Forex News | Currency News by Forexlive

After some disappointing economic data in recent weeks this will come as a welcome lift. The big manufacturers index for June came in at +1 against market expectations of -4. USD/JPY is basically unchanged at 88.50.

The financial regulatory reform Bill has passed through the House of Representatives and will now move on to the Senate.

–House Passes Regulatory Reform Bill; Senate Vote In Mid-July
–House Speaker: Bill Has ‘Toughest Set of Wall Street Reforms’ In Years
–Rep. Bachus: Bill Doesn’t End Too Big To Fail, Fails To Fix GSEs

By John Shaw

WASHINGTON (MNI) – The House passed the most sweeping package of
financial regulatory reforms in decades Wednesday on a mostly party line
vote.

The bill was approved in the House 237 to 192.

The Senate will take up the same bill the week of July 12th. If the
Senate approves the bill, it will be sent to President Obama for his
signature.

During the two-hour House debate, Democrats and Republicans
repeated arguments that they’ve been making for months.

House Speaker Nancy Pelosi said the legislation represents “the
toughest set of Wall Street reforms in generations.” The bill, she said,
would “end recklessness on Wall Street that led to joblessness on Main
Street.”

House Financial Services Committee Chairman Barney Frank said the
bill includes a strong set of consumer protections for financial
products.

Rep. Spencer Bachus, the ranking Republican on the Financial
Services panel, said the bill would not prevent future bailouts. He also
said that the legislation failed to reform government-sponsored
enterprises.

The underlying bill would create a council of regulators to monitor
the economy for systemic threats. It would institute new regulations on
hedge funds and over-the-counter derivatives and creates a Bureau of
Consumer Financial Protection that will oversee mortgage, credit cards
and other credit products.

The bill provides for expanded regular audits of the Federal
Reserve by the Government Accountability Act. It includes a variation of
the Volcker-rule, banning banks from proprietary trading and limiting
them from investing in or sponsoring hedge funds and private equity
funds.

It limits bank investments in private equity or hedge funds to 3%
of a fund’s capital. Total investment in private equity and hedge funds
can’t exceed 3% of a company’s tangible common equity.

The bill would push most OTC derivatives through third party
clearinghouses and onto exchanges or electronic trading systems. It
would force banks to push some of their swaps trading into subsidiaries.

Under the bill, banks will be allowed to keep their derivative
trading operations as long as they are used to hedge risk or trade
interest rates or foreign exchange swaps.

The bill will give federally insured banks up to two years to send
instruments such as uncleared credit default swaps off to a separately
capitalized subsidiary.

While it will only required a majority vote in the House and Senate
to pass, Senate supporters will have to secure 60 votes to cut off the
debate in the upper chamber.

Senate Banking Committee Chairman Chris Dodd has said that he
believes he will be able to get 60 Senate votes for the package.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

The FX market tends to ignore Japanese economic data, at least from an intraday perspective, but recent indicators show that the economy is slowing down fast and this could have some serious repercussions for the proposed deficit-reduction policies of the new PM.

There are some quite big Toshin launches happening at the moment in Japan, with around JPY 700 billion yesterday and another JPY 400billion today. Obviously the demand yesterday led to some big moves higher in the JPY crosses, led by AUD/JPY, and if the same thing happens today then we should see more rallies albeit not so much as yesterday. AUD/JPY is the favourite pair for Japanese investors given the favourable interest rate differential.

This is a pretty big call given the strength in the pound on the crosses in recent times. This is primarily a technical trade and they have recommended to their customers a short trade, with a stop-loss above 1.5550 and a target at 1.3500. Obviously not a trade for the intraday player.

The AUD and the CAD have had bad nights falling across the board and the GBP has also lost some of its recent gloss. Risk-off is once again becoming the mantra but currencies like the EUR might suffer less than others as the market is already short there. The JPY remains in demand as a safe-haven play in times of risk but from an intraday perspective, talk of some large Toshin demand may support AUD/JPY, CAD/JPY etc at least for this session (more a bit later).

Good luck today.

• ADP employment report shows US private sector job growth of only 13,000; well below expectations
• Canadian GDP unchanged in April after 0.6% March rise
• Chicago PMI dips to 59.1 in June from 59.7 in May
• Trichet: Smooth transition in money market
• Fed’s Lockhart: Recovery not strong enough to warrant higher rates
• Moody’s:  Spain on review for a downgrade from AAA. last of ratings agencies to act
• Merkel’s presidential candidate Wulff requires three votes to secure German presidency
• S&P 500 slides late, falls 1.0% to 1031; 10-yr note at 2.94%, new 14 month low
• Oil falls 0.70 to $75.25; gold ends mid-range at $1242

EUR/GBP was the star today as month-end demand, relief over the ECB refi and soggy UK data helped set off a nasty short squeeze. The rally took EUR/GBP as high as 0.8227 on the London close before reverting lower in afternoon trade, ending at 0.8180.

EUR/USD was mostly range-bound in US trade, running into selling in the 1.2290s throughout the session and ending on its lows at 1.2225. Risk aversion remains high as Merkel did not get much support in the German parliament today, casting a shadow over her political health and US growth fears return to the fore after weak ADP data set the stage for poor payrolls on Friday.

Commodity currencies were bashed throughout the session, sold both when the euro was strong early in the day and when the dollar recovered late in the session. Month-end requirements were part of the story but a stormy near-term outlook for global growth remains the primary factor at work today.

Odds of a Canadian rate hike next month were trimmed further by flat April GDP. USD/CAD rallied as high as 1.0647.

USD/JPY was in modest demand for month-end fixings early in the day but ran into heavy sales in the 88.70s. We end the day soft at 88.44 as risk aversion returns. Japanese tankan data will be a focus overnight.

The rest of the week should be busy as purchasing managers reports from around the globe and US employment data Thursday and Friday (claims and NFP) help shape sentiment.

With about 20 minutes to go in cash trading on Wall Street, the S&P 500 is at its lows for the year, now at 1033. Gulp.

EUR/USD has softened in response and not trades at 1.2233.

• Wants to make sure currency regime does not favor exports
• Must gradually reduce spending while preserving growth
• Must get debt and deficit under control
• Growth not satisfactory, needs to be 4-5%

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