Top Headlines

Fast FX Moves Raise Liquidity Worries – Financial Times (subscription)
In recent months a series of dramatic and unforeseen intraday fluctuations – even in popular and widely traded currencies – has led FX investors, bank traders and analysts to question the mechanics of the market. At its heart is a question of whether the vast over-the-counter market is in a cyclical decline or just the latest to be affected by new technology and tough regulation enforcing change. The broader concern is that declining liquidity will fuel more sudden FX moves and destabilise the market.

UK Treasury Urges BoE to Consider Time Stamps for FX Trades – Financial Times (subscription)
The Bank of England is being urged by the UK Treasury to consider requiring time stamps for all foreign exchange trades as part of reforms that proponents say would help prevent banks from defrauding clients, according to people familiar with the issue.

Aussie Jumps More than 1% as RBA Keeps Rates Unchanged – Reuters
The Australian dollar gained more than 1% against the US dollar, on track for its biggest daily rise in more than two weeks, after the Reserve Bank of Australia surprised many investors by refraining from cutting interest rates.

Door Open to Rate Cuts in Australia, India After Pause Tuesday – Bloomberg
Economists expect further cuts in interest rates in Australia and India after the central banks of the two nations kept monetary policy unchanged on Tuesday.

Aussie Moving Before RBA Third Month Spurs Regulator’s Probe – Bloomberg
Australia’s securities regulator will investigate today’s surge in the local dollar that came before a monetary policy statement. It’s the third such currency move in as many central bank meetings.

BlackRock Chief Larry Fink Warns on Strong US Dollar – Financial Times (subscription)
The steep rise in the US dollar risks undermining business confidence in the US and sending the country’s economy into a slowdown, the head of the world’s largest asset management firm is warning.

Dollar Recovering as Jobs Shock Fades – Reuters
The dollar held firm in Asia on Tuesday, having recovered almost all of its payroll-inspired losses.

Swiss Hold Policy Line After Franc Shock Risking Deflation – Bloomberg
Swiss National Bank President Thomas Jordan may have decided that one cataclysmic market shock is enough for now.

Russian Ruble Seen as World’s Best Performing Currency, Hits 2015 High – RT
The Russian ruble has hit 55.3 to the dollar Monday, its highest value this year. The currency has become the best performer during the first three months of the year, after it finished 2014 as one of the biggest losers.

ETFs That Hedge for Currency Risk – Wall Street Journal (subscription)
Investors have rushed into currency-hedged ETFs that invest in stocks in developed markets outside the US, but is the tactic worth it? Primarily focused on Japan and the eurozone, investors this year have put $23.5 billion into exchange-traded funds that lock in a current exchange-rate range to protect against dollar depreciation.

Are Currency Swings Worth the Worrying? – Wall Street Journal (subscription)
Most mutual-fund investors pay little attention to swings in exchange rates, but for investors in international stock or bond funds, recent moves in the currency markets have been hard to ignore. The question for investors: Should they do anything about it?

Greece Brightens, Brazil Darkens – Bloomberg
Greece and Brazil are both synonyms for economic dysfunction. So why do investors think Greece is becoming a respectable bet while Brazil remains a lousy one? Here’s a partial answer: the euro. Greece, a member of the European Monetary Union, works with a solid (if imperfect) currency. Brazil, on its own, doesn’t.



Regulatory News

FSB Taps Global FXCs for Benchmark Reform Review – Profit & Loss (free story)
The chair of the Financial Stability Board, Mark Carney, has written to the heads of the eight regional FX committees requesting their assistance in monitoring market participants’ progress in implementing the FSB’s FX Benchmarks Final Report recommendations.

Two Years On, Data Reporting Problems Still Persist – Profit & Loss (free story)
Two years after the commencement of required data reporting in the US, it’s clear that there are still some outstanding problems in the market, as regulators have issued just under $4 million in fines in the past month for reporting violations.

BOE Pushes UK Banks to Have Greek Contingency Plans in Place – Bloomberg
The Bank of England is pushing UK banks to have plans in place in case the Greek debt crisis escalates or the country leaves the euro area.

CCP Risk Questions Left Unanswered at CFTC Meeting – Profit & Loss (free story)
In the Commodity Futures Trading Commission’s Market Risk Advisory Committee meeting at the beginning of April, some of the most interesting questions regarding CCP risk went unanswered. Early on in the discussion, Kristen Walters, global COO of the risk and quantitative analysis group at BlackRock, asked how much money a CCP such as the one operated by the Intercontinental Exchange would expect to be required to absorb two simultaneous defaults from its clearing members.



Company News

EBS FX Volumes Rise 22% in March – Reuters
Foreign exchange spot volumes on the EBS platform rose back above $100 billion a day in March, up by 22% from February and by 30% from a year ago, helped by another handful of big swings in major currency rates.

Virtu to Raise Up to $314 Million in IPO – Profit & Loss (free story)
As it again prepares itself for an IPO, Virtu Financial is expecting a valuation of up to $2.6 billion and plans to raise as much as $314 million for the firm.

ICE and SGX Report Boosted FX Volumes for March – Profit & Loss (free story)
Both the Intercontinental Exchange and Singapore Exchange have reported increased trading volumes for March, consistent with volume increases on other platforms last month.

CME Group FX Trading Volumes Swell 27% in March – Finance Magnates
CME Group’s trading volumes in its foreign exchange products division have increased 27% in March, rebounding steadily. The total number of FX contracts traded on the exchange increased by almost 44% to about 1,087,000 daily which is also higher by 27% when compared to a year ago.

LCH Warns on CCP ‘Auction Risk’ – Risk Magazine (subscription)
The odds of a clearing house failing to effectively offload the positions of a defaulting member should be factored into international standards on stress testing and capital adequacy for central counterparties, according to LCH.Clearnet.

Currency Mountain Buys TraderMade – Profit & Loss (free story)
Currency Mountain Holdings, the parent company of FX brokerage firm FXDD, has acquired analytics firm TraderMade.



Market Savvy  

USD Outlook Continues to Walk the Tightrope
Saxo Bank
The weak US employment data from Friday is failing to generate any follow through lower, a notable sign of USD resilience that was also bolstered by yesterday’s in-line ISM non-manufacturing survey coming in above the 55 level. The April data cycle will be interesting as we reach the other side of supposed weather disruptions and on the general idea that one bad month can be written off as an aberration. The quiet since Friday suggests that the USD still has a strong change of hanging in there as we have yet to close through important USD support levels in everything from EURUSD and USDJPY to GBPUSD and USDCAD.



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