Top Headlines

Euro Perched at One-Week Highs Before ECB Vote – Reuters

The euro held near a one-week high before a European Central Bank meeting where policymakers are expected to outline a scaling back of bond-purchase, with analysts expecting a pause in the euro’s rally in the absence of any hawkish surprises.

The Future of QE: What to Expect from Mario Draghi – Financial Times (subscription)

ECB chief expected to give timeframe for weaning eurozone off quantitative easing.

US Dollar Slips Against Euro Before ECB Meeting – Wall Street Journal (subscription)

The US dollar fell as investors speculated that the European Central Bank will announce a reduction in its monthly bond-purchasing program as the region’s economy continues to strengthen.

Sterling Slips After Survey Reminds Traders of Weakening Consumer Spending Power – Financial Times (subscription)

The UK pound came under pressure in light trading after a government survey underlined the decline in consumers’ purchasing power.

Esma: FX Derivatives Market Worth €112.3 Trillion in European Union – FX Week (subscription)

Foreign exchange represents the second-largest derivatives market in the European Union, with a notional value of €112.3 trillion (£100.01 trillion), according to a study published by the European Securities and Markets Authority (Esma) in what is the first such snapshot of the region’s derivatives market.

LSE’s Clearing Boss: Brexit Transition Deal Needed This Year to Avoid ‘Systemic Issues’ – The Telegraph

The world’s biggest clearing house has urged the Government to come up with a Brexit transition deal this year to avoid the €850bn (£755bn)-a-day euro-clearing market from being fragmented by contingency plans.

LCH Braces for Repo Clearing Relocation – Risk (subscription)

UK clearing house aims to retain swaps clearing even if sovereign repo business relocates to the Eurozone.

Brexit to Test £17bn Tax Haul on Foreign Banks – Financial Times (subscription)

Foreign banks contributed £17bn to the UK’s public finances in the latest financial year, raising concerns about potentially significant tax losses if overseas lenders accelerate plans to shift staff and operations elsewhere in Europe.

A Question of Interpretation – Profit & Loss (subscription)

What does FX Global Code say about pre-hedging and does it need to be clearer?

Bitcoin’s Sectarian Battles Heat Up – Wall Street Journal (subscription)

Amid the rise of bitcoin imitators, a potentially even bigger disruption looms: Bitcoin itself could split next month.

McKinsey: Banks Stuck in a ‘Flat and Uninspiring Rut’ – Financial News

A failure to embrace digitisation could see investors fall even further out of love with banks, the consultancy says.

Regulatory News 

Trump Says He Is Thinking About Keeping Yellen as Fed Leader – Wall Street Journal (subscription)

President Donald Trump he still is considering offering Janet Yellen another term as Federal Reserve chairwoman when her term expires in early February.

Standards Set for FICC Hedging, Risk Management Conduct – International Finance Review (subscription)

Bond issuers and dealers must manage the hedging of their market risk solely for that purpose and not to influence pricing during deal execution.

Bankers Lament Growing Global Regulatory Fragmentation – Risk (subscription)

The post-crisis era of globally harmonised bank prudential standards co-ordinated by the Basel Committee on Banking Supervision may be drawing to a close, bank regulatory and risk specialists have warned.

Volcker Desks Unlikely to Meet FRTB Requirements – Risk (subscription)

Some trading activities will need to be reorganised to comply with market risk rules.

Company News

JPMorgan Appoints Head of FX Prime Brokerage – Financial News

The Wall Street bank said that Leah Mallas had been appointed as global head of FX prime brokerage. 

Big Bank Turns to Nasdaq for Help Running Its Currency Trading – Bloomberg

Nasdaq won its first deal to help power a bank’s currency trading, its latest attempt to branch out from its original business of running a famous stock exchange.

Barclays Profits Rise 40% Despite ‘Hard Hit’ to Trading Revenues – Financial Times (subscription)

Barclays has reported a 40 per cent jump in quarterly profits, as lower customer redress costs in its UK consumer bank offset a decline in bond and currency trading revenues at its investment bank.

OFR Launches New Monitoring Tools – Profit & Loss

The US Office of Financial Research (OFR) has launched two new tools aimed at monitoring and measuring the risks and stress levels of financial markets.

US Blockchain Start-Up Bloq to Launch Bitcoin-Like Token – Reuters

Bloq, a U.S. blockchain technology company, said on Tuesday it will launch the sale of its own crypto-currency called Metronome (MTN), which will have a predictable and autonomously managed token supply.

Market Savvy 

Mexican Peso Rallies Sharply After Banxico Steps In – Financial Times (subscription)

The Mexican peso came off a seven-month low to rally sharply after the country’s central bank stepped in to prop up the currency.

Loonie Weakens to Three-Month Lows After BoC Cautions on Further Tightening – Financial Times (subscription)

The Canadian dollar came under heavy selling pressure after the Bank of Canada held interest rates steady and officials said they would take a cautious approach to any further rate hikes going forward.

Rand Tumbles as South African Government Predicts Weaker Growth and Rising Deficit – Financial Times (subscription)

The South African rand hit its lowest level since late 2016, amid a chaotic inaugural budget presentation from the country’s new finance minister.