Currency Markets Braced for Janet Yellen’s Words

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Top Headlines

Currency Markets Braced for Janet Yellen’s Words – Financial Times (subscription)

A jittery currency market is braced for further volatility on Wednesday when Janet Yellen, the Federal Reserve chair, delivers her semi-annual testimony on the outlook for the economy before Congress.

FX Now: The Changing Dynamic – Tabb Forum

The foreign exchange industry is facing fundamental changes to how it operates. With the fallout from scandals continuing to impact, impending changes to how capital is assessed to trading businesses, a changing liquidity paradigm, and the desire on the part of the authorities to deliver a truly global code of conduct, the industry faces a period of unprecedented disruption.

Mexico Peso Hits Record Low, Analysts Blame Bondholders – Reuters

Mexico’s peso sank to a record low on Tuesday, pressured by what analysts described as bets against riskier assets in general and a move by investors to hedge big positions in local bonds.

Bank of Japan Seeks to Change Mindsets with Negative Rates – Financial Times (subscription)

Disregard the naysayers: negative interest rates underline BoJ’s goal of beating deflation

Polish Central Bank: FX Loans Conversion Could Cost Up To $11.2 bln – Reuters

Poland’s proposed conversion of Swiss franc loans may cost banks up to 44 billion zlotys ($11.2 billion) and knock down the zloty and Polish sovereign ratings, the central bank said on Wednesday in a regular financial sector stability report.

Central Banks Make Global Economy Vulnerable, OECD’s White Says – Bloomberg

Central banks’ ultra-loose monetary policy is putting the world economy at risk, said William White, a senior adviser to the Organization for Economic Cooperation and Development.

Regulatory News

EU Probes Suspected Rigging of $1.5tn Debt Market – Financial Times (subscription)

European regulators have opened a preliminary cartel investigation into possible manipulation of the $1.5tn government-sponsored bond market, in the latest efforts to root out rigging involving financial traders.

US Bankruptcy Court Set to Weigh in on Bitcoin’s Currency Status – Coindesk

A California bankruptcy court is set to weigh in on whether bitcoin should be considered a currency.

CFTC $80m Funding Increase Requested – Profit & Loss

The US President’s office is requesting an $80 million increase in the Commodity Futures Trading Commission’s (CFTC) budget for the fiscal year 2017.

Company News

Goldman Sachs Consolidates E-Trading Assets and Capabilities – Financial Times (subscription)

Goldman Sachs has created a new internal group combining its automated trading activities, as banks grapple with how to stay competitive in increasingly computer-driven financial markets.

Western Union CFO Transfers Cash Back to Shareholders, Despite FX Hit – Wall Street Journal (subscription)

A rocketing U.S. dollar took a bit of the shine off Western Union Co.’s results, but higher dividends are proof the money-transfer company’s business is thriving, said finance chief Raj Agrawal.

Goldman Sachs Abandons Five of Six ‘Top Trade’ Calls for 2016 – Bloomberg

Goldman Sachs to clients: whoops. Just six weeks into 2016, the New York-based bank has abandoned five of six recommended top trades for the year.

ICAP CEO Spencer Bets on Speed Traders – Bloomberg

The chief executive officer of ICAP Plc, which reported a 7 percent drop in revenue from electronic markets, says high-frequency trading firms such as Citadel LLC and Virtu Financial Inc. will help to make up for reduced trading from banks.

Market Savvy 

Currency Check: How Much Stronger Can the Yen Get? – Bloomberg

Claudio Piron, co-head of Asia rates and FX strategy at Bank of America Merrill Lynch, discusses the yen strengthening against the US dollar, Japan’s 10-year bond yield falling below zero and China’s currency reserves.

Emerging markets hit by commodities, credit and currencies: Kemp – Reuters

The global economy is being hit by a slowdown in growth, large swings in exchange rates and tumbling commodity prices.

How Low Can Central Banks Go? JPMorgan Reckons Way, Way Lower – Bloomberg

There are “no limits” to how far central banks can ease monetary policy.

Press Release

FCA Fines Former Head of JP Morgan’s CIO International £792,900 for Failing to be Open and Co-operative

The Financial Conduct Authority (FCA) has today fined Achilles Macris £792,900 for failing to be open and co-operative with the Authority.

FXCM Reports Monthly Metrics

FXCM today announced certain key customer trading metrics for January 2016 for its retail and institutional foreign exchange business.

SGX Reports Market Statistics for January 2016

Total FX Futures volume was 522,933, up 23% month on month and up 119% year on year.

Industry Events