Gaining an Edge

It is a conundrum of the current foreign exchange market that while the world is awash with events and opportunities to trade, successful traders seem thin on the ground. Tony Sycamore recently left his FX sales role at Commonwealth Bank of Australia in Sydney and – leveraging his background in sales there and BNP Paribas, as well as his time on the prop trading team at Goldman Sachs in Sydney – has established TechFX Traders, a new advisory firm that seeks to provide structure and discipline to individual traders, and ideas to professionals.
Read More »

What Does the Future Hold for FX Prime Services?

There has been a substantial shift in FX prime services over the past two years: some FX prime brokers having been pulling back from the space, prime-of-primes have been expanding to fill the gap and now new firms are coming to market offering potential new solutions to the current credit constraints in the market. But how will FX prime services evolve from here? For the Q3 edition of Profit & Loss, we launched a survey to gauge market sentiment regarding this question. It’s not too late to have your say, the survey will close at midnight on July 31st : https://www.surveymonkey.co.uk/r/PrimeServices
Read More »

Survey: FX Prime Services

The Q3 edition of Profit & Loss will feature an in-depth special report on FX prime services, looking at the significant changes that have occurred in this segment of the market and how these will impact trading firms in the future. But we want to hear from you about your expectations regarding the future of FX prime services, which is why we're asking you to fill out this 1-2 min multiple choice survey: https://www.surveymonkey.co.uk/r/PrimeServices All survey responses will remain anonymous, but should you choose to include your email address at the bottom of the survey you will receive a free PDF of the special report when it is published in September.
Read More »

BIS Paper Sees Some Evidence EUR/CHF Floor Break was Signalled

Given how the EUR/CHF cross collapsed immediately following the removal of the pair’s artificial floor by the Swiss National Bank (SNB) in January 2015, it would seem an obvious answer to the question, “was the event expected” would be “no”. The cross fell from its SNB-imposed floor at 1.2000, hitting 0.7000 at one stage before the “official” low was set at 0.85, finally settling around 1.05. A new paper published by the Bank for International Settlements (BIS), however, studies events in the FX market leading up to the removal of the EUR/CHF floor in January 2015, and while it is not conclusive, it does find evidence that some option markets were predicted the break lower in the cross.
Read More »

How Long Can the MXN Rally Last?

Galen Stops looks at the drivers behind the appreciation of the Mexican peso and asks whether the rally can continue. Few, if any, saw this coming. After Donald Trump won the US presidential race in November 2016, USD/MXN went from 18.03 up to 20.89, and by the time of his inauguration in January 2017, the exchange rate was up to 21.58. This depreciation of the peso seemed eminently reasonable at the time, given that on the campaign trail Trump had promised to renegotiate the North American Free Trade Agreement (Nafta) in America’s favour or terminate the agreement altogether, not to mention building a border wall between the US and Mexico at the latter’s expense.
Read More »

Predicting the Impact of Brexit

Speaking at the Commodity Futures Trading Commission’s (CFTC) Market Risk Advisory Committee (MRAC) meeting today in Washington, a range of market participants weighed in on the expected impact of Britain’s exit from the European Union Eileen Kiely, director at BlackRock, said that markets are currently in a period of low volatility – both implied and realised across asset classes globally – and that she does not expect Brexit to disrupt this trend. This is in part because Kiely believes that markets are currently pricing the risks associated with Brexit appropriately.
Read More »

Carney Speech Prompts Sterling Slide

The value of sterling slid today as Bank of England (BoE) Governor, Mark Carney, indicated that there would be no immediate adjustment of monetary policy by the central bank. In a speech delivered at Mansion House in London, Carney declared that “now is not yet the time to begin” monetary adjustment, ruling out the possibility of an interest rate hike. GBP/USD promptly dropped from 1.2753 at 8am BST to 1.2631 just before 3pm BST in response to Carney’s comments. “Since the prospect of Brexit emerged, financial markets, notably sterling, have marked down the UK’s economic prospects.
Read More »

CLS Releases Analysis of Brexit-Related Events

One week after releasing analysis of activity around the UK election, and as the first anniversary of the vote approaches, CLS has released analysis of Cable spot volumes during Brexit-related events. Unsurprisingly the analysis highlights how volumes spike during unexpected events. The data indicate that the Brexit vote, the Cable flash crash of October 7, 2016 and this month’s UK election were the three busiest days for Cable in the last 12 months – closely followed by another surprise event, the calling of the snap election on April 18.
Read More »

Tracking GBP’s Post-Election Trading Spike

CLS and Thomson Reuters (TR) have released data charting the spike in GBP trading following the UK’s recent general election.The exit poll at 22:00 produced a surprise outcome with the Conservative party expected to win just 314 seats, far less The exit poll at 22:00 produced a surprise outcome with the Conservative party expected to win just 314 seats, far less than previous polls and 12 seats short of an overall majority. The data from CLS shows that this resulted in an elevated trading activity in GBP/USD at 22:00. As results were being announced during the night, the unexpected exit poll was becoming more credible and GBP/USD volumes remained much higher than the 2016 average.
Read More »

Survey: Geopolitics the Biggest Challenge for PLN

Polish FX executives say that geopolitics is the biggest issue facing its country and currency this year, according to the results of a Bloomberg FX survey issued today. In the survey 56% of Warsaw FX professionals said that the single biggest challenge facing corporations in the country will be navigating geopolitical challenges, while one-quarter say it will be hedging against market volatility. According 56% of those who responded to the survey, the most significant issue affecting the zloty in 2017 will be political developments between Poland and Europe. Other survey respondents thought that the zloty could be most affected by geopolitics or moves by central banks in the US and Europe.
Read More »