Top Headlines

London FX Volume Falls 12 Percent to $2.41 Trillion a Day Average – Reuters

Foreign exchange trading out of London has fallen 12 percent over the last three years to an average $2.41 trillion (2 trillion pounds) a day, driven by a fall in spot market and hedge fund activity, the Bank of England said.

Dollar Dips as Investors Lighten Positions Into Year-End – Reuters

The dollar dipped, pulling away from 14-year highs hit last week on expectations of a faster pace of US monetary tightening, as investors booked profits and lightened hefty bets on the currency into the end of the year.

US Dollar Net Longs Steady; Yen Shorts Rise: CFTC, Reuters Data – Reuters

US dollar net long positions were little changed last week, affirming a trend in place for the last several weeks since the election of Donald Trump as US president.

Beware a Strong Dollar – Value Walk

When it comes to the US dollar in a global market… strong is a problem.

Icap Looks to Process Forex Trades on Blockchain – Financial Times (subscription)

Icap is preparing to process thousands of foreign exchange trades on blockchain technology amid signs the emerging standard is encroaching on global markets.

Key HK Renminbi Lending Rate Stuck at Exactly 10% for Second Straight Day – Financial Times (subscription)

A key lending rate in Hong Kong for renminbi lending has dug its heels in at 10 per cent, unchanged from Friday’s unusually round level.

Chinese Leaders Pledge Stable Currency – China Post

China’s leaders pledged to keep its currency stable and trim bloated heavy industry as they wrapped up an annual planning meeting amid pressure from US President-elect Donald Trump and European leaders over trade.

BOJ Sees Weak-Yen Effect of YCC Well Worth the Trouble – Reuters

While surging global bond yields are hampering the Bank of Japan’s efforts to cap long-term interest rates, a broad US dollar rally is helping the central bank’s new framework achieve what matters most: a weakening yen.

Brexit Dashes the Euro’s Reserve-Currency Hopes – Financial Times (subscription)

The world is dividing into much more definitive currency blocs.

Swiss National Bank Boosts Currency Reserve Provisions – Reuters

The Swiss National Bank said its Bank Council approved allocating 4.6 billion Swiss francs ($4.49 billion) to 2016 currency reserve provisions, raising the provisions to 62.8 billion francs.

Rupiah’s Fortunes as Region’s Best Currency to Fade as Indonesia’s Tax Amnesty Nears End – Bloomberg

The rupiah’s reign as Southeast Asia’s best currency is set to be short-lived as the supportive inflow from a $12.3 billion tax amnesty program is about to be slammed shut.

Long-Term Outlook for Ringgit Remains Challenging, Singdollar Also Expected to Slump Further – Asia One

With the US dollar potentially strengthening further, would prospects for the ringgit weaken despite Government measures to stabilise the local currency?

Kyat Slumps but Uncertainty Clouds Claims of Record Low – Myanmar Times

While economic analysts argue over whether the weakening kyat is a preventable blight on the economy or a natural by-product of global macroeconomic conditions, a second question has arisen – how to tell if the currency is actually at record lows against the US dollar.

Chart: The Most Overvalued and Cheapest Currencies in the World Right Now – Business Insider

The Chinese yuan has taken on more prominence in recent months, thrust into the limelight as it continued to unwind against the US dollar.

Emerging Market Investors Prepare to Buckle Up for 2017 – Financial Times (subscription)

Sentiment towards EM is better than 12 months ago, but Trump and Fed pose a threat.

Winner of the Biggest Market Shock 2016 – Profit & Loss

The biggest FX shock move of the year happened on the night of the UK referendum… but not to sterling.

Dominion of FX Market Remains Intact Despite Year of Change – Financial Times (subscription)

Greenback’s sharp appreciation since election poses real problems for other assets.

Regulatory News

CFTC Grants No-Action Relief from Certain Swap Clearing Requirements for Swaps with Eligible Affiliate Counterparties in Australia or Mexico – The National Law Review

The Commodity Futures Trading Commission Division of Clearing and Risk granted US swap participants temporary no-action relief from the required clearing rule with respect to swaps entered into with eligible affiliate counterparties located in Australia and Mexico.

Russia Central Bank Head: Rouble Rise Unlikely to Cause Financial Instability – Reuters

Russia’s rouble currency is unlikely to strengthen to the extent that it would threaten financial stability, Russian central bank governor Elvira Nabiullina told a news conference.

CBJ’s Decision to Raise Interest Rate ‘Necessary and Timely’ – The Jordan Times

The Central Bank of Jordan’s (CBJ) decision to raise key interest rates last week was an attempt to boost the attractiveness of the Jordanian dinar, economists said.

Company News

Fraud with a Difference: Trade with Your Mum – Profit & Loss

A US District Court Judge has found that an employer effectively stole $300,000 from her employer by trading non-competitively on CME against an account held by her mother.

Relocating Euro Clearing Will Damage Liquidity, Warns ICE – The Trade

Moving clearing out of London would raise costs for banks, according to ICE working paper.

Bitcoin’s Rally Crushed Every Other Currency in 2016. Here’s Why – Bloomberg

Bitcoin, that nebulous digital currency that trades in cyberspace and is “mined” by code-cracking computers, emerged as a better bet this year than every major currency, stock index and commodity contract.

2017 Will Be a Year of FX Industry M&A – Finance Feeds

Recent M&A deals have been hundreds of millions as massive venues mop up institutional FX firms – not retail client bases for a few million.

Market Savvy

Asian Currencies on Defensive; Ringgit Matches Post-1998 Lows – Reuters

The Malaysian ringgit matched a post-1998 low set last year and the South Korean won hit a nearly six-month low, after the US Federal Reserve last week signalled a faster-than-expected pace of interest rate rises in 2017.

Aussie Dollar Loses Last of 2016 Gains – Sydney Morning Herald

The Australian dollar hovered close to a six-month low as the federal government’s mid-year economic and fiscal outlook couldn’t quite dispel fears of a ratings downgrade despite all three major ratings agencies confirming the country’s triple-A rating, for now.

Rupee Makes a Weak Start, Slips Six Paise Against Dollar – Business Online

The rupee depreciated by six paise to 67.82 against the US dollar in early trade at the Interbank Foreign Exchange due to increased demand for the American unit from importers amid foreign fund outflows.