Top Headlines

Euro Falls Below $1.16 for First Time Since Late 2017 – Financial Times (subscription)

The euro slipped below the $1.16 level for the first time since November 2017 after a sell-off in the Italian debt market ricocheted into forex trade.

The Euro Must Be Made More Robust to Rival the Dollar – Financial Times (subscription)

US sanctions expose the mistakes made by the founders of the single currency.

Sterling Slides to Lowest Since November as Dollar Extends Rally – Reuters

The pound fell to a six-month low against a rallying dollar, while it held its own against a euro dragged down by concerns about a deepening political crisis in Italy.

African Finance Leaders to Debate China’s Yuan as a Reserve Currency: Xinhua – Reuters

Central bankers and officials from 14 African nations will discuss the viability of using China’s yuan as a reserve currency for the region, the official Xinhua news agency said.

Lira Rallies After Turkish Central Bank Simplifies Rate Regime – Financial Times (subscription)

The lira climbed vigorously against the dollar, recovering some of last week’s sharp losses, after Turkey’s central bank unveiled changes aimed at simplifying its monetary policy.

FX Abuses Persist Even After $10 Billion in Fines, Traders Say – Bloomberg

Add Andy Maack of Vanguard Group to the list of a dozen or so executives who say that routine misbehavior in the $5.1 trillion-a-day FX market persists even after banks paid $10 billion in penalties and a trader was sent to prison.

G10 FX Revenues Hit Two-Year Highs: Coalition – FX Week (subscription)

The first quarter of 2018 saw a reversal of revenue contraction seen in the last two years, with profits up 20%.

Treasury and BoE Clash Over City of London Regulation After Brexit – Financial Times (subscription)

The Treasury and Bank of England are at loggerheads over the future of City of London regulation after Brexit, with claims that relations on the issue are now “very, very bad”.

Regulatory News

Three Asian FX Fixings Threatened by Benchmark Rules – Risk (subscription)

European regulations would block use of fixings that account for 40% of LCH NDF volumes.

BoE: UK Banks Falling Short on Stress-Test Model Risk – Risk (subscription)

The Bank of England’s recent guidance on model risk management standards for stress-test models was prompted by concern about weak governance at some UK lenders, a senior executive at the Prudential Regulatory Authority has said.

Fed’s Powell Says Central Banks Can’t Take Independence for Granted – Wall Street Journal (subscription)

An erosion of public trust in institutions could threaten the independence of central banks and requires greater transparency and accountability from policy makers following the 2008 financial crisis, Fed Chairman Jerome Powell said.

Banks Won Big in Washington. What It Means for Investors – Wall Street Journal (subscription)

The financial-deregulation bill passed by the US Congress is the latest phase in the eternal tug-of-war between regulators and banks.

Regulators Rebuff Fragmentation Complaints – Risk (subscription)

Leading regulators have sought to dispel industry concerns that global prudential regulation is in danger of fragmenting along national lines, making it harder to manage cross-border balance sheets.

FX Global Code of Conduct Recognised by Singapore Monetary Authority – Finance Magnates

Slowly but surely all FX market participants are expected to adhere to the code a year after its launch.

Company News

BAML Makes Two Senior Hires – Profit & Loss

Bank of America Merril Lynch (BAML) has hired Justin Brill as its new global head of FX prime brokerage (FXPB) and Jeremy Lee as a relationship manager.

NEX Markets Adds Bloomberg FX Benchmark to Matching Service – The Trade

Foreign exchange and fixed income electronic trading services provider NEX Markets has added the Bloomberg FX benchmark to its eFix Matching service.

CCPs Incur Fewer Margin Breaches in 2017 – Risk (subscription)

LCH reports 399 fewer breaches than in 2016; DTCC 156.

MarketFactory Launches Pre-Trade Limit Tool – FX Week (subscription)

Reflector monitors and balances the limits and positions across all trading venues.

Isda Faces Member Backlash on Margin Lobbying – Risk (subscription)

The International Swaps and Derivatives Association is trying to contain a member backlash following its publication of an academic paper that calls for a rethink of the way initial margin is calculated under new rules for non-cleared derivatives.

Crypto News

London Remains Wary of Jumping on Crypto Bandwagon – Financial Times (subscription)

For a financial centre that still dominates the $5tn-a-day global foreign exchange market, London’s reluctance to embrace cryptocurrencies will ultimately prove a blessing, or a costly mistake.

Can the Biggest US Bitcoin Exchange Win Over Wall Street? – Wall Street Journal (subscription)

Coinbase’s growth surged as small investors piled into bitcoin; now it is trying to attract hedge funds.

Wall Street Crypto Firm Joins FIX Trading Community – The Trade will work with FIX Trading Community to bring institutional money to crypto markets.

The Jabberwocky World of Bitcoin – Financial Times (subscription)

Clear Leisure, a minnow with a technicolour history, is digging into cryptocurrency mining.

Market Savvy

Traders Look for Clues About the Emerging-Market Currency Bounce – Bloomberg

For all the concern that there’s a crisis brewing in some developing economies, emerging markets are showing resilience going into the final week of May, thanks to the dollar’s recent pause and a drop in US yields.

India’s Correlation with Global Markets Approaches 10-Year Low – Bloomberg

The weighted average correlation of India’s currency, bonds and stocks with those in other global economies fell to 0.32 last month, approaching a more than 10-year low of 0.29 set in November.

Bank Indonesia’s Call for Special Meeting Welcomed by Investors – Bloomberg

Rupiah, JCI and bonds all rally as BI set to meet Wednesday.