Fed’s Nod to Currency Wars Fuels Second Guessing by Dollar Bulls

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Top Headlines

Fed’s Nod to Currency Wars Fuels Second Guessing by Dollar Bulls –Bloomberg
The Federal Reserve chair, Janet Yellen, acknowledged the negative consequences of this year’s gains Wednesday, saying the currency is weighing on US exports and inflation as policy makers pared back their outlook for interest rate increases. That sent the greenback down by the most since 2009, though it rebounded Thursday to continue its rally of 14% over the past six months.

SNB Keeps Deposit Charges and Interest Rates Unchanged, Signals Franc Intervention – Reuters
The Swiss National Bank kept a charge on some cash deposits steady at -0.75% on Thursday, but said it would remain active in foreign exchange markets to weaken what it sees as a “significantly overvalued” franc.

Bad News for Saxo, But Good News for Currency Managers – Profit & Loss(subscription)
It will be another couple of months before we start to learn the real impact of the events of 15 January but overnight we received a negative hint; however, people I am speaking with are telling me a good story about currency managers – it’s clearly a mixed bag.

Citibank Sues Two Former Goldman Sachs Partners Over $29 Million Swiss Franc Margin Call – Forbes
The sharp and unexpected rise of the Swiss franc in January resulted in big losses for hedge funds, investment banks and other currency speculators, even causing some hedge funds to shut down. Now, there is a lawsuit over a $29 million margin call that hit the joint family office of two former Goldman Sachs partners.

Banks Keep Tightening FXPB Offering as Risk Profiling Takes Centre Stage –Forex Magnates
In one ramification of the CHF crisis, firms operating in the leveraged products space are facing an uphill struggle in their bid to take heed of a bank’s prime brokerage services, as new emerging players try to fill in the gaps.

Riksbank’s Krona Resolve Seen Tested After Rate Cut Shocker – Bloomberg
After venturing deeper into negative territory than ever before, Sweden’s central bank is now expected to deliver even more measures.

Asian Currencies Shoot Higher Against Dollar – Wall Street Journal(subscription)
Asian currencies shot higher against the US dollar Thursday, a rare reprieve after months of declines, but analysts cautioned that the gains will likely be temporary as the Federal Reserve sticks to its plan to raise interest rates.

Regulatory News

Banks Win Nine-Month Swap Margin Rules Delay From Basel Group –Bloomberg
Banks won a delay in the introduction of minimum global rules on the collateral needed to back trades in the $691 trillion market for swaps and other over-the-counter derivatives.

In Boon for Bitcoin, UK to Regulate Digital Currency Exchanges – Reuters
Britain took a significant step towards becoming a global bitcoin hub on Wednesday as the government announced it would regulate digital currencies for the first time by applying anti-money laundering rules to exchanges.

‘Futurising’ the OTC Market – Markets Media
Dodd-Frank represents a move toward ‘futurising’ the OTC swaps by moving them to an exchange model, which is a big change from the bilateral world, in which banks handled most OTC transactions on behalf of end users, i.e. corporations and asset managers.

Regulators Outpace Physicists in Race to Catch Flash Boys – Bloomberg
Regulators are testing the limits of science in their drive to stop high-frequency traders from manipulating European securities markets.

Bank of England Says Plans to Introduce Libor Alternative Next Year – Reuters
The Bank of England said on Wednesday it aims to introduce next year an alternative to the discredited Libor interest rate at the centre of a rigging scandal.

Company News

Thomson Reuters Sees FX Volumes Fall in February – Profit & Loss (free story)
Thomson Reuters has seen a month-on-month decline in foreign exchange average daily volume (ADV) across its platforms in February, in line with other institutional platforms. It also saw a fractional year-on-year fall.

Saxo Bank Announces 2014 Results, Profits Double as Deposits Grow – Forex Magnates
Saxo Bank estimates that the maximum losses related to the Swiss National Bank’s debacle will total $100 million, which will be reflected in the annual report for 2015.

Alpari Looking to Establish New EU Licensed Subsidiary – Forex Magnates
The firm is already looking to hire a managing director for a subsidiary to be based in the EU, targeting clients mainly from Eastern Europe, where the brand has been actively promoting its services in the past.

Market Savvy  

US: What’s Patient Despite Losing Patience? The FOMC
BNP Paribas
This was a very dovish FOMC. The market had expected “patient” to be dropped, but had not anticipated the patience to be manifest as much as it was in the Survey of Economic Projections (SEP).

Press Releases

Clearstream Opens Offshore RMB Cash Correspondent Bank Accounts in Luxembourg, Singapore and Frankfurt
Clearstream, the international central securities depository of Deutsche Börse, is making further progress in its Asia strategy: the company will open three new offshore renminbi cash correspondent bank (CCB) accounts with Chinese banks based in Frankfurt, Luxembourg and Singapore.

FIA Commends CFTC for Revising its Policy on Residual Interest
FIA released a statement today in support of a CFTC final rule affecting certain procedural requirements for how futures commission merchants and their customers meet margin requirements. The final rule, announced yesterday, ensures that the current deadline for depositing residual interest will not be changed without an opportunity for public comment.

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