Fed’s Yellen Sticks to Her Guns as Global Market Rout Worsens

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Top Headlines

Fed’s Yellen Sticks to Her Guns as Global Market Rout Worsens – Reuters

Federal Reserve Chair Janet Yellen returned to Congress on Thursday and again stressed that the U.S. central bank was not on a “pre-set” path to return policy to “normal” given a worsening meltdown in global stock markets.

Yen Surges Again as Investors Rush to Safe-Haven Assets – Wall Street Journal (Subscription)

 The yen rose sharply on Thursday, as investors poured into the safe-haven Japanese currency, a sign that market forces are overwhelming central bank efforts to weaken their currencies.

Foreign Exchange, The World’s Biggest Market, is Shrinking – Reuters

The foreign exchange market’s status as the world’s largest, built up over decades of rampant globalization, deregulation and growth in financial services, is unlikely to be relinquished any time soon. But the glory days are over.

Forget the Great Recession—Welcome to the ‘Great Repricing’ – Bloomberg

Six and a half years removed from the Great Recession, we’re now in the midst of the “Great Repricing.”

Collateral Damage in the Currency War – Wall Street Journal (subscription)

Prosperous Sweden wouldn’t normally be a candidate for easier monetary policy, but then these aren’t normal monetary times. So it’s hard to fault the Riksbank for cutting its negative policy rate again, to minus-0.5% from minus-0.35%, despite strong economic growth and a real-estate bubble.

Regulatory News

Japan Finance Minister Says Will Take Necessary Steps to Deal With FX Volatility – Reuters

Japanese Finance Minister Taro Aso said on Friday the government would take necessary steps to deal with currency volatility, the minister’s strongest hint of intervention since the yen began its surge this month.

Bank of Mexico Sells Dollars as Peso Falls to New Low – Wall Street Journal (Subscription)

Mexico’s peso slid to a new low against the U.S. dollar Thursday, triggering $400 million in dollar sales by the Bank of Mexico as stocks fell and oil prices resumed their decline.

Peru Central Bank Hikes Key Rate, Warns of Inflation – Reuters

Peru’s central bank raised the benchmark interest rate for the third straight month on Thursday and warned that rising inflation expectations threatened to trigger a feed-back loop of quickening price hikes.

Company News

Small Businesses Still Hugely Exposed to FX Swings – Reuters

Only 20-25 percent of small and medium-sized British and French companies hedge their exposure to fluctuations in currency rates which can have a huge impact on their bottom lines, a report by banking research consultancy East & Partners showed on Thursday.

Open Interest Hits All-Time High in Renminbi Futures on HKEX – Leaprate

Hong Kong Exchanges and Clearing Limited (HKEX) the Hong Kong securities and derivatives market announced another record-setting day today for HKEX’s RMB Currency Futures contracts.

Eurobase Extends FMR Advisory Link – Profit & Loss

Software provider Eurobase has partnered with FMR Advisory to support its strategic focus on providing consultancy and software solutions to financial organisations impacted by MiFID II.

Market Savvy 

Yen Rallies as World Falls Apart: FX Strategist – CNBC

The yen’s surge to 15-month highs against the dollar Thursday reveals deep problems in global markets, according to Steven Englander, global head of currency and G-10 strategy at Citigroup.

Could China Have a Reserves Crisis? – Council on Foreign Relations

Last summer, U.S. lawmakers were condemning China for pushing down its currency, arguing that it was still “terribly undervalued.” But those days may be long gone.  Chinese and foreigners alike have been stampeding out of RMB, leaving the Chinese central bank struggling to keep its value up and prevent a rout.

Dollar on Track for Steep Weekly Losses – Reuters

The dollar nursed losses on Friday that have put it on course for steep weekly drops against major currencies, with many investors favouring the perceived safe-haven appeal of the yen amid sinking global markets.

Press Release

Gain Capital to Launch International Money Transfer Business

GAIN Capital Holdings, Inc, a global provider of online trading services, today announced plans to launch its new international money transfer business. The new venture, GAIN Capital Payments Ltd., will do business under its ForeignExchange.com brand name.

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