Forex traders brace for "Monster"

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July 31, 2013, 10:26 a.m. EDT
Forex traders brace for ‘monster’ next few days

By Matthew Walter

Foreign exchange traders are gearing up for an unusually tight schedule of market-moving events in the next few days that may provide a welcome jolt to the currency market.

  The Federal Reserve

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The dollar’s /quotes/zigman/1652083 DXY -0.04%  big rally seen earlier this year has stalled, and the greenback has traded in a relatively narrow band against the yen and other currencies since early July. But traders say the quick succession of central bank meetings and key economic data releases on the docket this week may lead to abrupt moves in the dollar, euro and yen.

“It’s monster stuff” coming out in the next few days, said John Netto, president of M3 Capital, a proprietary trading firm based in New York, who is betting the dollar will fall this week.

Monetary policy meetings decisions are scheduled from the Federal Reserve on Wednesday and the Bank of England and European Central Bank on Thursday. Those announcements alone would typically be enough to put currency traders on guard, but they’re also reacting to Wednesday morning’s report on the pace of second-quarter economic growth and will need to digest a widely watched snapshot of the U.S. labor market on Friday, among other data releases.

“There’s a lot of new information coming into the market, from policy decisions...to macroeconomic figures,” said Helie d’Hautefort, chief investment officer at Geneva-based Optim Invest, which advises clients on $2.7 billion worth of investments and recently launched a fund that trades currencies. “We can have some very important moves.”



/quotes/zigman/1652083 DXY 81.64, -0.03, -0.04%



With such a large binary risk that major currencies such as the euro or dollar could move sharply higher or lower, Mr. d’Hautefort said he prefers not to bet either way. Instead, he’s invested this week in hedging instruments--currency options to be specific--that will pay off if market volatility surges in the coming days.

For certain types of investors that specialize is quick, tactical trading, the next few days present a rare opportunity.

While the Fed, Bank of England and ECB are widely expected to leave policy unchanged, traders will parse through their statements for clues about policy adjustments expected later in the year. Speculation about when the Fed will begin to scale back its $85 billion a month in bond purchases shook financial markets earlier this year.

Ahead of Wednesday morning’s report on second-quarter Gross Domestic Product, Mr. Netto of M3 Capital was betting that the report would come up short, giving the Fed room to continue its bond buying for longer. Instead, the economy grew 1.7% in the period, shattering the consensus forecast from a Dow Jones survey that called for a 0.9% growth rate in the quarter.

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Investors on Thursday will hear from the European Central Bank, which will likely talk up Europe's recovery while staying accommodative.

“The market is leaning the other way, and I like taking those shots because they provide tremendous upside,” Mr. Netto said.

Quin Kelley, co-founder and managing director at Holland Global Trading LLC, is among the investors expecting the dollar to rebound before the week’s end. Uncertainty about the Fed’s next move has triggered a significant unwind of bets on a stronger dollar, and the greenback has fallen 2.9% versus the yen since July 8 to Y98.06. Mr. Kelly expects the Fed to give a relatively neutral statement, leaving expectations that its bond-buying will be tapered later this year intact.

“The past couple of months, when we get these [Fed] statements...it seems to be a catalyst for the dollar to take a new direction,” Mr. Kelley said.

even though this article does not say dinar based on this and the weekend is close i would buy buy buy dinars real fast its comming

but ponee it will sound better when i go to the bank and hear the cha ching sound in my account

....? I'm sorry to disappoint you both but this has absolutely nothing to do with this investment... This about qe or not to qe...

 AWWWW Really??? Well hells bells !  Ok, where is my blanket? 



