Top Headlines

Deutsche Bank Walks Away from US Swaps Clearing – Financial Times (subscription)

Deutsche Bank is closing its US swaps clearing business as it battles to cut costs amid continued questions over its business model.

Peso Firms on Mexican Rate Hike Bets; Bovespa Rises – Reuters

Mexico’s peso strengthened as investors bet that the country’s central bank would hike interest rates on Thursday and as the dollar weakened on predictions that the US Federal Reserve would not raise rates.

Options Trading Points to Resurgence in Mexican Peso – Wall Street Journal (subscription)

A key measure recently signaled the most optimism on the Mexican currency since October.

Pound Climbs as Dollar Reverses Early Gains – Financial Times (subscription)

Sterling picked up to its highest level since the start of the month as the dollar reversed its early gains.

Analysts Aren’t Buying Sterling Rebound as Brexit Deadline Looms – Bloomberg

The pound fell for the fourth time in five days as currency strategists remain unconvinced by its rebound in the past month, with their forecasts for the end of the second quarter rooted at the lowest level on record.

Dollar Sags on Lower Yields; Euro Zone risk in Focus – Reuters

The dollar drooped against its peers early, hovering near a 10-week low versus the yen, with a slide in US Treasury yields amid investor flight to safety taking a toll on the currency.

Chinese FX Reserve Crosses Risky Line in Sand – Reuters

The ongoing shrinkage in China’s foreign cash stash is partly due to attempts to defend another line in the sand, namely keeping the exchange rate above seven yuan per dollar.

Russia Shows Why China Should Just Stop Burning Up Its Reserves – Bloomberg

According to Commerzbank, such intervention is futile.

Asia Waits for Trump to Turn His Focus Its Way – Financial Times (subscription)

China’s efforts to stem its intervention spend unlikely to curb manipulation claims.

Germany Wants G20 to Keep Language on Trade, Currencies, Climate: Sources – Reuters

Germany will press the Group of 20 to reaffirm its commitment to promoting free trade, resisting currency wars and fighting climate change when finance ministers meet next month for the first time since the election of Donald Trump, G20 sources said.

US Judge Says Trump Order Could Impact HSBC Executive’s UK Trip – Reuters

Mark Johnson, a British citizen who at the time of his arrest in July was HSBC’s global head of foreign exchange cash trading, had been allowed to return to England from December to January and sought permission to travel there again in March.

Why FXCM Is a Warning for the Whole FX Industry – Profit & Loss

The firm has comprehensively undermined one of the foundations of any major financial market; trust.

Market Technicals Are Bearish on Trump Trade – Financial Times (subscription)

‘Head and shoulder formation’ useful in identifying tops in assets such as forex and bonds.

Regulatory News

Trump Preparing to Nominate Commodity Futures Trading Commission’s Giancarlo as Chair – Wall Street Journal (subscription)

The Trump administration is preparing to nominate J. Christopher Giancarlo as chairman of the Commodity Futures Trading Commission, according to people familiar with the matter, elevating the former brokerage executive to the full-time head of the top US derivatives regulator.

Bank Warns ‘Lax Financial Rules’ Are a Route to Failure – BBC

The man responsible for financial stability at the Bank of England has warned against relaxing banking regulation, saying that such a move could damage the global economy.

Bank Negara Eases Forex Rules – The Star

The Central Bank of Malaysia, Bank Negara, has eased some of the restrictions in the foreign exchange market to allow for some trading of US dollar/ringgit transactions between local banks.

Australia, South Korea Extend Bilateral Currency Swap Deal – RTT News

Australia and South Korea extended their bilateral currency swap deal for another three years.

China Tells Bitcoin Exchanges to Follow Forex Rules – Wall Street Journal (subscription)

China’s central bank issued its harshest warning yet to the domestic bitcoin industry, saying that platforms trading the virtual currency risk being shut down if they skirt rules on money laundering and foreign exchange.

Company News

Bats Acquisition Nearly Complete – Markets Media

The Chicago Board Options Exchange has one last hurdle to clear before it can complete its planned acquisitions of Bats Global Markets, by the end of the first quarter.

Covert Depreciation Signals ‘Cold Currency War’, Says Pimco’s Joachim Fels – Financial Review

The Federal Reserve and Bank of England are the latest central banks to step into what Pacific Investment Management says is a new “cold currency war”.

Effex Used Last Look Tactics to Cheat FXCM Client, NFA States – FX Week (subscription)

NFA names Effex Capital as FXCM’s preferential market-maker, which used ‘hold timer’ and ‘previous quote’ practices. 

Market Savvy

Kiwi Clattered by Central Bank Steer, US Dollar Dips – Reuters

The New Zealand dollar was by far the biggest faller among major currencies, down almost a full percentage point after its central bank kept rates on hold and said any tightening might be at least two years away.

Rand on Edge Before Zuma Speech; Other Emerging Markets Firm – Reuters

Emerging stocks flirted with new five-month highs and currencies mostly firmed versus a tepid dollar, except for the South African rand which fell before the president’s annual state of the nation address.

The Australian Dollar Is Drifting Ahead of a Key Speech from the RBA Governor – Business Insider

The Australian dollar had a quiet session overnight, largely reflecting the muted moves seen in broader financial markets.