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Some interesting currency moves today

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JR8
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Re: Some interesting currency moves today

Postby JR8 » Sun, 18 Jan 2015 1:34 pm

Wd40 wrote:Apparently the SNB move has bankrupted a few forex brokers and also some businesses in Poland and Hungary who have taken loans in Swiss francs. Next week we may have a few more skeletons coming out of the closet


It's certainly already 'hit' a few that I'm exposed to. My own broker (Interactive Brokers - NASDAQ listed) for one, although the damage right now appears very limited. Plus one of my stocks held via that broker, IG Index (IGG.LN)*. Firstly, a broker should operate within clearly defined and controlled risk parameters so the risk of damage is minimised: I see some internal risk managers, and internal/external auditors getting whacked because of this.

Interestingly, IGG report that their clients unwound their EUR/CHF positions faster than IGG could unwind their reverse position against it (i.e. unwind their hedge into an illiquid/dead market for the reverse side of the trade). That's going to get a lot of attention within the industry in future, the ability of a 'facilitator' (for example a broker, especially of geared-up derivatives) to dynamically and effectively hedge off risk in real-time, especially in a sudden 'fast market'.

'Poland and Hungary'. I haven't read the news recently about this whole saga so am unaware what their particular woes are, though I do understand that Hungary ties itself quite closely to the Swiss economy. But that's the risk, tying yourself to something over which you have no control. [X-ref S$, but at least in SGs case it's peg is against a wide enough basket of other currencies based upon physical trade, rather than being something essentially completely artificial].

Take this as a warning. If you use a broker read the smallprint about how they seek to manage internal risk, and to what extent your assets are segregated and protected. Also remind yourself that this is why the likes of trading currency-pairs (etc) is very high risk. Above and beyond that your reward can seem superficially attractive for taking on risk, but that risk can manifest itself out of the blue. Suddenly those ads in the local press for MYR or IDR fixed deposits paying 'generous' interest rates start to look less juicy....eh!

*'The core business is spread betting though IG also provides other services such as CFDs and FX trading.'
http://www.digitallook.com/equity/IG_Group_Holdings
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Re: Some interesting currency moves today

Postby Wd40 » Sun, 18 Jan 2015 2:46 pm

JR8 wrote:
Take this as a warning. If you use a broker read the smallprint about how they seek to manage internal risk, and to what extent your assets are segregated and protected. Also remind yourself that this is why the likes of trading currency-pairs (etc) is very high risk. Above and beyond that your reward can seem superficially attractive for taking on risk, but that risk can manifest itself out of the blue. Suddenly those ads in the local press for MYR or IDR fixed deposits paying 'generous' interest rates start to look less juicy....eh!


Yeah :) Now I understand, why you were so cautious about carry trades and managed currencies. 30% move in the currency pair when you are taking on leverage of 100-200 times and are trying to trade pips. That's a massive loss.

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Re: Some interesting currency moves today

Postby JR8 » Sun, 18 Jan 2015 3:25 pm

https://www.youtube.com/watch?v=PrO9CVwnShU
'What you need to know about the Swiss franc'

A 3-minute macro overview (from Thursday, as all hell was breaking loose).
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Re: Some interesting currency moves today

Postby Wd40 » Mon, 19 Jan 2015 8:28 pm

http://www.marketwatch.com/story/will-c ... 2015-01-18

China could be the next country to break its peg to the USD.

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Re: Some interesting currency moves today

Postby JR8 » Mon, 19 Jan 2015 10:16 pm

[News just now] 'French president François Hollande said that the European Central Bank (ECB) would make the decision to implement full-blown quantitative easing (QE) at its next meeting.'
-------------
http://www.digitallook.com/news/interna ... 42653.html


Well I never. I thought he was just the French President, and yet here he is pre-announcing European/ECB policy.


--- It's like the State bank of Idaho pre-announcing what the Fed are going to do....
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Re: Some interesting currency moves today

Postby JR8 » Mon, 19 Jan 2015 11:47 pm

'1516: In an unscheduled announcement the Danish central bank has cut its main lending rate to 0.05% and their deposit rate to -0.2% from -0.05%.'
http://www.digitallook.com/news/market- ... 42531.html

'Schell schnell! divert the Panzers from Athens to Copenhagen!
Er, but they're not even in the euro.... it doesn't matter, destroy them!!!'
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Re: Some interesting currency moves today

Postby Wd40 » Thu, 22 Jan 2015 9:17 pm

So today is the day! :)

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Re: Some interesting currency moves today

Postby Wd40 » Thu, 22 Jan 2015 9:47 pm

60Bn Euros a month!

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Re: Some interesting currency moves today

Postby JR8 » Thu, 22 Jan 2015 10:16 pm

Who cares, the EU is f*cked.
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Re: Some interesting currency moves today

Postby JR8 » Fri, 23 Jan 2015 10:05 am

I thought the EU were going to mess up announcing the size of their latest wound-dressing, well apart from pre-announcing it.

