With our fingers on the pulse of the global markets, in this blog we offer commentary, news and reviews from our in-house traders and trainers regarding the markets and the events that influence them.
ECB impact on GBPUSD
ECB Impact on GBPUSD On 20 June, I wrote about central bank power and the impact the ECB can have on the currency value. This was in evidence again this week on Thursday, when Mario Draghi, the head of the ECB, stated they would do “whatever it takes” to save the Euro. I have chosen to illustrate the impact of his speech on GBPUSD, rather than the Euro. The 4 hour candle on EURUSD was 199 pips in range. The candle length for Cable was 232 pips. In either case, very significant movements. One of the “excuses” for weak...
read moreUK GDP and the Olympics
UK GDP figures show a third consecutive quarter with the economy shrinking, or as the official term goes, negative growth. The quarter on quarter drop of 0.7% was far greater than the 0.2% anticipated by the markets. Naturally, the value of sterling fell after the announcement. I don’t know about you, but I have some sympathy for those claiming the weather slowed the economy down. With the wettest April and June for more than a century, it was hardly surprising that construction output fell. I can just imagine all of the muddy...
read moreA little optimism
Optimism in the markets seems as rare as sunshine in a British summer this year. But as the sun comes out, the temperature soars. Phew, it’s hot right now. The same is true with optimism and the Euro. A few comments this morning about changing the status of the European Stability Mechanism (ESM) by an ECB council member sent the Euro soaring as well. Ewald Nowotny suggested the ESM could be classified as a bank, although no formal discussions have taken place with this objective. The optimism from this simple statement had the Euro...
read moreJust like buses – central banks announcements
Last week was notable for news affecting the value of major currencies. We waited all week for announcements from central banks and just like buses, three came along at once. The Bank of England’s announcement to print another £50 billion was anticipated. The markets knew that was going to happen. At the moment of the announcement, a small blip in the value of GBPUSD just confirmed the inevitable. The European Central Bank then duly obliged with a quarter point cut from 1%. This bit was expected by the market. The Euro went into free...
read moreAfter the Euro summit
After the Euro Summit How quickly news drops out of the headlines. It was only a week ago that Eurozone leaders met for another in the series of Euro summits to save the Euro. Expectations were low, lower than a snakes belly in fact. Then something miraculous happened, an announcement of progress towards banking union. The markets immediately pushed the value of the Euro higher. Banking union is one of the pillars required to support a currency. One currency, one central bank standing behind it, with the central bank in turn monitoring and...
read moreCentral bank power
When it comes to trading currencies in the forex markets, there is no-one to fear more than a central bank and comments made by them. Right now, the Federal Reserve (FED) are in committee, determining whether to intervene in the US economy. If they do, they will decide how and when to do it. In a market where trillions of dollars are traded daily, few institutions can affect the value of a currency as much as a central bank. An example earlier today is sterling (GBPUSD) as the minutes from the Bank of England meeting were released. The...
read moreMirror, mirror on the wall, who’s the fairest currency of them all?
It’s been an interesting few days. Friday started with gloomy news from the UK manufacturing sector. GBP unloved as the UK remains recession bound. Then the news from the USA. Non-farm payroll figures upstaged the UK in their disappointment. Cue USD joining the ugly currency parade. So now we have EUR, GBP and USD in this parade. The Swiss National Bank decided a while ago to limit the value of the Swiss Franc by linking it to the value of the Euro. The setting of a “floor” rate of exchange effectively fixes the value of the...
read moreWhat is a Euro worth?
I spent yesterday with many other traders at a trading conference in London. An enjoyable day in good company listening to some very good presentations and panel discussions. Naturally, there were many questions about the Euro and Greece’s (future) participation in it. It is fair to say that pretty much everyone in the room (there were a couple of hundred or more) had a negative view of the value of the Euro. But why? What is a fair price? Hasn’t all of the downside risk already been priced in? Wouldn’t the Euro be stronger...
read moreNew 2012 lows for Euro
It must be some kind of justice that the Euro is currently trading near the lows for 2012 against the US dollar on the eve of another EU summit. As I write, the Euro has just set a new low for the year, heading below 1.2600 for the first time and setting the lowest rate for the currency since August last year. With continuing disagreement in the Euro about substantive measures to solve the problems in the Euro area, this level of trading can only be indicative of market expectations for the EU summit later today. The more that heads of...
read moreWelcome to the trader’s blog
Welcome! On this trader’s blog we’ll be sharing some of thoughts of our in-house traders and trainers regarding the markets and the events that influence them.
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