The price action in Cable on Monday around the resignation of four government ministers in the UK was interesting and highlighted a nuance of the modern FX market structure. The pertinent question to be considered is: Do we want to have a generally stable market with fewer 200 point moves, but which has occasional flash events; or is it better to have a generally busier market, with more 200 point moves and little – or even no – flash events?
Traders do like to moan – I know I did – maybe because it’s therapeutic, maybe because it is (occasionally) true that they are unlucky. More often than not though, it’s because they’re wrong. That said, looking at those indices that track global macro, and listening to traders around the world, it does genuinely appear to be a struggle to make money in FX and rates at the moment. But why is that? We have events – we even have a trend!