Articles tagged by Usd
aversion generated by the Brexit vote has seen Scandinavian currencies more
than others coming under pressure along with sterling.
particular, the Norwegian krone and Swedish krona have been hit by the downward
trend. However, market analysts contacted by ...
EBS BrokerTec and Icap Information
Services (IIS) have launched EBS CNH Benchmark, the first fully electronic,
trade-backed reference rate for the offshore Chinese renminbi (CNH) market,
according to Icap.
The benchmark is published daily at 16:30
Beijing/8:30 GMT, and is timed ...
OTC Clearing Hong Kong (OTC Clear) has launched a clearing service for cross-currency swaps (CCS), which will initially focus on swaps in the USD/CNH currency pair.
OTC Clear is the first international clearing house to provide clearing for USD/...
TraderMade’s chief technical analyst, Steve Jarvis, has put out some interesting research looking at USD trading patterns around past presidential elections to see if there is any indication of what to expect in the upcoming one.
Using a USD trade weighted index chart for his analysis rather than specific FX rates, Jarvis looked at how the USD moved during the two months leading up to the previous seven US presidential elections and the two months after.
Going back to 1988, Jarvis highlights who was elected, their defeated opponent, and includes the percentage change for the USD index for the two months before and after the election, as well as the net change over the four-month period.
Today marks the conclusion of an acrimonious US Presidential race, with two candidates promising very different approaches to handling the US economy. As a result, analysts have been furiously mapping out the potential impacts of either result.
If Clinton wins:
Analysts at ING predict that in the case of a Clinton win USD will retrace its pre-election losses and re-couple with Federal Reserve expectations.
“Latest breakout of wage growth from post-crisis range means a Clinton win should see markets (fully) price in a Dec Fed rate hike,” they note.
“Following the US election, global markets have reacted in predictable panic. Equity markets [and] the dollar sold off and gold rallied,” notes Kerim Derhalli, CEO of invstr.
Profit & Loss previously reported on the immediate aftermath of the surprise US election victory for Donald Trump, but the question facing markets now is: what next?
“Key will be now whether or not Trump will prove to be a populist or a pragmatic president,” says Valentijn Nieuwenhuijzen, chief strategist and head of multi-asset at NN Investment Partners.
The US Federal Reserve increased interest rates by a quarter point today, also indicating that it now expects to increase rates three more times in 2017.
“In view of realised and expected labour market conditions and inflation, the committee decided to raise the target range for the federal funds rate to half to three-quarters per cent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labour market conditions and a return to 2% inflation,” says the Federal Open Market Committee in a statement issued today.
Last year the FX market was highly event driven, with periods of sustained low volatility occasionally punctuated by large but episodic market moves.
Looking ahead to 2017 and there are already clearly some events set to take place that have the potential to drive further bursts of volatility, namely the invocation of Article 50 by Britain to begin its exit from the European Union and the scheduled political elections in France, Holland and Germany.
In addition, the change of policy direction expected under US Presidential-elect, Donald Trump, and the US Federal Reserve’s indication at the end of 2016 that it currently plans to raise rates three times this year are expected to be major drivers of the currency markets in the coming year.
When assessing which large tail risk events are likely to take place in 2017, speakers at Profit & Loss’ Forex Network London emphasised that there are other risk factors being overlooked that might have a greater impact on financial markets.
“Like last year, the tail risks this year are quite high compared to normal,” said Colin Harte, strategist and senior portfolio manger at BNP Paribas Investment Partners. “There are some quite material risks that – if they come to pass – could have a significant impact on markets.”
He noted, however, that many of the expected tail risk events from 2016 were less dramatic than expected in the end: sterling took an obvious hit after the Brexit result, but soon became range-bound again, while the Trump election victory actually led to a rally in the equity markets.
Data from CLS shows that the first round of the French presidential election caused a much stronger reaction in the spot FX market than the second round.
The data shows that there was a significant spike in volumes following the first round of voting. Ahead of the vote, polls were showing a statistical tie for the top four candidates, and therefore the result was much more uncertain.
Before polling was suspended by law on Friday, 21 April 2017, Bloomberg’s composite of French polls showed Emmanuel Macron in the lead with 24.5 % and Marine Le Pen in second place with 22.5% of the vote
Galen Stops looks at the drivers behind the appreciation of the Mexican peso and asks whether the rally can continue.
Few, if any, saw this coming.
After Donald Trump won the US presidential race in November 2016, USD/MXN went from 18.03 up to 20.89, and by the time of his inauguration in January 2017, the exchange rate was up to 21.58.
This depreciation of the peso seemed eminently reasonable at the time, given that on the campaign trail Trump had promised to renegotiate the North American Free Trade Agreement (Nafta) in America’s favour or terminate the agreement altogether, not to mention building a border wall between the US and Mexico at the latter’s expense.
Singapore Exchange (SGX) set a new volume and open interest records for its USD/CNH futures contract in January.
A total of 297,011 USD/CNH futures contracts with a notional value of $29 billion traded on SGX’s platform last month. This represents an increase of 175% y-o-y and comes after the exchange reported full-year growth in trading on the contract of 270% in 2017 compared to the previous year.
