Top Headlines

Lone Republican Commissioner Looks to Head CFTC – Financial Times (subscription)

The sole Republican commissioner at the main US derivatives regulator has thrown his hat in the ring to be appointed the next chairman, even as he embraced aspects of financial reforms that Donald Trump’s team wants dismantled.

Hawkish Yellen Lifts US Dollar – Wall Street Journal (subscription)

The US dollar climbed broadly in early Asia trading after US Federal Reserve Chairwoman Janet Yellen warned that waiting too long to raise interest rates could invite in the “nasty surprise” of inflation.

Five Ways Trump Can Get a Weaker Dollar – Bloomberg

Donald Trump may have a point: the dollar is indeed strong.

Pound Steadies Above $1.23 After Wild Few Days – Reuters

The pound steadied after a few days in which uncertainty about Brexit has seen both its biggest rise in decades against the dollar and two of its heaviest slumps in months.

Goldman: ‘Hope for the Best but Position for Sterling Lows’ – Financial Times (subscription)

The currencies market got it wrong when it sent the UK pound surging on Tuesday in its best day since the 1990s, Goldman Sachs has told its clients.

Bad News Better Than No News as Sterling Surges on Hard Brexit Talk – Euromoney

On a day many expected would see the pound sink to new depths, the currency instead responded to news that the UK would be leaving the single market by posting its best performance since the referendum – but whether the day marked a turning point or a mere relief rally, nobody can be sure.

CLS Data Confirms December Dip – Profit & Loss

Data from CLS reinforces that released earlier this month by trading platforms by indicating a month-on-month decline but a year-on-year rise in FX volumes.

China State Banks Offer Funds in Bid to Cool Fierce Liquidity Squeeze, Yuan Dips – Reuters

Short-term funding costs in China shot to their stiffest level in nearly 10 years on fears of a cash crunch heading into its most important holiday of the year, but ended well off the day’s highs as state banks stepped in to offer more yuan supplies.

Philippine Peso Rated Asia’s Most Resilient Currency for 2017 – Bloomberg

Asia’s worst-performing emerging-market currency in the past year is being tipped as the one likely to suffer least from the global slings and arrows of 2017.

Turkey Says Stronger Dollar Would be ‘Bad News’ for Emerging Markets – Reuters

Signals from the United States suggest the dollar could strengthen further and this would be “bad news” for emerging markets, the deputy prime minister of Turkey said at the World Economic Forum in Davos.

Sweden’s Biggest FX Trader Warns Rate Hike Could Come Quicker – Bloomberg

Sweden’s biggest currency trader is telling the market it should pay less attention to what the central bank says and more to what the bond market does for clues on the timing of the next interest rate increase.

A Global FX Problem – Profit & Loss

Do trading desks really have sufficient experience and risk appetite to cope with the changing market dynamic?

Regulatory News 

Dodd-Frank in Crosshairs as Law’s Opponents Take Power – Wall Street Journal (subscription)

About 80% of rules mandated by 2010 law have been drafted or finalized. What happens next?

Banks Have Big Hopes for Trump, But Obama’s Old Team May Get in the Way – Bloomberg

Wall Street’s expectations that Donald Trump will quickly free banks from the grip of aggressive regulators could encounter a problem: Some of Barack Obama’s top appointees aren’t planning to leave anytime soon.

Indonesia, Malaysia Hold Rates as Fed Fuels Currency Decline – Bloomberg

Central banks in Indonesia and Malaysia kept their benchmark rates unchanged to help bolster their currencies and guard against capital outflows as the US moves to tighten monetary policy.

China FX Regulator Says Pressure on Cross-Border Capital Outflows Eased Somewhat in 2016 – Reuters

Pressure on cross-border capital outflows eased somewhat in 2016, China’s foreign exchange regulator said at a press conference.

Czech Central Bank Sees Mid-Year as Right Time to End Currency Cap – Reuters

The Czech central bank still believes the right time to abandon a cap on its currency is around the middle of this year, its board member Lubomir Lizal said.

Company News

HSBC, UBS to Shift 1,000 Jobs Each from UK in Brexit Blow to London – Reuters

UBS Chairman Axel Weber said that about 1,000 of the Swiss bank’s 5,000 employees in London could be affected by Brexit, while HSBC Chief Executive Stuart Gulliver said his bank will relocate staff responsible for generating around a fifth of its UK-based trading revenue to Paris.

Mizuho Bank Adopts Thomson Reuters FX Trading to Access Superior Liquidity – Finance Magnates

The bank has deployed Thomson Reuters FX Trading to connect with the world’s largest independent pool of FX liquidity.

FX Swaps Start-Up LMRKTS in First Fundraising – Financial Times (subscription)

A US financial technology start-up used by some of Wall Street’s biggest banks to remove risk in their currency derivatives portfolios is running a first fundraising to take its business to the rest of the swaps market.

Market Savvy

Stocks, Currencies Fall After Fed’s Yellen Signals Rate Hikes – Reuters

Emerging market stocks fell and currencies struggled to make much headway after US Federal Reserve chair Janet Yellen said interest rates should rise steadily, boosting the dollar.

Mexican Peso Poised for New Closing Low After Nafta Report – Financial Times (subscription)

The Mexican peso is back in the firing line, dropping the most among major currencies as a report that the Trump administration is planning to renegotiate Nafta within days of taking office further cloud the outlook for Latin America’s number-two economy.

Loonie in Hottest Streak Since 1970 as US Dollar Retreats – Bloomberg

The Canadian dollar is off to its best annual start since it became a floating currency in 1970 amid a pullback in the US currency and signs the economy is picking up speed.