 

It's massive for the global market which bernanke has propped up since the collapse in 08 ... The outcome was that they have decided to continue bond purchases.... To keep the economy from falling back into deflation... Again sorry to disappoint... I haven't checked the market today but this has probably boosted the dollar.... In a normal environment qe shouldn't boost any currency.. But in these bad times it has the opposite effect as it seen to be helping the economy.. Even though its debasing the currency.... You have to remember that currency is the largest financial market of them all... Traded by investment banks right down to myself and stay at home mums.. So forex quotes are moved by the perception of the masses.... The masses do not know about the dinar investment.... Ignore forex talk...

thanks i could not have figured that out i will now have to talk to morts lawyer

i will get my hopes up when i see m swing on the gallows until then  you can dream

Ur welcome... Sorry for putting your fire out! Lol

andy1979uk wrote:It's massive for the global market which bernanke has propped up since the collapse in 08 ... The outcome was that they have decided to continue bond purchases.... To keep the economy from falling back into deflation... Again sorry to disappoint... I haven't checked the market today but this has probably boosted the dollar.... In a normal environment  qe shouldn't boost any currency.. But in these bad times it has the opposite effect as it seen to be helping the economy.. Even though its debasing the currency.... You have to remember that currency is the largest financial market of them all... Traded by investment banks right down to myself and stay at home mums..  So forex quotes are moved by the perception of the masses.... The masses do not know about the dinar investment.... Ignore forex talk...

Like the stock market, Forex is driven by irrational purchasing based upon unfounded enthusiasm. It is my belief that the main engine driving the stock market (and to a lesser extent I suspect, the Forex) today is an effect of QE. Why? Simple, with interest rates being held artificially low, there really isn't anyplace else to put your money to work for you. With interest rates in the toilet, the investor who needs to put their money where it will work for them has limited choice. Keep in mind the unfounded enthusiasm thing, because there is the danger. One piece of wrong news, and believe me, there is a lot of potential for bad news and we could see 2008  all over again. I would even venture to say it is not a matter of if it will happen, but when and why.

BTW, the market pretty much closed in a free fall ... it will be interesting to see what happens when it opens tomorrow. Precious metals were basically flat.

It makes me laugh when you read the Roos comments on how they will float or rv then float and by Xmas it will be 300 times higher than where it started.... It just doesn't work like that.... If they floated it would take 50 years to get where we want it... I feel sorry for those who fall for it.. It's just un educated nonsense.. However when / if it does rv then I actually expect a massive fall in its value as people rush to sell if its a decent rate... Before it then picks up again.... It works the same way as every other investment... Supply vs demand supply will prob increase as people sell... Then the market will decide its worth... Hence prob a bit of a sucker rate first! Ps if anyone fancies a bit of a flutter silver should give a nice 25% reward over the next few months... Buy at 20 now and sell at 25 ish.... It's a given.... The charts don't lie.... Then buy back at 18 again for the next huge leg up...

2008 is defo coming again Kevin! The masses just need to work it out....

And when they do metals (real money) will be moon bound....

And the why factor will be inflation forcing them to raise interest rates.... If the economy isn't peddling its self by then and can't survive withdrawal from qe it's game over globally.... However it's all an illusion! Designed to wipe out the middle class... And the middle class knows this.... Who Obama allegedly trying to help at the minute?

Interest rates are already starting to creep up a bit. Fixed rates on the annuities we sell have gone up by a quarter of a percent the last two months in a row. It's based on what we expect to be able to earn on new money, and since 90% of our investments are investment grade long term bonds, their rate has to be creeping up as well.

I agree about precious metals, not sure we've seen the bottom on them yet though ... my next big investment will be land. I can eat off the land, but have problems chewing gold ...

Absolutely...

And yeah I think gold could touch 1000 ..

Market free fall? Think it dropped about 125 pts ( Dow) futures are up 45 points now no big deal.. And momentum is rising so I think it will continue its rise although this has been a phenomenal rally and the market is ripe for at least a substantial correction... Although I think most thought bonds would be tapered... Just goes to show though that good news doesn't mean it will rally as displayed today... Support and resistance tramlines have far more power than bernanke s one day comments...

I was referring to the manner in which it dropped, 125 points in that short a time is pretty much a free fall ... wasn't sure why the last minute sell off, but it does look like they liked, or at least didn't dislike what Bernake said.

Got you.... Maybe they're catching on...

DANG! And you had briefly pulled Ponee out of her "Hide under my BANKEE" mood with your news. Plus I had already called about mortgaging my house and buying 1 week reserves on about 100 million deenarrrrs!

Way to go andy1979uk you spoiled all our fun for today!