How much growth has foreign exchange experienced from the last report in April 2013?
Overall trading in foreign exchange has fallen from a year-to-year basis. Markets in April 2016 saw turnover fall to $5.1 trillion from $5.4 trillion due primarily to less movement in the JPY in the current market environment.
What is the break down among the different foreign exchange products?
The US dollar is offered against the major currencies, but appreciating against many emerging market currencies, include the South African rand and Turkish lira. Oil prices are trying to stabilize with Brent near $42 and WTI near $40, but the recent losses continue to weigh on the Malaysian ringgit and the Mexican peso.
Monetary policy is said to have lost its impact on the foreign exchange market, as investors scratch their heads at the resilience of currencies with negative interest rates. Yet the price action in the action cannot be understood without recognizing the ongoing importance of monetary policy expectations.
In an unusual development, sterling is outperforming today. It rose to a four-day high near $1.4230 on what appears to be mostly modest position adjustment in relatively subdued turnover. The $1.40 area held on repeated tests in the second half of last week. Stops were triggered above $1.4160 forcing latest shorts to cover. The news stream was not particularly helpful with the British Chamber of Commerce warning that the economy slowed in Q1 with the balance of services the poorest in nearly three years. Meanwhile, UK stocks and bonds are underperforming slight
Conspiracy theories have run amok. After several years of claiming countries were engaged in currency wars or attempts to drive their currencies down to achieve export advantage, many reporters and analysts announced a volte-face. At the late February G20 meeting in Shanghai, a secret accord has been concocted that declares a truce in this made up war.
Speculative activity in the CME currency futures picked up in the latest reporting period. There were six significant gross position adjustments, which in our work is more than 10k contracts.
The gross short speculative euro position fell by 17.9k contracts, leaving 209.6k. Since early December, 53k gross short euro contracts were covered. During the same time, about 17k gross long contracts were added.
Since the initial spike higher when the BOJ provided some operational tweaks to its asset purchase program on December 18, the dollar has fallen 5.6% against the yen through Tuesday’s low near JPY116.70. We had warned that the break of JPY120 would spur a move to JPY118, and the move below JPY118 targeted the August low near JPY116.20.
The market’s disappointment with the ECB unleashed pent-up corrective forces in the foreign exchange market. This leg up in the dollar began in mid-October. Through the day before the ECB, the euro was the weakest of the major currencies, losing 7.5% against the dollar. The yen and sterling shed a little less than half as much. The Australian dollar was the only one of the majors to have gained against the dollar. Even then, its 0.12% appreciation had only been achieved here in December. Similar, tendencies were evident in parts of the debt mark
The euro has shed six cents over the past seven sessions. There are two main forces. The primary one arguably is within Europe itself. After an extended flash crash that saw German 10-year yields jump (from 5 bp on April 17 to almost 80 bp in the first half of May), they have come back (to 53 bp today). The ECB confirmed what many had suspected. Namely, that the ECB will expedite its bond purchases ahead of the thinner summer markets.
It is beyond dispute. The US dollar is in a powerful bull run. There are two main drivers, and their ability to dominate the price action varies according to the news stream. The first is constructive economic news from the US that reinforces ideas that the Fed will likely raise rates next year.
