Weekly review: The end of one era; the start of another
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Foreign Exchange

Weekly review: The end of one era; the start of another

Change – that was the theme this week, as EuromoneyFXNews reflected on the departure of one of the giants of the FX industry this past decade.

EuromoneyFXNews editor Hamish Risk produced an in-depth profile that not only tells the story of Ivan Ritossa’s remarkable career as he leaves the helm at Barclays, but also the rise of the bank as an FX powerhouse and the development of the single-dealer platform. Read it here – it’s the first time the story has been told.

While we are on the subject of change, we also had exclusive news from Bloomberg about a substantial shift in the multi-dealer FX space.

Tod Van Name, Bloomberg’s FX chief, told us volumes on its FXGO platform were up 79% year to date, far outstripping the performance of other venues and producing what he described as “serious changes” in the market place.

And, to labour the point, we also talked to Derek Sammann, head of interest rate and FX products at CME Group,who explained how the firm planned to alter market perceptions and make a success of its European venture into exchange-traded FX.

The firm, which closed a previous foray into centrally cleared FX in 2008, explained why a willing client base means this time it will be different.

Meanwhile, it was not so much a change as a homecoming, as Morgan Stanley added a new fund from Stephen Jen, its former strategy chief, to its family of Ucits III funds.

Jen, who left Morgan Stanley in 2009 to join a hedge fund, told us why he was a “glass-is-half-empty” investor.

Elsewhere, we spoke to Rabobank, whose prime brokerage business has been thriving amid the turmoil of the financial crisis.

As Peter Plester, PB chief at Rabo, explains, it is the bank’s credit rating that means its customers can get to the prices that its rivals can’t.

Hong Kong challenged

In the markets, the big talking point at the start of the week was the fact that the Hong Kong Monetary Authority had intervened for the first time in three years to keep USDHKD within its trading band.

For some, it was a positive sign that risk appetite was improving and money was flowing into Asia once more.

Indeed, coming on the back of record highs for the renminbi against the dollar last week, it prompted speculation that central bank reserve diversification was back on the agenda – a phenomenon that has the potential to boost EURUSD.

For others, though, it could herald the beginning of the end for Hong Kong’s peg against the dollar.

That would take the HKD out of the dollar’s sphere of influence, and continue the trend we reported on this week of the rise of the renminbi currency bloc.

Meanwhile, the main currencies held within recent ranges.

True, USDJPY looked like it was about to break higher, but for all the well-worn arguments for JPY weakness, it remained stubbornly close to its nominal all-time high against the dollar.

Sterling enjoyed a boost from news of the end of the UK recession, and enthusiasm for the euro was tempered by muted eurozone activity data, but still GBPUSD and EURUSD stayed well within recent limits.

That lack of volatility is making some nervous – periods of calm invariably herald wild swings in the currency markets.

However, for those looking for a trigger that could break the market out of its torpor, they could do worse than look at looming CDS regulation in the EU.

Indeed, regulation that limits the use of CDS along with renewed fears about eurozone debt could be just the thing to get the market moving again.

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