Yuan Slumps to 11-Year Low as US Trade War Escalates – Reuters

China’s yuan slumped to a fresh 11-year low against the dollar on Monday and stocks fell as the Sino-US trade war sharply escalated, threatening to inflict more damage on the world’s largest economies and weigh further on global growth.

Central Bankers Rethink Everything at Jackson Hole – Financial Times

For the world’s central bankers gathered in Jackson Hole, there was a sense that things would never be the same again.

Walsh Becomes Second Republican to Challenge Trump for White House – Reuters

Joe Walsh, a conservative former US congressman turned talk show host, on Sunday became the second Republican to challenge President Donald Trump for the party’s 2020 White House nomination.

Trump and Abe Say Have Agreed in Principle on Trade Deal – Japan Times

The United States and Japan agreed in principle on Sunday to core elements of a trade deal that US President Donald Trump and Prime Minister Shinzo Abe said they hoped to sign in New York next month.

China Signals Intervention as Hong Kong’s Protests Intensify – Straits Times

China sent the strongest warning yet of using troops on Hong Kong’s streets, where Beijing says protests have turned into a “Colour Revolution”, with water cannons and tear gas fired in skirmishes between police and demonstrators in the 12th straight weekend of unrest.

UK Will Refuse to Pay £39bn Divorce Bill in No-Deal Brexit – Financial Times

Boris Johnson insisted on Sunday the UK would not pay the £39bn divorce bill in full in the event of a no-deal Brexit on October 31, as EU officials said it was “squarely and firmly” up to Britain to find a solution to the vexed issue of the Irish border.

Latin America Hangs On to Its Economic Gloom – Wall Street Journal

Region is becoming relatively poorer with each passing year compared with rest of world. 

Trump Says ‘I Wouldn’t Stop Him’ if Fed Chair Powell Resigned – Fox News

Before leaving for the G-7 in France, President Trump told reporters that he wasn’t happy with Federal Reserve Chairman Jerome Powell, saying that he didn’t think Powell was doing a very good job. “Do I want him to resign?” Trump said in response to a reporter’s question. “Let me put it this way: If he did I wouldn’t stop him.”

Looking Ahead to a Three Year Review of the FX Global Code and its Development

A webcast and transcription of a recent panel session in which senior industry figures discussed the future of the FX Global Code and the main challenges it needs to surmount.

Lira’s Sudden Crash Catches Japan’s Mom-and-Pop Investors Again – Bloomberg

The Turkish lira plunged 12% against the yen on Monday, the second time this year that Japanese investors were forced to liquidate positions in one of their favourite emerging-market trades.

Regulatory News

The Volcker Revamp Was a Small Victory in a Wider War – Financial Times

When the updated version of the Volcker rule landed last week, all of Wall Street had something to say about it. Among bankers, investors, lobbyists, lawyers and analysts, there were normal differences of opinion. But it was striking that various natural allies of the banks took views that were, at least on some level, logically inconsistent with arguments they have for years made about the burdens imposed by the rule.

Esma Probes Blurry Line Between FX Vendors and Venues – Risk

Forex liquidity aggregators resemble trading platforms – but are not regulated as such, critics charge.

ASIC’s ‘Why Not Litigate?’ Mantra: Look Overseas for Result – Australian Financial Review

Regulators in the US and UK reacted to public anger over bad bank behaviour. Ten years later, they have decided there are better ways than going to court.

Will Protest-Hit Hong Kong Lose Financial Business to Singapore Amid a Growing Climate of Fear? – South China Morning Post

Debate about which among competing Asian financial centres will eventually emerge as the “winner” has gone back and forth for decades and, lately, some have argued that Hong Kong has ruled itself out of contention with its protest movement. That, however, may be a premature and overly simplistic conclusion.

European Commission Plans to Simplify Eurozone Budget Rules – Financial Times

Officials look to ease burden on struggling members by softening debt reduction goals.

Crypto News

BoE Governor Raises the Prospect of a Global Digital Reserve Currency – Profit & Loss

In a speech at the Jackson Hole symposium at the weekend, Bank of England Governor Mark Carney raised the question of a global digital reserve currency, asking whether it may not be the most suitable long term solution to reform of the international monetary and financial system.

Adjunct Professor Claims Facebook’s New Currency Stole His Ideas –Washington Square News

An NYU Courant Institute of Mathematical Sciences professor has claimed that Facebook plagiarised a trade coin he proposed in an academic paper with their new e-currency, Libra.

China Places Libra Next to Alipay and WeChat Pay – and it Could Change the Game for Bitcoin – Forbes

China had a couple of kind words for Facebook’s Libra this week, placing it next to Alipay and WeChat Pay; and that could change the game for major cryptocurrencies.

US Lawmaker Still Concerned About Facebook Cryptocurrency After Swiss Meetings – Reuters

The chair of the US House Financial Services Committee said on Sunday she remained concerned about Facebook’s plans for a digital currency after meeting the government officials in Switzerland that Facebook has said will regulate it.

Company News

Investors Pull Money from Hedge Funds at Fastest Pace Since 2016 – Financial Times

A rebound in returns this year has not stopped clients punishing managers for weak 2018.

Deutsche Bank and UBS Explored European Banking Alliance – Wall Street Journal

Deal talks in June never coalesced but show how far European lenders are willing to go to address a punishing banking environment.

Trump Asserts He Can Force US Companies to Leave China –New York Times

President Trump asserted that he has the authority to make good on his threat to force all American businesses to leave China, citing a national security law that has been used mainly to target pariah states like Iran, Syria and North Korea.

UBS Faces Client Backlash Over Losses from Complex Options Strategy – Financial News

Yield Enhancement Strategy has generated at least $60m in losses for clients and more than two dozen customer complaints.

Market Savvy

Fed’s Mester Sees Downside Risk From Escalating Trade War – Reuters

Cleveland Federal Reserve President Loretta Mester said she sees “big downside risk” from rising trade uncertainty, and will be watching how businesses and consumers react ahead of the US central bank’s next policy meeting.

Central Banks Have ‘Lost Control’ of Pricing – Australian Financial Review

Central bank independence was being eroded faster than ever before, reducing valuable support for the economy, according to the chief economist of one of the world’s biggest reinsurers Swiss RE.

Hong Kong’s Currency Peg to the Dollar Isn’t an Achilles’ Heel – it’s an Achilles’ Shield – South China Morning Post

The peg, which prevented a complete economic wipeout in 1983, has been described as a ‘deadly weakness’, but in truth it is an automatically self-correcting mechanism that today’s Hongkongers can be thankful for.

Lowe Warns: The Shock of Trump is Becoming Real – Australian Financial Review

A world of deepening political body-blows from Donald Trump to Brexit and Hong Kong are fast turning into genuine economic shocks that threaten to overwhelm central banks’ powers, Reserve Bank of Australia governor Philip Lowe has warned.