LONDON TO BECOME MAJOR OFFSHORE HUB FOR RENMINBI TRADING

Although there was a talk three years ago that the U.K.-China relations deteriorated after U.K. Prime Minister David Cameron met with the Dalai Lama, the exiled Tibetan leader, developments that take place today show it's not a problem anymore.

As London is hosting China's president Xi Jingping, a People’s Bank of China official told a British executive that the central bank already expects London to be the worldwide center for renminbi trading, Bloomberg has reported without naming the person.

The yuan wasn’t even allowed outside its own borders before 2004, but China is opening up now, driving predictions that it will become a reserve currency eventually rivaling the dollar. London already has 40 percent of global foreign-exchange trading and wants to build on its dominant position by grabbing a major share of offshore renminbi trading.

London’s dominance in foreign-exchange trading has been a widely-spread topic in the past week as bankers and politicians cite a statistic from TheCityUK, a financial services lobby group: London trades more dollars than New York, and more euros than all of Europe combined.

For the British capital-city, intensifying its renminbi trading could mean more financial services jobs and more investment. In the past 15 years, over $50 billion of Chinese cash has flowed into British assets, according to Standard Chartered estimates. The two countries agreed on 14 billion pounds ($22 billion) of trade deals during Chinese Premier Li Keqiang’s visit in 2014.

A research commissioned by Euronext NV expects as much as $5 trillion of Chinese money over the next three to five years to flow into assets on European exchanges.

Data supports the belief that London’s gravity is pulling in renminbi trading. Peak transactions in the offshore currency against the greenback occur at 7 a.m. London time, reflecting the handover from Asia when London forex traders are at their desks, ICAP Plc data shows.

In the past year, trading has more than doubled at that time on ICAP’s EBS Brokertec platform. The dollar-renminbi cross has surged to its third-most traded pair from 14th in 2013. Last year, the broker and market operator created a 24-hour, six-person team focusing on the Chinese currency.

In the past six months, offshore renminbi trading more than doubled on Thomson Reuters Corp. markets to $192.5 billion in September. This included spot and forwards transactions. That is up from $127.1 billion a year earlier and $28.2 billion in 2013.

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LOONIE, CANADIAN BOND RISE AS LIBERAL PARTY LEADER WINS FEDERAL ELECTION

The Canadian dollar strengthened Tuesday after Canadians voted for Liberal Party leader Justin Trudeau as the country’s new prime minister in the federal election.

The nation-wide vote, held on Monday, led to the ouster of Stephen Harper, who was running for what would have been his fourth term as prime minister.

Justin Trudeau will now become Canada’s 23rd prime minister. The Liberal party, which claimed 184 seats in the newly expanded 338-seat House of Commons, became the first ever to vault directly from third party status to government, says National Post.

The country’s new leader campaigned on a plan that included running C$25 billion in deficits over three years to stimulate the economy with infrastructure spending, while increasing taxes on top earners and cutting them for the middle class, says Bloomberg.

The Canadian dollar strengthened by 0.34% to 77.06 U.S. cents, paring a decline from Monday’s session. It traded at 76.79 late Monday in New York.

The yield on the Canadian 10-year sovereign bond rose 6.1 basis points to 1.52%, according to FactSet data.

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U.S. STOCKS OPEN LOWER AS INVESTORS DIGEST EARNINGS, ECONOMIC REPORTS

U.S. stocks opened slightly lower on Tuesday as investors digested a slew of earnings reports and better-than-expected housing data.

The S&P 500 opened 3 points, or 0.1%, lower at 2,030. The Dow Jones Industrial Average fell 40 points, or 0.2%, to 17,190. The Nasdaq Composite began the day down 6 points, or 0.1%, at 4,898.

U.S. housing starts jumped to a nearly an eight-year high in September as builders ramped up construction of apartments.

The Commerce Department reported that housing starts rose 6.5% to 1.206 million units last month from August’s total of 1.132 million units, while analysts had expected 1.140 million.

The number of building permits released dropped by 5.0% to 1.103 million units from August’s total of 1.170 million. Economists expected building permits to fall by 0.9% to 1.164 million units in July.

The third-quarter earnings season was set to enter its peak on Tuesday, with 20 companies slated to report, says S&P Capital IQ.

For the third-quarter reporting season so far, aggregate earnings for the S&P 500 stand at $28.62 per share, down 4.77% from a year earlier, according to data from S&P Capital IQ. That’s 64 basis points better since last Monday, when the first full week of earnings season began.

More than 110 companies are expected to release earnings this week.

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