‘We Are in a Currency War, But Nobody Has Admitted It,’ Strategist Says

‘We Are in a Currency War, But Nobody Has Admitted It,’ Strategist Says – CNBC

Central banks are currently embroiled in a covert currency war which is causing stagnation in foreign exchange markets, according to Thanos Vamvakidis, the global head of G-10 FX strategy at Bank of America Merrill Lynch.

Britain is Bracing for an Economic Shock as No-Deal Brexit Draws Closer – Daily Telegraph

Get ready for a humdinger of an economic shock. That in any case is what policymakers at the Bank of England and the Treasury are doing.

As Fed Nears Rate Cut, Policymakers Debate How Deep, and Even If – Reuters

With the first U.S. interest rate reduction in a decade expected later this month, two Federal Reserve policymakers sketched out arguments on how deep the cut should be, even as a third said she needs more data before being ready to sign on at all.

Germany’s Von der Leyen Secures Powerful EU Executive Top Job – Reuters

Germany’s Ursula von der Leyen secured European parliamentary approval on Tuesday to become the first female European Commission president on a platform of a greener, fairer and rule-based Europe.

China’s Holdings of US Treasuries Dip for the Third Straight Month to a Two-Year Low – South China Morning Post

China’s holdings of US Treasuries including notes, bills and bonds fell by US$2.8 billion in May to US$1.11 trillion. The dip in May was the third consecutive month of declines, leaving China’s holdings at the smallest since May 2017.

US, Japan Eye Possible Small Trade Deal by September – Reuters

The United States and Japan are working on a trade deal involving agriculture and autos that could be agreed by President Donald Trump and Prime Minister Shinzo Abe when they meet in New York in September, three industry sources familiar with the discussions said.

Regulatory News

Reinvent International Monetary Order or Face Chinese Dominance: France – Reuters

France’s finance minister said the post-war international monetary order needed to be reinvented or become increasingly dominated by China.

Australia Bank Watchdog Faces Funding Challenge as it Gets New Powers – Reuters

Australia’s banking watchdog vowed to be tougher with the entities it oversees but needs more funds to carry out its work, its chairman said, after a government report recommended the regulator be more forceful and less discreet.

Lagarde Resigns as IMF Chief, Starting Race for Her Successor – Reuters

International Monetary Fund chief Christine Lagarde submitted her resignation from the global crisis lender on Tuesday, citing more clarity about her nomination to lead the European Central Bank as European legislators approved a new top bureaucrat.

HSBC Lifts Ban on Personal Mobile Phones for Traders – Financial News

Regulators have been pushing banks to ensure they have appropriate controls in place around the use of personal devices.

Participants Should “Avoid” Eonia – ECB Working Group – FOW

The euro risk-free-rates working group said participants should “avoid entering into new contracts referencing Eonia”.

Crypto News

Bitcoin Tumbles as US Senators Grill Facebook on Crypto Plans – Reuters

The cryptocurrency market took a beating on Tuesday with bitcoin losing over 10% in value after US lawmakers grilled Facebook on its cryptocurrency plans, as political and regulatory scrutiny of digital coins intensifies.

Donald Trump’s Bitcoin Takedown Signals Global Currency War – Yahoo Finance

US President Donald Trump’s tweet attacking bitcoin highlights his increasing interest in controlling global currency markets — an interest that could create a “new world order” in foreign exchange.

G-7 Finance Chiefs to Tackle Cryptocurrency Risks, Digital Tax at Paris Summit – Marketwatch

Finance officials from the Group of Seven rich democracies will weigh risks from new digital currencies and debate how to tax tech companies like Google and Amazon when they meet at a chateau north of Paris.

Tether’s $5 Billion Error Exposes Crypto Market’s Fragility – Wall Street Journal

Investors got a reminder that the market infrastructure for trading cryptocurrency is still under construction.

Are Hedge Funds Placing a Big Short in Booming Bitcoin? – Financial News

Hedge funds and other big traders are betting that bitcoin will fall, even as the digital currency has risen above $10,000 on a new wave of crypto-optimism.

Company News

CTAs Bounce Back in June – Profit & Loss

Commodity Trading Advisors posted a 1.59% return in June, according to the Barclay CTA Index compiled by BarclayHedge.

Global Headwinds Drive $23 Billion in Cumulative FX Losses for North American Companies – Yahoo Finance

Ongoing market volatility stemming from Brexit, trade wars, and other supply chain disruptions resulted in $23.39 billion in foreign exchange losses for publicly traded North American companies during the first quarter of 2019, according to the new Kyriba Currency Impact Report.

Global Macro Hedge Funds Struggle to Regain Top Form – Financial News

Global macro, the hedge-fund style that made George Soros and Alan Howard famous, is struggling to recover from a dire 2018 — with one investor lamenting that top funds are “just not there any more”.

The Lawyer Thrust into the Front Line of Deutsche Clean-Up – Financial Times

Stefan Simon advised the bank on Libor scandal — now he is its head of regulation.

Tech Giants Draw Fire in Congress – Wall Street Journal

Concerns about the power of the major technology companies echoed across the nation’s capital on Tuesday, with politicians in both parties demanding more regulatory scrutiny of the tech giants’ reach and plans for expansion.

Market Savvy

Time for ECB to Admit its Existing Policy Arsenal is Exhausted – Financial Times

Who does the European Central Bank work for? It sounds like an absurd question, but the market finds itself in an absurd situation. The soft patch in Europe has investors clamouring for the ECB to act — yet not one of those same investors believes interest rate cuts or quantitative easing will have a beneficial impact.

Thai Central Bank Says Cutting Policy Rate May Not Have Much Impact – Reuters

Thailand’s real interest rates are low compared with those of its regional peers, so cutting the benchmark rate may not have much impact, the central bank said.

Does Investing in Emerging Markets Still Make Sense? – Financial Times

Two controversial departures of high-ranking technocrats in the space of three days, one in Ankara, the other in Mexico City, have served as reminders of the high-risk nature of investing in emerging markets.

Attacks by Trump Risk Damaging the Fed’s Credibility

Top Headlines 

Attacks by Trump Risk Damaging the Fed’s Credibility – Financial Times (subscription)

Investors have been remarkably calm about the mounting political pressures on the Federal Reserve, the world’s most important central bank, in sharp contrast to what has been seen historically in advanced countries, and to what emerging economies continue to experience.

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Will Currency Traders’ Brexit Bets Reflect Pessimistic Europe?

Top Headlines

Will Currency Traders’ Brexit Bets Reflect Pessimistic Europe? – Financial Times

Sterling markets and Europe’s policymakers clearly do not see eye to eye. Analysts say that the positive risks to the currency now outweigh the negatives, while continental European officials say preparations for the UK crashing out of the single market without a deal are under way.

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So Bad It’s Good: Markets See Silver Lining in Brexit Rejection

Top Headlines

So Bad It’s Good: Markets See Silver Lining in Brexit Rejection – Bloomberg

Prime Minister Theresa May’s record defeat in Parliament over her Brexit divorce deal provoked a curious response from markets: Optimism.

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Volatility: How ‘Algos’ Changed the Rhythm of the Market

Volatility: How ‘Algos’ Changed the Rhythm of the Market – Financial Times (subscription)

Philippe Jabre was the quintessential swashbuckling trader, slicing his way through markets first at GLG Partners and then an eponymous hedge fund he founded in 2007 — at the time one of the industry’s biggest-ever launches. But in December he fell on his sword, closing Jabre Capital after racking up huge losses. The fault, he said, was machines.

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