Mystery Solved? BIS Report Studies Triennial FX Survey Data – Profit & Loss

When the Bank for International Settlements published this year’s version, there was no little surprise at it finding there was $6.6 trillion traded every day, a new report, however, throws more light on that number, but doesn’t quite answer all the questions.

Danger Lurks for Currency Market If Volatility Recurs, BIS Says – Bloomberg

Currency traders may face new dangers when volatility returns to the market, after a spell of innovation in the industry coincided with a period of unusual calm.

Brexit Versus Public Services: Rival British Leaders Make Final Campaign Push – Reuters

Prime Minister Boris Johnson will travel to the heartlands of Brexit Britain in a final campaign blitz ahead of Thursday’s election, as he seeks to secure the parliamentary majority he needs to take the country out of the European Union.

Lagarde Prepares Sweeping Review of ECB’s Strategy – Financial Times

The last time the European Central Bank conducted a review of its monetary policy strategy the euro was only four years old, no country had ever experienced negative interest rates and Christine Lagarde was running a US law firm.

ECB’s Holzmann Eyes Return to Positive Rates – Reuters

European Central Bank policymaker Robert Holzmann hopes to see the end of negative interest rates by the time his six-year term ends, he told an Austrian tabloid, praising new ECB head Christine Lagarde for fostering collegiality among his peers.

China’s Potential Growth Below 6% Over Next Five Years: Central Bank Adviser – Reuters

China’s potential economic growth will be below 6% over the next five years, an adviser to China’s central bank said.

Democrats, Trump Trade Negotiator Near Deal for Trade Pact – Wall Street Journal

Though hurdles remain, an agreement would allow the US-Mexico-Canada agreement to come to a vote in Congress.

Battle Lines Drawn – Profit & Loss

Looking at the geographical distribution of OTC FX turnover, some areas of competition are emerging amongst different trading centres, but it will be a long time before we see the outcome of any moves being made now.

In the FICC of It – Profit & Loss

This week’s podcast features reaction to the Global FX Committee meeting, a discussion on internalisation, crypto volumes and instant settlement of FX trades.

Regulatory News

Hedge Funds Key in Exacerbating Repo Market Turmoil, Says BIS – Financial Times

Hedge funds exacerbated the recent turmoil in the repo market with their thirst for borrowing cash to juice up returns on their trades, according to the Bank for International Settlements.

Worrying Signs That a Great Global Deregulation has Begun – Financial Times

The great global deregulation has begun. The signs are subtle so far, but last week threw up four pieces of evidence that the US and Europe are poised to compete to ease bank regulation – in turn threatening the co-ordinated global approach that has helped make the international banking system safer in the decade since the financial crisis.

End of Poloz Era at Bank of Canada May Open Door to First Female Governor – Reuters

Bank of Canada Governor Stephen Poloz will step down when his seven-year mandate expires in June, the bank said, and the front-runner to replace him could become the first woman to head the country’s central bank.

Mifid II Creates ‘Existential Threat’ for Small Research Groups – Financial Times

Boutique research providers’ business models are coming under increasing pressure two years on from the introduction of EU markets rules, in what an industry association describes as an “existential threat” to the sector.

Crypto News

Brace for the Digital-Money Wars – Wall Street Journal

Digitising the Chinese yuan – and eventually the dollar – would open new fronts in the fight over privacy and trade.

Deutsche Bank says Crypto Could Replace Cash by 2030 as Fiat System Looks ‘Fragile’ – The Block Crypto

Cryptocurrencies have the potential to eventually replace cash, according to new research from financial services giant Deutsche Bank.

Bitcoin Volatility is Up, Liquidity Stagnant – CoinDesk

Bitcoin’s price volatility has been a source of doubt about its narrative both as digital cash and as digital gold. How could something so volatile be a safe haven investment?

Best-Performing Cryptocurrency Powers Controversial Exchange – Bloomberg 

Binance’s BNB token has outperformed Bitcoin this year, the token serves as a loyalty program for Binance exchange customers.

State Street: 38% of Clients Will Put More Money into Digital Assets in 2020 – CoinDesk

The majority of asset managers that bank with State Street are interested in digital assets such as bitcoin, but none have asked the global custodian to store them yet. 

Company News

Is It Time to Start Worrying About the Primary FX Venues? – Profit & Loss

They recently reported new lows for FX daily volume and using the BIS survey as a benchmark their market share is now a quarter what it was in 2010 and half what it was in 2016, so is it time to start worrying about the decline of the primary FX venues?

Hedge Funds Lag Stocks and Bonds Again – Financial Times

Hedge funds are on course for their best year since 2013 but will still come in with weaker returns than both equities and bonds, figures from an industry research group show.

Northern Trust Hires Two FX Experts – FOW

Northern Trust has hired David Byne and William Hartnett in its global foreign exchange solutions division.

FX: Still a Banking Market? – Profit & Loss

Much has been said about how the banks’ influence in FX markets is much reduced, but is that accurate? 

Market Savvy

As Fed Reiterates Rate Pause, Forecasts Likely to be Blown Off Course – Reuters

Friday’s booming US jobs report should give the Federal Reserve all it needs to stick to its plan not to cut interest rates further in the near future, so when US central bankers meet this week, most of the focus will be on their outlook for next year and beyond.

The Shock and Awe Era for Central Banks is Over – Bloomberg 

The era of shock and awe is over for central banks, 10 years after it started.

Japan Upgrades Third-Quarter GDP as Consumer, Business Strength Absorbs Hit from Trade – Reuters

Japan’s economy expanded at a much faster pace than initially reported in the third quarter, as resilient domestic demand and business spending offset the hit to growth from falling exports and global trade tensions.

In the Next Downturn, Fiscal Policy May Have to Step Up – Wall Street Journal

The Fed’s postcrisis tools will have less punch if long-term bond yields are already low.