Meanwhile, the daily open interest for this product reached a new high of 31,278 contracts, with a notional value of $ 3.21 billion, on 26 January.
The aggregate volume for SGX FX futures stayed above 1 million contracts, or approximately US$ 53 billion, for the full month, representing year-on-year (y-o-y) growth of 99.3%.
The average daily volume (ADV) of FX contracts traded on the exchange in February was 1.17 million. On a Year-to-Date (YTD) basis, this represents an increase of 123% over the corresponding period in 2017.
SGX’s USD/CNH futures saw a pick-up in activity last month, with 10 successive days of trading in excess of $1 billion, including two consecutive days of trading above $2 billion.
The Bankers Association of the Philippines (BAP) and Bloomberg have announced a series of new initiatives aimed at furthering the growth of the FX market in the Philippines.
The BAP has appointed Bloomberg as the new calculation agent for the USD/PHP spot reference rate. The spot reference rate is frequently used as a benchmark by onshore and offshore banks, corporations and asset managers in the Philippines for trade execution, valuation and benchmarking of portfolios.
"We are pleased to partner with Bloomberg to provide enhanced solutions to the FX community in the Philippines," says BAP's managing director, Benjamin Castillo. "These new initiatives will support the Bangko Sentral ng Pilipinas' (BSP) financial market development reforms to better organise and deepen the country's FX market. We look forward to execution efficiency, increased market liquidity and transparency leveraging Bloomberg's technology platform and industry best practices."
OTC Exchange Network (OTCXN), a blockchain-powered capital markets infrastructure company, today announced that it completed its first live test trades for the exchange of tokenised fiat currency and bitcoin.
The infrastructure provider says that it believes this to be the first time that tokenised US dollars and tokenised bitcoin have been exchanges between two separate trading accounts over an electronic trading platform with assets held in safekeeping at a neutral custodian and digitised on blockchain.
Currently, institutional traders usually conduct block trades of fiat currency and cryptocurrency over e-mail and chat, relying on the reputation and credibility of their counterparties to honor their part of the trades, often taking hours to confirm and settle. The OTCXN platform aims to remove trading counterparty and settlement risk with an atomic exchange of assets on high-performance blockchain and facilitates settlement of transactions instantly, not in hours or days.
Singapore Exchange (SGX), is launching a new product, SGX FlexC FX Futures, with the aim of “futurising” certain OTC FX product offerings.
Targeted for launch on August 27, SGX FlexC FX Futures - developed in consultation with market participants - enable bilateral trades that are privately negotiated with tailored expiration dates to be registered and cleared like a standard SGX FX futures contract. This feature will be available for INR/USD, KRW/USD, TWD/USD, USD/CNH and USD/SGD contracts.
Michael Syn, head of derivatives at SGX, says: "Access to counterparty credit, especially for tenors longer than spot, is increasingly scarce and expensive in the OTC FX markets.
The total volume of FX futures traded on SGX in July was 1.7 million, down 8% month-on-month, despite the exchange seeing record volumes in its USD/CNH futures.
Although volumes were down last month compared to June, they were still up 124% year-on-year. The monthly decrease appears to have been driven by a decline in volumes on SGX’s INR/USD futures, with trading down 23% m-o-m but still up 81% y-o-y.
The bright spot for SGX in July was trading on its USD/CNH futures, as a record $61.5 billion in notional was traded on these contracts, bringing the total volume of these contracts cleared to over $255 billion this year.
Gemini, the digital asset exchange and custodian founded by Tyler and Cameron Winklevoss, has launched a new cryptocurrency that is pegged to the US dollar.
The new cryptocurrency, called the Gemini dollar, is pegged 1:1 to the US dollar and is built on the Ethereum network according to the ERC20 standard for tokens.
Starting September 10, 2018 at 10am EST, it became possible to convert US dollars in a Gemini account into Gemini dollars and withdraw them to a specific Ethereum address. It is also possible to automatically convert Gemini dollars into US dollars by depositing them into a Gemini account.
A storm is brewing in the world of FX derivatives. Driven by, surprise surprise, Brexit uncertainty and Trump - there’s a sizable chunk of activity in GBP/USD options relative to the other major currency pairs.
Now the geopolitical landscape is of course backed into the price of the underlying currency pair, as opposed to the activity of the options. But the challenge is that as volumes increase, investment banks have to inevitably pay more in interdealer broker (IDB) fees. And the bigger the volume, the bigger the brokerage cost. Already under intense scrutiny to reduce costs wherever possible, this is a major headache that any desk head could do without right now.
A new research note from CME Group looks at whether FX options skews can be used to predict where certain currencies will move relative to the US dollar.Written by Erik Norland, executive director and senior economist at CME, the research opens by explaining that options markets typically exhibit a skew, but that in different asset classes this skew can be in different directions.For example, Norland points out that out-of-the-money (OTM) put options on equity index futures are usually more expensive than OTM call options because investors fear a sudden decline in stock prices more than a sudden rise. However, the reverse is generally true for options on agriculture products because food buyers are more concerned with a sudden increase in the price of crops rather than a decline.