Top Headlines

US Travel Ban Row Halts Dollar Recovery – Reuters

The dollar dipped as investors sought the traditional security of the Japanese yen after new US immigration curbs put the spotlight back on President Donald Trump’s protectionist bent and the risks it poses for the economy.

Beware of the Consensus for a Dollar Rally in 2017 – Financial Times (subscription)

US currency is no longer cheap and much optimism is already priced in.

Peso Recovers as Investors Hope for Trade Compromise – Wall Street Journal (subscription)

Mexican and US presidents speak, cooling tensions that have sparked big fluctuations for currency.

Carlos Slim says Mexico Should Consider Forex Stabilisation Programme – Financial Times (subscription)

Mexico should consider a forex stabilisation programme to curb inflationary pressures, according to the county’s richest man, Carlos Slim. 

Stumbling Sterling Heads for First Three-Day Fall of Year – Reuters

Britain’s pound fell, setting it on course for its first three-day fall against the dollar of the year and putting it on the back foot ahead of Thursday’s first Bank of England meeting of 2017. 

Forex Losses: MACC Advises BNM to Conduct Own Probe – Free Malaysia Today

The Malaysian anti-graft agency has advised Bank Negara Malaysia (BNM) to conduct its own internal probe over the alleged loss of US$10 billion (RM44.3 billion now) in a foreign currency trading scandal in the 1990s.

When Central Banks Get It Wrong – Profit & Loss

The latest brouhaha over FX losses took place 20 years ago but highlights the mayhem central banks can still create.

Renminbi Internationalisation Remains Elusive – Financial Times (subscription)

Offshore rate against the dollar has been stronger than its onshore counterpart.

India to Seek Weaker Rupee to Shield Growth, Deutsche Bank Says – Bloomberg

India’s currency is poised to weaken this year as the central bank seeks to cushion the economy from excessive appreciation, according to Deutsche Bank.

The Wrap – Profit & Loss (subscription)

Liquidity, fragmentation and geopolitics dominate closing conversations on Day 2 at Profit & Loss Forex Network Chicago.

Regulatory News

Mnuchin Dims Banks’ Hopes He Will Allow a Prop-Trading Revival – Bloomberg

Steven Mnuchin made clear he doesn’t want Wall Street banks getting back into the business of making risky market bets with their own capital, after Senate Democrats pushed him to clarify his responses to questions they asked during his confirmation process to be Treasury secretary.

US Regulators Hang Tough at Basel as Trump Rollback Looms – Bloomberg

US bank regulators are taking a hard line in a showdown with the European Union over global capital rules, even as President Donald Trump begins to pull the country out of international agreements and prepares to roll back financial regulations. 

Europe’s Zombie Tax on Trading Kept Alive by Election Season – Bloomberg

A European proposal for a tax on financial transactions is trapped in limbo: financial realities won’t let it come to life while political opportunism is preventing a quick death.

Company News

Goldman Presses May to Protect City Post-Brexit – Financial Times (subscription)

Head of US bank warned about threat to London at private Davos meeting.

FX Guru John Taylor Is Back, Minus the $12 Million-a-Year Salary – Bloomberg

The former hedge fund manager, who now charges $25,000 a year for his insights, forecasts the pound moving to $1.15—which he calls ‘conservative.’

Buy Side Reshapes Trading – Markets Media

The buyside is transforming the way it trades foreign exchange due to changes in liquidity provision in a forerunner for other asset classes, especially rates, according to consultancy Celent.

Former Watchdog Tracey McDermott to Join Standard Chartered – Financial Times (subscription)

Shift from enforcement to banking follows flurry of moves through the revolving door.

Chicago Traders Welcome Volatility in Trump Age – Chicago Business

Chicago traders who survived doldrums in recent years (not to mention boredom) are pumped about more volatility and volume in the age of President Donald Trump.

Market Savvy

Rand, Rouble Lead Emerging FX Falls; Lira in Surprise 1.2 Percent Gain – Reuters

The South African rand and Russian rouble were pummeled by weaker commodity prices, leading a wider fall in emerging currencies, while the Turkish lira bucked the trend with a 1.2 percent jump versus the dollar.

LatAm Currencies Strengthen After Weak US GDP Data – Reuters

Latin American currencies mostly strengthened after weaker-than-expected US growth figures dampened expectations of a fast rate-hiking cycle in the coming months.

Concerns Mount About UK-EU Financial Clashes, GBP/NZD Exchange Rate Struggles – Exchange Rates

The current week has started off poorly for the GBP/NZD exchange rate, which has remained negative on account of a lack of direct UK economic data.