The European Central Bank gears up to defend its bond-buying program in German court. The USA serves notice to virtual currency providers that if they’re helping tax evaders, they’ve got lots to fear. India’s rupee hits all-time lows.

FX prime brokers are discontinuing double give-up relationships because those agreements can’t satisfy Dodd-Frank pre-trade requirements. Even though Sweden’s currency has taken a hit lately, central banks are stocking up on it and other Nordic currencies as a way to get away from dollar and euro reserves. Brazil’s currency weakening experiment, hoped by some to solve large numbers of economic problems, falls a bit short of miraculous.

Commentary and Insight

Memorial Day thoughts on trading and happiness
MrTopStep.comBy Vikram | MrTopStep.com
Oh, the spreadsheet may say you can, but if your identity is partly tied up in your account balance, you really can’t afford it. We all make this mistake sometimes. We confuse our net worth and our self worth.
jlne.ws/10ZIQiV

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Quote of the Day

This also looks to be a test case as China pushes its offshore renminbi efforts into other regions, notably in Europe as London, Paris and others vie for an offshore trading status.

Jimmy Koh, managing director of research and investor relations at UOB, in “Singapore cements offshore renminbi ambitions”

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Move Over Japanese Yen, Make Way For China’s Yuan
Forbes
By 2015 the Chinese currency, the renminbi, will be one of the three most traded currencies in the world, on par with the euro and the dollar, HSBC said on Friday.
jlne.ws/10ZLYeW

Commentary and Insight

Yuan’s puzzling rise signals imminent reforms
Business Times
BEIJING’S tolerance for the yuan’s massive rally against the US dollar over the last six weeks has mystified many market observers, but some traders in the domestic forex market believe the anomaly is a harbinger of a new wave of currency reforms.
jlne.ws/13ErKJe

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Quote of the Day

The idea that money is still flooding emerging markets misses the big picture, which is that global cross-border capital flows are down 60 per cent from their 2008 peak.

Ruchir Sharma in “Don’t expect emerging markets to be flooded in cheap money”

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Don’t expect emerging markets to be flooded in cheap money
Ruchir Sharma – FT.com
The easy money policies of the US and Japanese central banks are inspiring worried talk of “currency wars”. The fear is that newly printed dollars and yen will flood into fast-growing emerging markets, driving up their currency values, undermining their exports and creating local asset bubbles. In this analysis, emerging market leaders are fighting in vain to hold back a destructive tide.
jlne.ws/13ErJF6

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Secret liquidity and Scottish independence
Joseph Cotterill | FT Alphaville
Yes, it’s hardly a neutral document on the matter. Still, there are lots of interesting charts in the UK government’s latest report on the finance and economics of Scotland becoming a sovereign state, this time covering the dangers from banks…Although we think they missed one.
jlne.ws/13ErJF8

Commentary and Insight

Yuan’s ‘too big to fail’ dilemma
Craig Stephen – MarketWatch
Too big to fail is always a hard argument to get the better of. It comes close to explaining why China struggles so much with the vexed question of opening its capital account and setting the yuan free.
jlne.ws/15IW0tj

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Argentina’s grand plan to recover US dollars is about as worthless as its own currency
Quartz via Yahoo! Finance
While hustlers in Buenos Aires secretly buy dollars on the street, the Argentine government is openly begging for greenbacks.
jlne.ws/10vMZed

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Quote of the Day
People aren’t sitting on dollars in Argentina because they make comfortable cushions; they’re hoarding them because it’s the safest investment in Argentina right now.

Roberto A. Ferdman in “Argentina’s grand plan to recover US dollars is about as worthless as its own currency”

The currency derivatives market in Johannesburg bumps over 500 billion rand for the first time. Broker FXCM catches favorable profit winds. Thomson Reuters adds onshore and offshore RMB interbank FX rates to its Eikon desktop.

The yuan is finishing on a positive note in response to global demand and economic factors. Zambia plans to force companies to bring their foreign currency back, to improve tax compliance. India plans to cut a levy on rupee-denominated bonds, in a bid to improve foreign investment.

Colombia joins the stimulus party. As Argentina tightens controls on foreign currencies, the currencies flow underground. German chancellor Angela Merkel says that eurozone austerity will require sacrifices (probably not meaning goats and sheep) in order to achieve the end goal of economic growth and stability. In today’s commentary section, OANDA’s Trevor Young goes into interesting detail on the subject of mobile currency trading.

Commentary and Insight

BlackRock urges Fed to rein in QE3
Dan McCrum in New York – FT.com
One of Wall Street’s biggest money managers has called on the Federal Reserve to rein in its programme of quantitative easing, saying its bond-buying tactics are a “large and dull hammer” that have distorted markets and risk stoking inflation.
jlne.ws/Yew44r

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Dollar/yen boost for ‘risk-on’ trading
Jamie Chisholm – FT.com
Colleagues on these pages note how traders are betting that the Bank of Japan’s new monetary splurge may boost Treasuries as the yen falls and Japanese funds seek extra yield. But if the action of recent sessions is anything to go by, it seems that investors are increasingly using the dollar/yen ($/Y) as their new broader “risk-on” proxy, too.
jlne.ws/Yew44x

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Quote of the Day

Fed policy has had a distorting effect on capital allocation decisions of all kinds at virtually every level of the economy. It is a very large and dull hammer for markets.
Rick Rieder, BlackRock, in “BlackRock urges Fed to rein in QE3″