Top Headlines

Meltdown as Cable Flash Crashes – Profit & Loss

The subject of liquidity is very much to the fore in foreign exchange markets again following what has been termed a “flash crash’ in Cable in early Asian trading.

Bank of England Investigating Dramatic Overnight Fall in Pound – Guardian

The dramatic collapse in the pound overnight is being scrutinised by the Bank of England amid suggestions that a “fat finger” error or computer-generated trade was behind the slide in sterling to a new 31-year low.

Cable Flash Crash Raises Questions for Code of Conduct – Profit & Loss

This morning’s flash crash in Cable in which it dropped 9.5 percent in seconds and the low of which is still disputed raise some interesting questions for the creators of the FX Code of Conduct.

Don’t Like Flash Crashes? Blame Machines – Bloomberg

Today’s sudden drop in the British pound serves as the latest warning that computers can be great to increase speed, but they’re dumb. 

Pound’s Plummet Seen as Sign of the Changing Times in Currencies – Bloomberg

The pound’s sudden plunge Friday is fueling concern that trading has become less stable in an ever more complex market.

HSBC Executive Barred by Fed After Indictment Over Forex Fraud – Bloomberg

An HSBC Holdings executive and a former employee have been barred from the banking industry by the Federal Reserve as they face US criminal charges that they committed fraud in conducting foreign-exchange trades.

Sliding Sterling Still Has Some Way to Sink – Reuters

Sterling will plumb new multi-decade lows in the coming months as the battered currency extends its slide on concerns divorce proceedings with the European Union could be difficult and leave Britain outside Europe’s single market, a Reuters poll found.

Yuan Buckles After Latest Drop in China’s Foreign-Exchange Reserves – Wall Street Journal (subscription)

Chinese currency hits weakest level against dollar since January after reserves fall by more than forecast in September.

Yen’s Decline Offers Some Respite for Bank of Japan – Wall Street Journal (subscription)

The Japanese currency has fallen three percent in the past eight trading days.

Why Investor Enthusiasm About Emerging Markets Could Be Fickle – Wall Street Journal (subscription)

Interest in hard currency outpaces local currency, a possible signal money is chasing yields rather than economic growth.

IMF Warns US Rate Hike Could Disrupt Asian Capital Flows – Reuters

The IMF urged Asian economies to ensure their currency rates move flexibly.

Regulatory News

Currency Investors Set to Face Wave of Regulation, Aite Says – Bloomberg

Currency investors will need to transform the way they do business as global regulators expand their focus from banks, according to Aite Group.

EU Financial-Transaction Tax Set for Showdown in Luxembourg – Bloomberg

The ten European Union countries pursuing a financial transaction tax meet in Luxembourg on Monday, trying to break a stalemate on the levy first proposed five years ago.

CFTC Likely to Pull Back On Reg AT – FOW (subscription)

US futures watchdog the Commodity Futures Trading Commission may be about to water down its controversial plan to clamp down on electronic trading, a senior US trading expert has claimed.

Bitcoin Escapes ‘Stifling’ Consumer Protection Authority’s Prepaid Regulation – Crypto Coins News

The CFPB, the government agency overseeing consumer protection in the financial sector, has not included bitcoin and other virtual currencies and related products from its new prepaid regulatory requirements.

Company News

Ion to Acquire Reval – Profit & Loss

Ion Investment Group is to buy cloud-based treasury and risk management software solution provider Reval, the terms of which were not disclosed.

SGX’s September Metrics in Holding Pattern, FX Grows Double Digits – Finance Magnates

FX volumes were a notable strong suit at SGX in December, growing by double digits MoM.

‘Negligible’ Risk of Saudi Currency Devaluation, Says Credit Suisse – Arabian Business

Saudi Arabia is one of the worst performing markets globally but concerns about currency devaluation are “misplaced”, a report concluded.

Market Savvy

CAD Weakens as Broad-Based Gains for Greenback Offset Higher Oil – Reuters

The Canadian dollar weakened against its US counterpart as the greenback made broad-based gains, but losses for the loonie were restrained as oil rose.

Brazil Real Drops as Fed Expectation Weakens Emerging Currencies – Bloomberg

Brazil’s real dropped as emerging-market currencies weakened after Federal Reserve officials signaled the US economy is ready for an interest-rate increase.

LatAm Currencies, Stocks Mostly Down Ahead of US Payrolls Report – Reuters

Latin American currencies and stocks mostly fell on Thursday as traders bet a closely watched US employment report due on Friday will strengthen the case for an interest rate increase this year.