Day: December 13, 2017

No Surprises: Fed Raises Interest Rates Again

The US Federal Reserve raised interest rates for the third time this year on Wednesday, citing an improving economy and labour market.

At the end of the Federal Open Market Committee’s (FOMC) two-day meeting, it was announced that the benchmark interest rate would be increased by 25 basis points, to between 1.25% and 1.5%.

“In view of realised and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1-1/4 to 1?1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation,” said the FOMC in a statement today.

Deutsche Research Highlights FX Macro Struggles

New research from Deutsche Bank shows that returns from FX macro managers have dropped to their lowest levels since the 1980s, despite the fact that “there does not appear to be a structural decline in the excess returns available to FX investors”.

The Deutsche Bank Currency Index (dbCR), which captures the beta available in the FX market by following a simple carry, valuation and momentum strategy, is at -2% for the year, but is well within historical ranges.

Hence the assessment from George Saravelos, an FX strategist at Deutsche and author of the research note, that despite low volatility and uncertainty around key macro issues there doesn’t appear to be a structural decrease in potential FX returns.

MarketFactory Enables Bitcoin Trading Via its API

MarketFactory has announced today that FX market participants will be able to use its API, Whisperer, to trade bitcoin futures on the CME when they launch on December 18.

Additionally, Whisperer provides access to Bitcoin market data.

“Our Whisperer API and connectivity solution simplifies and reduces our clients’ technical cost of entry to new currency markets, and with that in mind, we are pleased to announce that BTC futures are already available to trade via our CME integration,” says Matt Whitaker, director of product management at MarketFactory.

UK Businesses Increase FX Hedging Ahead of Brexit

As UK businesses prepare for Brexit, small firms are managing their FX risk more and more as they look to increase trade internationally, and exporters forecast increased growth in FX turnover, according to a new report from East and Partners released this week.

Following interviews with 2,211 UK corporates, East and Partners has revealed that 25% of micro businesses and over 40% of SMEs used FX forwards in the second half of 2017, an increase of 16% and 15%, respectively, over the last six months. The report also shows that larger businesses are also using hedging options on a more regular basis, with nearly half indicating their use.

“Awareness and understanding around the benefits of FX risk management solutions has clearly hit home with UK small business, leading to record highs in its usage,” says Simon Kleine, business lead at East and Partners Europe.