systems, an increasing priority among providers.

The New Threat to Bank-to-Bank Lending – Wall Street Journal (subscription) A dispute over technology could pose a new threat to Wall Street’s plumbing by severing a link that allows big banks to borrow freely from one another, according to market participants.

 

 

Regulatory News

Barclays, Credit Suisse Strike Record Deals with SEC, NY Over Dark Pools – Reuters Barclays and Credit Suisse have settled federal and state charges that they misled investors in their dark pools, with Barclays admitting it broke the law and agreeing to pay $70 million, federal and New York state officials said on Sunday.

Are Regulators Holding Back Digital Currency? – American Banker (subscription) Federal and state banking regulators are still struggling with how to come to grips with banks whose clients are heavily involved in digital currencies like bitcoin — and that may be curbing interest from many in the financial industry.

Federal Reserve Board Extends Comment Period to March 21, 2016, for Proposed Policy Statement Detailing the Framework the Board Would Follow in Setting the Countercyclical Capital Buffer (CCyB) The Federal Reserve Board on Friday extended until March 21, 2016 the comment period for the proposed policy statement detailing the framework the Board would follow in setting the Countercyclical Capital Buffer (CCyB).

The Financial Policy Committee’s Framework for the Systemic Risk Buffer (SRB) As part of the legislative package implementing the recommendations of the Independent Commission on Banking in the UK, the Financial Policy Committee (FPC) is required to produce a framework for a systemic risk buffer (SRB) for ring-fenced banks and large building societies.

Dismissed ANZ Trader Drops Unfair Dismissal Claim – Profit & Loss One of two former ANZ traders who were suing the bank for unfair dismissal has dropped his claim.

 

 

Company News

Tullett Prebon Increases Job Cuts at Brokerage to 70 People – Bloomberg Tullett Prebon Plc, which is buying rival ICAP Plc’s voice-broking division, said it will reduce headcount in its interdealer business in Europe and North America by about 70 people, more than than the job cuts it announced in November.

BoJ Surprise Helps Platforms – Profit & Loss The surprise rate cut by the Bank of Japan provided FastMatch and Hotspot with a strong end to January, with both platforms seeing their busiest day of the year so far.

Blythe Masters and JPMorgan Trial Blockchain Project – Financial Times (subscription) JPMorgan Chase has begun a trial project using blockchain as it seeks to lead banking-industry efforts to cut the cost and hassle of trading.

HSBC to Freeze Hiring, Salaries in 2016 Amid Cost Reductions – Bloomberg HSBC Holdings Plc will impose a hiring and pay freeze this year as part of its drive to cut as much as $5 billion in costs by the end of 2017.

 

 

Market Savvy  

Yuan Vs. Yen: How China Figures Into Japan’s Negative Rates – Wall Street Journal (subscription) Japan’s move to negative interest rates is the latest step in a dangerous dance between the world’s second and third largest economies.

What if the Fed Hikes, Leaves Rates on Hold…or Cuts? The future path of US interest rate policy remains a major source of uncertainty for global markets, with the rates market far more dovish than analysts and in particular FOMC members. Someone will ultimately be proven wrong and this will impact asset prices, including the dollar.

Fed Will Be Patient on US Policy Given Global Risks: Kaplan – Reuters The Federal Reserve will be patient as it decides how trouble overseas could hit the U.S. economy, a Fed policymaker said in an interview, suggesting the central bank will be slower to raise interest rates this year.

Yen Feels the Chill of Sub-Zero Rates, Euro Wobbly – Reuters The yen nursed broad losses on Monday and the euro was also on the defensive after the Bank of Japan adopted negative interest rates and sent bond yields sliding across the globe and particularly in Europe.

Aussie’s Plunge to Seven-Year Low Is Turning Out to Be a Blessing – Bloomberg The Australian dollar’s plunge to a seven-year low is turning out to be a blessing as China steers its slowing economy away from the heavy industries that helped fuel a mining boom Down Under.

 

 

Press Releases

trueEX Completes First Electronic Mexican Peso Swap Trades for Institutional Investors trueEX, the fastest growing swap execution facility (SEF), has created another industry innovation with the execution of the first dealer to client Mexican peso (MXN) interest rate swaps trades on its award-winning platform.

LCH Attains Singapore Recognition – Profit & Loss LCH.Clearnet has been formally granted the status of Recognised Clearing House by the Monetary Authority of Singapore (MAS).

 

 

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