Tapering at last
The biggest talking point among traders for several months now has been “When will the FED start tapering?”. At least we know the answer now. Wednesday’s FED meeting announced a reduction in the amount of money being thrown at the market, reduced by $10bn a month from $85bn to $75bn. This really is a symbolic gesture. In the overall scheme of things, a reduction of $10bn a month being pumped into the US economy is neither here or there. The economic output of the US economy is well over $15,000bn and growing strongly. The other aspect of the FED announcement was not to...
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 fall on the back of the ECB reducing the overnight...
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 Swiss Franc, so better add CHF as well. With four...
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 without Greece? Once you start asking these...
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