Here's a summary...
'News of a massive bond-buying plan by the European Central Bank (ECB) sent UK stocks to a four-month high on Thursday, as policymakers failed to disappoint with stimulus measures to revive the struggling Eurozone economy.

London's FTSE 100 finished the session up 1%, gaining 68.59 points to 6,796.63. The index has not closed above this level since 19 September 2014 when it settled at 6,837.92.

"European stocks and bonds rallied as the ECB finally came through after months of promises and delivered a quantitative easing (QE) programme that is bigger than expected to attack the curse of deflation in the Eurozone," said analyst Jasper Lawler from CMC Markets UK.

"There were some fears of under-delivery heading into the press conference but those were quickly dissolved," he said.

ECB president Mario Draghi unveiled QE totalling €1.1trn, with the purchase of €60bn-worth of private and public securities each month until September 2016, slightly ahead of investors' expectations.

The news sent the euro to a fresh 11-year low against the dollar, while bond in the Eurozone periphery dropped sharply.

Yoram Lustig, at fund manager at AXA Investment Managers, said the news was the "long-awaited bazooka from the ECB", but expected equity markets range bound in the month ahead, "oscillating between fear and hope".
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Re: Some interesting currency moves today

Postby JR8 » Fri, 23 Jan 2015 11:58 am

And another view...

---

The European Central bank (ECB) came out swinging and got the right response from global markets. As was largely anticipated, the ECB announced quantitative easing with monthly asset purchases to the tune of €60 billion a month and a target to be met in 18 months (September 2016).

Initial expectations were for €50 billion a month over two years so the pace was faster than the market expected. Overall, this will see the ECB expand its balance sheet by around €1.1 trillion and, combined with another 10 basis-point cut to the TLTRO liquidity, it seems investors feel the ECB went above and beyond.

The language was also very encouraging as the ECB said the programme will be open ended and adjustable as it chases its inflation target. In terms of sovereign purchases, sub-investment grade countries will also be included, which was a big contention point among analysts.
[Continues]
http://www.ig.com/uk/market-update/2015 ... risk-22257
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Re: Some interesting currency moves today

Postby Barnsley » Fri, 23 Jan 2015 12:53 pm

JR8 wrote:And another view...

---

The European Central bank (ECB) came out swinging and got the right response from global markets. As was largely anticipated, the ECB announced quantitative easing with monthly asset purchases to the tune of €60 billion a month and a target to be met in 18 months (September 2016).

Initial expectations were for €50 billion a month over two years so the pace was faster than the market expected. Overall, this will see the ECB expand its balance sheet by around €1.1 trillion and, combined with another 10 basis-point cut to the TLTRO liquidity, it seems investors feel the ECB went above and beyond.

The language was also very encouraging as the ECB said the programme will be open ended and adjustable as it chases its inflation target. In terms of sovereign purchases, sub-investment grade countries will also be included, which was a big contention point among analysts.
[Continues]
http://www.ig.com/uk/market-update/2015 ... risk-22257


Somebody is gonna be filling their boots with this .....

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Re: Some interesting currency moves today

Postby Wd40 » Fri, 23 Jan 2015 12:55 pm

Indian markets are cheering this, so is the Indian Rupee :)

http://www.business-standard.com/articl ... 032_1.html

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Re: Some interesting currency moves today

Postby Barnsley » Fri, 23 Jan 2015 1:00 pm

Wd40 wrote:Indian markets are cheering this, so is the Indian Rupee :)


Its a joke , everyone is debasing their currency , all have same policy.
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Re: Some interesting currency moves today

Postby Wd40 » Fri, 23 Jan 2015 1:03 pm

Barnsley wrote:
Wd40 wrote:Indian markets are cheering this, so is the Indian Rupee :)


Its a joke , everyone is debasing their currency , all have same policy.




Emerging markets are a little different, they need their currencies to be stable to counter high inflation and attract capital inflow. Developed markets have the opposite problem, they need to counter deflation.

Indian Rupee has been extremely strong in the recent past and its a good thing.

http://www.nasdaq.com/article/best-and- ... y-cm429452

Market Vectors-Indian Rupee/USD ETN(INR)

Indian equity markets have posted stellar performances this year driven by optimism over the new pro-reform, business-friendly government led by Prime Minister Narendra Modi. In fact, the Indian economy has been witnessing improving macroeconomic conditions led by better-than-expected corporate earnings, a falling inflation level and improving manufacturing and industrial production. Moreover, steps taken by the RBI governor have been successful in narrowing the current account deficit.

These factors led the Indian rupee to be the best performing major currency worldwide against the dollar during 2014 and INR to be the best currency ETF this year (read:Best ETF Strategies for 2015).

The fund tracks the performance of the S&P Indian Rupee Total Return Index, providing exposure to exchange rate movement of the U.S. Dollar against the Indian Rupee. The product is, however, quite unpopular and illiquid with an asset base of under $2 million and average trading volume of 27,000 shares a day.

The fund charges 55 basis points as fees and has returned 14% this year. INR currently has a Zacks ETF Rank #3 or Hold rating.


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