Top Headlines

Speculators Slash Net U.S. Dollar Longs to Lowest in 1-1/2 Years -CFTC, Reuters – Reuters

Speculators further reduced bullish bets on the U.S. dollar for a seventh straight week, with net longs dropping to their lowest level since mid-July 2014, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday.

Racked Markets Hand Verdict to Central Banks on Sub-Zero Rates –Bloomberg

It seemed like a good idea at the time: Cut interest rates below zero to revive growth. But as policy makers from Tokyo to Stockholm embrace the notion, investors are close to panic mode. Far from buoying financial markets this year, negative rates have helped global stocks enter a bear market, sent the cost of protection against corporate defaults soaring and driven investors to havens such as U.S. Treasury bonds and gold.

Asia’s Rich Advised to Buy Yen as BOJ’s Negative Rates Backfire – Bloomberg

Money managers for Asia’s wealthy families are favoring the yen as it benefits from the turmoil in global financial markets.

How Much Has Japan Spent on Keeping the Yen in Check? – Bloomberg

Japan has spent the equivalent of between $8 billion and $117 billion in the past four episodes to check undue strength in the yen.

Fed’s ‘Dot Plot’ Looks Increasingly Out of Touch On Rates – Reuters

The Federal Reserve’s rate path “dot plot” has become increasingly detached from financial markets’ interest-rate projections and risks sending an overly hawkish message that may undermine the central bank’s credibility.

Ex-Rabobank traders lose bid in U.S. to overturn Libor convictions – Reuters

Two former Rabobank traders on Thursday lost a bid to overturn their convictions arising from an international investigation into the manipulation of Libor, the leading global benchmark for pricing financial transactions.

Chinese Start to Lose Confidence in Their Currency – New York Times

As the Chinese economy stumbles, wealthy families are increasingly trying to move large sums of money out of the country, worried that the value of the currency will fall and their savings will be worth less.

Currency Dilemma Looms for PBoC After Holiday – Bloomberg

China’s central bank faces a difficult choice. Raising the yuan fixing on Monday to match last week’s dollar drop would undo much of the benefits of January’s depreciation. Any overt weakening bias after the week-long holiday risks worsening global market turmoil.

China Central Bank Governor Zhou Xiaochuan Plays Down Forex Fears –Financial Times (subscription)

China’s central bank governor played down concerns over the country’s falling foreign reserves and said he saw no basis for continuing depreciation in the renminbi

Regulatory News

Last Wave on Libor: CFTC Likely to Charge Multiple Banks for Rate Rigging –Wall Street Journal (subscription)

American banks have so far escaped the billions of dollars in fines that have been levied by U.S. and British regulators leading a global seven-year probe into interest-rate rigging. That is likely to change.

Stitching Together the Global Financial Safety Net – Bank of England

​Financial globalisation and the expansion in global capital flows bring a number of benefits — more efficient allocation of resources, improved risk sharing and more rapid technology transfer. But they can also increase the risk of financial crisis. In recent years, to reduce these risks to stability, countries have reformed financial regulation, enhanced frameworks for central bank liquidity provision and developed new elements, and increased the resources, of the global financial safety net (GFSN).

Are Bitcoin and Other Digital Currencies Securities? Steptoe & Johnson

Anyone who has tried to explain bitcoin around their kitchen table knows that it is not easy to put your finger on what exactly the technology is.  Because of their innovative nature, digital currencies don’t have obvious analogs or fit easily into existing categories.  Bitcoin is part currency, part digital payment system, and part immutable ledger.

Philippine Central Bank Further Eases FX Rules – Inquirer. net

Monetary authorities have further eased the rules covering foreign exchange (FX) transactions to boost financing for energy projects, promote microfinance as well as attract more investors.

Company News

Global Markets Head Exits ANZ – Profit & Loss

ANZ Bank’s acting head of global markets, Eddie Listorti, has left the bank, just months after taking on the role.

Banks Cutting Most-Experienced Bond Traders in Fixed-Income Cull –Bloomberg

Banks are taking a hatchet to their bond-trading businesses and the biggest casualties are proving to be the people with the most experience.

U.S. Firms Face Currency Shockwaves – Wall Street Journal (subscription)

With the U.S. economy trundling along as much of the world downshifts, forex effects are becoming an unwelcome but familiar theme in quarterly earnings reports.

Market Savvy 

Yuan Rises Most Since 2005 as PBOC Voices Support, Raises Fixing –Bloomberg

China’s yuan surged by the most in more than a decade, catching up with dollar declines during a week-long holiday, after the central bank chief voiced support for the exchange rate and set its fixing at a one-month high.

Dollar Lifted By Japan PM, Improved Sentiment – Reuters

The dollar rose against the yen on Monday as Japan’s leader criticized excessively volatile currency markets, and most regional equity markets gained, curbing demand for safe-haven yen.

Emerging-market currencies’ stability may be short-lived – Nikkei News

While many emerging countries’ currencies have stabilized or strengthened as global economic weakness has weighed on the dollar, their slide could resume amid persistent concern about underlying economic issues.

A Growing Problem for EM Currencies -SogGen – FXStreet

Research Team at Societe Generale, suggests that the EM growth cycle, both in absolute terms and relative to G10, matters immensely for emerging market currencies.

Rupee Outshining Emerging Market Currencies – Seeking Alpha

Looking back, 2015 was a tough year for emerging market (EM) equities and their currencies. A looming interest rate hike in the U.S., combined with a Chinese slowdown and falling commodities, ensured that most EM currencies faced tremendous downward pressure.

Five Countries Being Squeezed by Currency Pegs – Bloomberg

Only on the streets of cities like Cairo, Abuja or Tashkent can you gauge just how much pressure developing countries are under to ease controls on their currencies.

Press Release

CFTC Designates the National Futures Association as a Recipient of SDR Data
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order authorizing the National Futures Association (NFA), the only registered futures association (RFA) registered with the CFTC, to be a designee to receive access to data maintained by swap data repositories (SDR).

Benchmarking FX Performance

As more buy-side traders take on the routing and execution decisions for their trades, the demand for trade-support tools, such as transaction cost analysis, has grown in parallel.

Europe Takes Lead in FX ‘Best Ex’

Spot foreign exchange trading is not covered by Markets in Financial Instruments Directive II, the incoming regulations covering European financial markets from 2018, but that does not mean the asset class completely escapes increased scrutiny.

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