Foreign Exchange Still Has the Power to Shock

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Top Headlines

Foreign Exchange Still Has the Power to Shock – Financial Times(subscription)
It is official: foreign exchange still has the power to shock. When the Swiss National Bank ended its currency’s euro cap in January, the franc leapt almost 30% against the single currency in a day. Swiss stocks plunged and two foreign exchange brokers collapsed.

SNB Says Franc Cap Stopped Being Beneficial – Wall Street Journal(subscription)
Switzerland’s central bank was forced to scrap its cap on the value of the Swiss franc because mounting costs would have been “out of all proportion” to potential benefits of maintaining the policy, the bank said in its annual report published Thursday.

Currency War is Now a Dud as Windfall From Devaluations Vanishes –Bloomberg
Currency wars, it turns out, may not be worth fighting right now. While weaker exchange rates have at times throughout history helped stoke economic growth by making countries’ exports cheaper, the benefits are becoming hard to find.

CME Urges Tougher US Response to EU Clearing Dispute – Financial Times(subscription)
The head of the US’s largest derivatives exchanges has suggested European clearing houses be restricted from US markets, if a long-running regulatory spat between the world’s two main regions for derivatives trading is not resolved soon.

Dollar Slips Further After Weak US Durable Goods Data – Reuters
The US dollar fell against a basket of major currencies on Wednesday after weaker-than-expected US economic data combined with a robust survey of German business morale to drive more unwinding of bullish dollar bets.

China Says No Problem with Capital Flight, Currency Solid – Dow Jones Business News
A senior Chinese foreign exchange regulator on Thursday played down concerns over a weaker yuan and capital flight, saying the local currency remained strong and capital was flowing into China, not out.

Treasury Select Committee Lists Further Questions for Lord Grabiner – Profit & Loss (free story)
UK MPs sitting on the Treasury Select Committee have outlined outstanding issues concerning Lord Anthony Grabiner’s investigations for the Bank of England (BoE) into the foreign exchange market and the conduct of liquidity auctions.

RBA Losing Currency War Spurs April Rate-Cut Bets to Curb Aussie –Bloomberg
The Reserve Bank of Australia is losing the global currency war and investors are betting it will have to cut interest rates as soon as next month to rein in the Aussie.

Regulatory News

UK Banking Reforms Hinge on Backing From Global Regulators – Reuters
The success of British reforms to crack down on misconduct at banks will largely hinge on whether regulators elsewhere in the world help implement them, Hong Kong’s top market regulator said.

FCA to Ask Firms for Views on MiFID II Implementation (press release)
The Financial Conduct Authority (FCA) is seeking early views from firms, trade bodies and consumer groups on how it might implement certain aspects of the recast Markets in Financial Instruments Directive, known as MiFID II.

Derivatives Under MiFID II: Time for Equal Access – FIA Opinion
At first look, the proposed MiFID II text appears to handle this and realise the G-20 objective of promoting transparency, efficiency and competition in the OTC derivatives markets. However, if we look more closely, and consider the parallel legislation in the US, which has failed to prevent both implicit and explicit barriers to access for OTC derivatives venues, we soon discover that further explicit regulatory action is needed.

DTCC Calls for Early Start to Derivatives Trade Reporting Under ASIC – Profit & Loss (free story)
The Depository Trust and Clearing Corporation (DTCC) is warning firms to consider opting-in early to the upcoming derivatives trade reporting deadlines in Australia in order to avoid the risk of non-compliance.

Lew Warns Lawmakers Against Weakening Dodd-Frank, Risk Panel –Bloomberg
US Treasury Secretary Jacob Lew warned lawmakers against weakening financial rules adopted since the 2008 crisis, saying ordinary Americans and small businesses would suffer.

Company News

FXCM Spins Off FXCM Japan to Rakuten Securities – Profit & Loss (free story)
FXCM has signed a definitive agreement to sell its Japanese business to Rakuten Securities for a purchase price of approximately $62 million.

East and West: CME’s Gill Looks For Growth in Asia and Europe – John Lothian News
Forget the doom and gloom of years past in the markets. CME Group had a great year in 2014, even with the ongoing headwinds from the Fed’s ongoing freeze on interest rates and more regulation hitting the market-base, said Phupinder Gill, CME’s CEO, at the FIA Boca conference.

TT Gets $16 Million as Court Finds Against CQG in Patent Trial – FOW(subscription)
A US court has awarded Trading Technologies almost $16 million after finding in favour of the tech firm in its long-running patent infringement battle with rival CQG, marking a victory for the firm as it works through various legal actions.

Market Savvy  

The Morning Track – Break Out?
Track.com
Markets want a jailbreak from the prison of consolidation. The search for a clear new trend is hard to find at month end and quarter end. The lack of big news adds to the problem. We are rehashing the debate of the FOMC on lift-off and patience still. The lack of real rate movement in US front-end has been the excuse for unwinding the USD long positions. The question is whether its sufficient to put on short USD positions instead and that answer after the CPI yesterday and better housing data seemed to be no.

Press Releases

UK Small Businesses Embracing Chinese Currency Faster Than European Peers, HSBC Survey Shows
Small businesses in the UK are embracing renminbi (RMB) to settle cross-border trade faster than other countries in Europe and North America, a survey from HSBC has indicated.

TMX Group and Industrial and Commercial Bank of China (Canada) Sign Memorandum of Understanding
Industrial and Commercial Bank of China (Canada) (ICBK), a Canadian subsidiary of ICBC, and TMX Group announced the signing of a memorandum of understanding (MoU) to enhance their understanding of each other’s businesses and explore the possibilities of cooperation.

Industry Events