Top Headlines

ECB Officials Expressed Concern Over Risk of Euro Overshoot – Bloomberg

European Central Bank officials sounded the alarm at the threat of an even stronger euro, as the currency’s gains to the highest since they unveiled quantitative easing in 2015 cloud efforts to revive inflation. 

Dollar Pares Gains as Skittish Traders Focus on White House – Bloomberg

The dollar was on track to end the day slightly higher, recovering from a drop after a false report that Gary Cohn was resigning as director of President Trump’s National Economic Council.

Sterling Set for Third Weekly Loss vs. Euro as Outlook Darkens– Reuters

Britain’s pound fell against the euro and was poised for a third consecutive week of losses as a global selloff in risky assets prompted investors to cut bets after a week of tepid UK data.

Pound Undervalued Versus Euro, Says UBS Wealth Management: Chart – Bloomberg

The pound has been sandwiched between the world’s two biggest currencies since the start of the year, making it hard to gauge how markets perceive the UK as Brexit negotiations progress.

Markets Still Bewildered After China Central Bank Explains Yuan ‘X’-Factor – Reuters

A week after China’s central bank finally offered some explanation of the mysterious new ‘X’-factor it has added to its daily yuan reference rate, traders and analysts say they are none the wiser over how to make sense of it.

Big FX Bets Bunched Around Jackson Hole Meeting Next Week – Reuters

About $45 billion of currency options on the euro-dollar exchange rate are expiring in the three days leading up to the annual central banking symposium in Jackson Hole next week.

Asia Hubs Jostle for Share of FX Wallet – Euromoney

As Singapore reinforces its position as the leading FX trading centre in the Asia Pacific region, Euromoney looks at the prospects for other regional hubs.

Most Businesses Have Not Changed Strategic Planning Due to Brexit: Thomson Reuters CFO Survey – Reuters

A majority of businesses are yet to change their strategic planning due to Britain’s decision to leave the European Union, a survey of chief financial officers by Thomson Reuters showed.

Capital Savings from New IM Regime Elude Dealers – Risk (subscription)

The new initial margin requirements for non-cleared swaps have increased dealers’ funding costs, but banks say they have been unable to obtain the capital benefits as regulators are yet to approve their updated models.

FDIC Sues Barclays, RBS and Other Banks Over Libor – Financial Times (subscription)

The US has taken the unusual step of suing European banks in a London court over the Libor-rigging scandal after parts of a similar New York lawsuit failed.

Goldman’s Sketchy Case to Buy (And Then Sell) Bitcoin – Financial Times (subscription)

A Goldman Sachs analyst had predicted the price of bitcoin – currently above $4,000 -would surge in a frenzy of speculation, before going on to halve.

Regulatory News

Gary Cohn Is Suddenly the Most Important Person in Washington and on Wall Street – CNBC

As corporate America distances itself from President Trump, all eyes are on Gary Cohn to see if he’ll stay at the White House.

SEC Officials’ Holdings, Legal Work, Pose Potential Conflicts – Reuters

Two lawyers appointed to senior jobs at the US Securities and Exchange Commission have ties to major companies including financial firms Goldman Sachs Group and Wells Fargo & Co that could complicate efforts to regulate them, according to government documents viewed by Reuters.

SEC’s Clayton Breaks from Tradition – Markets Media

Clayton broke from tradition, perhaps due to the need to be more transparent to Joe Q Public, or the buy-side, or even to Congress and the industry.

Federal Reserve Swaps with Foreign Central Banks Total $36 Million in Latest Week – Reuters

The Federal Reserve provided $36 million of liquidity to foreign central banks in the latest week via its swap lines for foreign central banks, the New York Fed said.

Company News 

FX Forwards Users Drop EU Banks Over Margin Rule – FX Week (subscription)

Other dealers do not have to collect margin on physically settled forwards.

Former Harvard Money Manager Is Launching a Digital-Currency Hedge Fund – Bloomberg

Lewis Fellas, a former portfolio manager at Harvard University’s $35.7 billion endowment, is planning a hedge fund that invests in digital currencies such as bitcoin.

Some Investors See Bitcoin Better Than Gold, Morgan Stanley Says – Bloomberg

Bitcoin’s meteoric rise is leading some investors to argue that bitcoin is a better hedge against inflation and turmoil than gold, according to Morgan Stanley.

Banks Warned Off Machine Learning for Model Risk – Risk (subscription)

Banks acknowledge they “cannot hide behind a complex tool” to assess interconnectedness.

UBS Backs AI Over Blockchain for Wealth Management – Waters Technology (subscription)

Swiss banking giant focuses on intelligent machines for advisory over distributed-ledger projects.

Market Savvy

Yen Surges as Stock Market Mood Darkens – Reuters

The yen was the major mover among the G10 group of developed world currencies, gaining another half percent against the dollar as nerves over stock market valuations and the future of an eight-year global rally seeped into other assets.

Asian Currencies Subdued by Trump Woes; Philippine Peso at Yet Another 11-Year Low – Reuters

Most Asian currencies were subdued while the Philippines peso hit a fresh 11-year low, as markets shied away from riskier assets amid rising doubts about US President Donald Trump’s ability to push through his economic agenda.

In a Good Year for Asia Currencies, Philippine Peso Is Unloved – Bloomberg

Asian emerging market currencies have been having their best year since before the 2013 taper tantrum, bolstered by pace-setting growth rates and attractive yields.