Top Headlines

Euro Hampered by Italian Political Risk – Reuters
The euro struggled near five-month lows on Thursday as worries Italian populist parties might push for debt forgiveness from the European Central Bank triggered wider concerns about market disruption in the common currency region.

• Italy Left Waiting for a Premier as Populists’ Talks Drag On – Bloomberg
• Italy’s Bond Slump Stirs Fading Memory of Euro-Area Debt Crisis – Bloomberg

China Denounces Trade Unilateralism, Defends Free Trade – Reuters
China’s foreign minister on Wednesday took a swipe at the United States’ trade policy and defended international free trade on the basis of World Trade Organisation regulations.

UK’s Risk of Losing Euro Clearing After Brexit Eases – Reuters
The threat of clearing in euro denominated financial contracts being forcibly moved from London to the European Union after Brexit eased on Wednesday after EU lawmakers backed more detailed economic tests for relocation.

Hong Kong’s Overnight Currency Defence Costs US$1.2 Billion – South China Morning Post
The Hong Kong Monetary Authority intervened in the foreign currency market to defend the Hong Kong dollar for a second day this week on Wednesday, bringing its total purchases of the local currency since April to about HK$62.4 billion.

• Hong Kong Spends $1.2 Billion Defending Currency Overnight – Bloomberg

Turkish Central Bank Promises ‘Necessary Steps’ to Calm Lira – Financial Times (subscription)
Turkey’s central bank has moved to calm the market ructions shaking the lira, stating that “necessary steps” will be taken.

• Turkey’s Leader is Helping to Crash its Currency – Washington Post (subscription) 
• Lira’s Week of Misery Leaves Currency at Mercy of Policy Makers – Bloomberg 

Brazil Holds Rates Unexpectedly Amid Currency Selloff – Reuters
Brazil’s central bank unexpectedly kept interest rates unchanged on Wednesday, contradicting widespread forecasts of a cut after a selloff in emerging markets drove the Brazilian real to a two-year low.

Oil Hits Highest Since Nov 2014 as Brent Edges Closer to $80 – Reuters
Oil prices hit their highest level since November 2014 on Thursday, with Brent crude creeping ever closer to $80 per barrel as supplies tighten and demand remains strong.

• Why Oil Is Climbing to Level Not Seen Since 2014 – Bloomberg

Bank of England Tipped to Raise Rates in Slowing Economy – Bloomberg
Slower than expected growth this year won’t stop the Bank of England from at least one interest rate increase.

Franklin Templeton Buys $2.25bn in Argentine Bonds – Financial Times (subscription)
Cash infusion seen as vote of confidence in Argentina after currency fall.

The Need for Clarity – Profit & Loss (subscription)
The latest unfair dismissal court case in the UK highlights the need for firms to provide more clarity for their FX desks – and they might want to warn staff about their use of language.

Regulatory News

Fed’s Quarles Suggests U.S. Could Cut Foreign Banks’ Capital Requirements – Reuters
The top regulatory official for the Federal Reserve suggested Wednesday that regulators could consider lowering capital requirements for foreign banks operating in the U.S.

South Korea to Gradually Disclose Foreign Exchange Intervention Details – Wall Street Journal (subscription)
South Korea in a major policy turnaround has decided to gradually disclose details on its veiled foreign-exchange interventions to enhance transparency and ease lingering U.S. suspicion that it may be manipulating its currency to boost exports.

Esma Expected to Tighten Rules for Mifid Data Services – Risk.net (subscription)
European authorities are expected to issue guidance on how trading venues publish post-trade data. Confusion over the rules, part of a wider overhaul of transparency in Europe’s financial markets, has dogged initial attempts to release trade information.

SEC Shows Investors What a Cryptocurrency Scam Looks Like – Wall Street Journal (subscription)
Regulator launches website touting ‘HoweyCoin,’ a fake initial coin offering, to educate investors on red flags.

Company News

CLS Volumes Down in April, Up YoY – Profit & Loss
The average daily volume of trades submitted to CLS was $1.78 trillion in April, down 4.2% from March 2018, but up 17.2% year-on-year.

UBS Moves 80 Staff into Artificial Intelligence Unit – eFinancialNews (subscription)
UBS has moved 80 people into a new artificial intelligence unit designed to future-proof its fixed income division and stave off threats from tech start-ups aiming to grab market share from large investment banks.

ACI FMA to Launch New Global Code Exam – Profit & Loss
ACI – the Financial Markets Association is launching a new online version of its FX Global Code Certificate. The new exam will be available from 25 May.

Crypto News

Square’s Bitcoin Move Has Caused Internal Disagreement: CEO Dorsey – Reuters
Square Inc’s decision to allow users of its mobile app to buy and sell bitcoin this year was a “pretty contentious move within the company” and remains a source of internal tension, the payment processor’s CEO Jack Dorsey said on Wednesday.

The Internet ‘Needs a Native Currency’ and Jack Dorsey Wants to Help it Be Bitcoin – CNBC
Jack Dorsey Hopes Bitcoin Will Become Web’s ‘Native Currency’ – Coindesk

What Buffett Gets Wrong About Bitcoin – Bloomberg
The value of cryptocurrencies is ultimately going to accrue to the token, not necessarily the operating business or cash flow of the networks, Union Square Ventures’ managing partner and co-founder Fred Wilson said Wednesday.

Credit Suisse Trader Quits to Launch $30m Crypto Hedge Fund – eFinancialNews (subscription)
A former Credit Suisse foreign exchange trader has quit banking and raised $30m to launch a cryptocurrency hedge fund in Amsterdam.

Coinbase Launches Institutional Crypto Suite – Profit & Loss
Coinbase, a cryptocurrency exchange based in San Francisco, has launched a new suite of services aimed at institutional level market participants.

Market Savvy

Hedge Funds May Hold Key to Higher U.S. Bond Yields, Dollar – Reuters
The U.S. bond market is at a turning point, with the 10-year yield finally making a convincing break above 3 percent, paving the way for a more prolonged rise in U.S. borrowing costs.

Williams Says Fed’s Era of Market Hand-Holding Is Nearing an End – Bloomberg
It’s almost time for the Federal Reserve to stop holding the market’s hand. That’s the message from John Williams, president of the Federal Reserve Bank of San Francisco, who takes the helm of the central bank’s powerful New York branch on June 18.

Foreign Diversification Without the Currency Risk – MorningStar
Foreign stocks bear an additional layer of risk stemming from changes in foreign-exchange rates, making them more volatile than their U.S.-listed counterparts. But currency-hedged international-stock funds allow investors to benefit from global diversification without taking on extra risk. Currency-hedging won’t always help performance and could hurt tax efficiency, but it should consistently reduce volatility.