Top Headlines

Sterling Hits 12-Day High as Investors Bet on Conservative Win – Reuters

Sterling hit its highest level against the dollar in almost two weeks on Tuesday, buoyed by expectations that the ruling Conservative party would be victorious in Thursday’s elections and would probably win a majority of parliamentary seats.

Fed Weighs Benign Impact of Rate Rises on Markets – Financial Times (subscription)
Among the arguments likely to be advanced in favour of an interest rate rise by the Federal Reserve at next week’s rate-setting meeting is a striking fact about its recent increases: they have left relatively little imprint on financial markets.

Five Questions About the Fed’s $4.5 Trillion Balance Sheet – Bloomberg

Bulls and Bears Are Both Winning as Markets Take Strange Turn – Bloomberg
Markets are handing rosy returns to optimists as well as pessimists. History tells us it ain’t going to last.

Sharp Rise in Mexican Peso After State Election – Financial Times (subscription)
Mexico’s peso hit its highest level since November, buoyed by projections pointing to a narrow victory for the ruling party in the country’s biggest state after polls had earlier predicted a tight race.

Qatar C.Bank Official: We Have Huge FX Reserves to Support Riyal – Reuters
A dip by the Qatari riyal against the U.S. dollar in the spot and forwards markets on Tuesday is due to speculation, and Qatar has huge foreign exchange reserves which it can use to support its currency, a central bank official told Reuters on Tuesday.

Automated Trading of Commodity Futures Accelerating –  Financial Times (subscription)
The machines are taking over markets for energy, metals and food.

Regulatory News

Foreign Exchange Rules Eased, Baht Rises – Bangkok Post
The Bank of Thailand said it’s easing some foreign-exchange rules to reduce compliance costs for the private sector.

Banker Robert Jones Said to Be on Trump List for Fed Governor – Bloomberg
Robert G. Jones, the chairman of a bank in U.S. Vice President Mike Pence’s home state, is under White House consideration among other candidates to be nominated as a Federal Reserve governor, according to two people familiar with the selection process.

Trump Taps Former Banker Joseph Otting to Head OCC – Financial Times (subscription)
Donald Trump has nominated a former banker to become comptroller of the currency, in a key first step toward unpicking the regulatory framework in place since the financial crisis.

Three Dodd-Frank Changes That Could Actually Pass Congress – American Banker (subscription)

While the House is expected to vote this week on a sweeping regulatory reform bill called the Financial Choice Act, it’s already clear that the legislation is highly unlikely to be enacted due to Democratic resistance in the Senate.

FIA Cautions Against Forced Relocation of Euro Clearing –
FIA has responded to a communication from the European Commission on challenges for critical financial market infrastructures and for further developing the Capital Markets Union.

Misys Teams With Broadridge for MiFID II Regulatory Reporting – Finextra
Misys has unveiled a regulatory reporting component which enables banks to comply with the Markets in Financial Instruments Directive (MiFID II) ahead of the 3 January 2018 deadline.

Company News

John Paulson Is Struggling to Hold On to Client Money – Bloomberg
The walls keep closing in on John Paulson.

Southern Europe’s Most Troubled Lenders Stumble Toward Solutions – Wall Street Journal (subscription)
Problems at several long-suffering lenders in southern Europe are coming to a head, a reminder of weak links remaining in the region’s banking system despite progress made by many larger lenders to repair their balance sheets.

China Exchanges Resume Allowing Bitcoin Withdrawals – Wall Street Journal (subscription)
Three exchanges end three-month moratorium after upgrading systems in response to heightened government scrutiny

Market Savvy

JPMorgan Has a Surprisingly Simple Theory for Low Volatility – Bloomberg
Investors have conjured up myriad theories to make sense of historic lows in market volatility across asset classes despite such strong headwinds, citing everything from soaring assets in passively-managed vehicles to the rise of social media. To explain the tranquility, JPMorgan Chase & Co. strategists led by Nikolaos Panigirtzoglou go back to the basics.

Dollar Hits Seven-Month Low, Stocks, Oil Retreat as Caution Reigns – Reuters
Escalating tensions in the Middle East, the impending testimony of the former FBI director, British elections and a European Central Bank meeting this week, all took their toll on Asian stocks, oil and the dollar on Tuesday.

For BlackRock, Yuan Is Key to Ongoing Rally in Asian Currencies – Bloomberg
On a winning run thanks to the downtrodden dollar, Asian currency bulls have something else to smile about — the yuan. The Chinese currency’s unexpected surge over the past two weeks has put it atop the Asian leader board, with the gains, thought to be largely engineered by policy makers, turning around a weakening trend in the yuan.

RBA Holds Rates at Record Low Amid Sluggish Growth Outlook – Bloomberg
The Reserve Bank of Australia kept its benchmark interest rate unchanged amid a mixed picture of weaker growth signals, a stronger jobs market and a slowing of house prices.

U.K. Retail Sales Decline as Households Keep a Lid on Spending – Bloomberg
The evidence is mounting that U.K. consumers are reining in spending.

Industry Events

FIA International Derivatives Expo (IDX 2017), 5-7 June, London 
MFA Forum 2017, 20 June, Chicago
Profit & Loss Scandinavia 2017, 14 September, Stockholm
Forex Network Chicago 2017, 27-28 September, Chicago
FIA Futures & Options Expo 2017, 17-19 October, Chicago