Top Headlines

HSBC Agrees to $101.5m US Forex Settlement – Financial Times (subscription)

HSBC has agreed to pay a $101.5m penalty in a settlement with the US Department of Justice over its attempts to manipulate foreign exchange markets, allowing the bank to avoid pleading guilty to criminal charges.

Dollar Near Three-Year Low, Heading for Worst Run Since 2015 – Reuters

The dollar laboured near a three-year low against a basket of currencies, heading for a fifth week of falls that would be its longest losing streak since May 2015.

Sterling Seesaws After UK Retail Sales Data; Briefly Nears $1.40 – Reuters

Sterling seesawed after data showed British shop sales slid by much more than expected in December, though the currency was still on track for its longest winning streak against the dollar since 2014.

Stop Calling GBP the Great British Peso, Says Deutsche Bank – Financial Times (subscription)

The UK has many structural problems, but unlike its neighbours trapped in the euro, the composition of the UK’s foreign assets and liabilities means that the Bank of England does not need to defend the currency for financial stability purposes.

Emmanuel Macron Rejects Special Access for City After Brexit – Financial Times (subscription)

Emmanuel Macron has said that if Britain wants special access for its financial services industry to the EU single market after Brexit, it will have to obey all of the bloc’s rules, adding: “Be my guest.”

VM Rules Sound Death Knell for Forex Swaps in Europe – Risk (subscription)

Dealers and buy-side firms have effectively killed off foreign exchange swaps in Europe, thanks to new rules requiring the instruments to be collateralised.

What’s Bitcoin Worth? A New Plan to Bring Discipline to Crypto Prices – Wall Street Journal (subscription)

The owner of the New York Stock Exchange is launching a service to bring bitcoin data to hedge funds and other professional trading firms, the latest sign that the once-fringe market for cryptocurrencies is being taken seriously by Wall Street.

Five Market Surprises That Could Occur in 2018 – Financial Times (subscription)

Treasuries, the dollar, Nafta and the economies of the US and China all face some uncertainty.

Regulatory News

Crypto Derivatives Targeted by EU Regulator Weighing Curbs – Bloomberg

Europe’s top markets watchdog may curb trading in derivatives in bitcoin and other cryptocurrencies as part of a broader crackdown on risky financial products available to retail investors.

SEC Pours Cold Water on Prospect of Bitcoin ETFs – Wall Street Journal (subscription)

Wall Street’s top regulator all but shut the door to approving exchange-traded funds that hold bitcoin and other cryptocurrencies, questioning whether the products could comply with rules meant to protect mom-and-pop investors.

Revised Basel Output Floor Could Hit US Banks After All – Risk (subscription)

Fall in operational risk weights could push up capital requirements for market and credit risk.

Two Federal Reserve Openings Provide One Chance to Counter Trump – The New York Times

The Federal Reserve is facing a significant change in leadership that goes beyond the installation of a new chairman.

Company News

Derivatives Positions Have Fallen 46% Since 2015: BIS – FOW (subscription)

Cross-border activity was negatively impacted by a decline equities and derivatives in Q3 2017.

Don’t Expect the Crypto-Futures Revolution to Stop at Bitcoin – Bloomberg

Cboe Global Markets is exploring futures on other cryptocurrencies after becoming the first US exchange to offer Bitcoin contracts last month.

We Signed the FX Global Code. Why Are Other Signatures Missing? – Russell Investments

Signing makes sense. Failing to sign? Not so much.

Market Savvy

Asian Currencies Firm as Dollar Wallows Near a Three-Year Low – Reuters

Asian currencies strengthened as the dollar languished on fears over a US government shutdown and as China’s strong economic growth figures boosted sentiment in the region.

As Emerging Market Currencies Soar, Here’s One That Still Looks Cheap – Wall Street Journal (subscription)

Can a currency that’s up 12% against the dollar over the last twelve months, and outperforming several of its emerging market peers, still be undervalued? Investors are betting that’s the case for the Malaysian ringgit.

Venezuela’s Currency Rout Hits a New Milestone at 200,000 per Dollar – Bloomberg

Venezuela’s currency crossed a new barrier this week as hyperinflation exploded and Nicolas Maduro’s government readied a cryptocurrency issuance next month.