Top Headlines

China Changes CFETS Currency Basket for Calculating Yuan Index – Reuters

China will change the way it calculates a key yuan index in the new year, nearly doubling the number of foreign currencies in a basket that is used to set the yuan’s value, its foreign exchange market operator said.

Offshore Yuan Slides to Fresh, Modern Era Low Against Dollar – South China Morning Post

The offshore yuan in Hong Kong dropped to a fresh low morning as it broke 6.98 per US dollar.

What It Means if Trump Names China a Currency Manipulator – The New York Times

President-elect Donald Trump has vowed to name China a currency manipulator on his first day in the White House.

Dollar Retests 14-Year High as Euro Drops to Near 2016 Low – Bloomberg

The dollar rose to its highest of the week before paring gains slightly, trading within striking distance of the December 20 high that was the highest since 2002 as measured by the DXY index, amid sometimes choppy price action, thin liquidity and sporadic order flow.

Sterling Hits Two-Month Low as Dollar Gains – Reuters

Expectations US inflation and growth will outstrip the rest of the developed world’s prodded the dollar higher across the board, knocking half a cent off the euro and driving sterling to a two-month low.

Russia’s Rouble Outperforms Major Currencies – Financial Times (subscription)
Rising oil price and hopes of warmer relations with west boost currency against dollar

Most Asian Currencies Firmer After US Bond Yields Slip – Reuters

Most Asian currencies inched higher, getting some respite as US bond yields declined and the dollar lost a bit of steam.

Thai Capital Outflow Muted Amid Ringgit Rout – Bangkok Post

A large foreign reserve buffer, sound economic fundamentals, low exposure to foreign debt and limited foreign holdings of local bonds and equities will help Thailand avoid following in the footsteps of the ringgit rout and massive capital flight from Malaysia, say economists and market experts. 

Romanian Currency Close to Three-Year Low Against Euro as Political Crisis Takes Center Stage – Business Review

With negotiations for the formation of a new government at a standstill, the Romanian RON took a battering against the main foreign currencies.

Mexico, What to Expect on Financial Markets in 2017 – Seeking Alpha

MXN/USD rate could rise, while bond prices might fall due to inflation.

These Currencies Got Crushed in 2016 – CNN

2016 has been a roller coaster of a year and currency markets are no exception.

Regulatory News

Former Bundesbank President Hans Tietmeyer Dies – Financial Times (subscription)

Champion of euro project was ambivalent about way currency union was implemented.

Obama Administration Makes Closing Argument Before Trump Deregulatory Tide – Wall Street Journal (subscription)

Rolling back Dodd-Frank would make it harder to prevent another financial crisis, Treasury’s Jacob Lew says.

Basel IV – A Timeline – Risk (subscription)

How Basel’s plans to tighten control over banks’ internal models have evolved since 2014.

Flash Boys and High Frequency Trading: Trust Markets, Not Regulators – Forbes

Regulators not only failed to protect investors, but they cannot be counted on to protect investors.

Company News

FX Person of the Year 2016 – Profit & Loss

There are a few stand-out candidates, but who is most deserving of the accolade?

Yen Forecasts for 2017 Suggest Another Wild Ride – Wall Street Journal (subscription)

Some 81 outlooks put the Japanese currency from ¥97 to ¥128 to the dollar at the end of next year.

SocGen Sees USD Supply Shortage as Playing Negative – Pound Sterling Live

A dwindling supply of dollars in international FX markets, due to falling FX reserves, is providing underpinning support for the dollar into the end of the year, says Societe Generale’s FX strategist Kit Juckes.

Market Savvy

Dollar Retreat Lifts Emerging Assets; Rouble Near 14-Month High – Reuters

A dollar retreat helped emerging stocks rise to 10-day highs and currencies strengthened, led by the rouble which appeared on the cusp of breaking under 60 per dollar for the first time in 14 months.

C$ Modestly Stronger as Oil Remains Firm – Reuters

The Canadian dollar firmed slightly against its US counterpart as the price of oil, a key Canadian export, held near highs not seen since 2015.

Rupee Strengthens Against US Dollar on Asian Cues – Live Mint

The rupee was trading at 68.12 per US dollar—up 0.18% from its previous close of 68.24.