The Forex Thread

[manarak]

There are already interesting threads running, like the thread on the financial crisis and the thread on where gold is heading in this market.

I'd like to propose that we use this thread to discuss expectations on FX and gold.

As many other people, I hold AUD at the moment.

Now that AUD has hit its highest rate against EUR and near its high against USD, I wonder what to do.

No other major currency offers interest rates as high as the AUD, and although the australian fed will cut its rates on feb 7th, I see no other choice.

So I am going to keep my AUD.

Then, I expect the EUR to remain in crisis for a long time, and with it, the CHF.

The US economy created a lot of jobs, and I can imagine the USD to gain 10% in the next months against EUR, so I would sell CHF against USD, while keeping the AUD to continue raking in the interest.

What are your expectations?

Edited February 3, 2012 by manarak

[BEENTHEREDONETHAT]

Looking ahead it seems like the USD will continue it,s downward trend. The Aussie is projected to continue up, for the next 6 months anyhow.. Check the forecast in attached. Don't know of a better place to put it.If you hear of one let me know.

The Mongolian Tuguik's paying close to 14% now and some people are saying it is a good bet, but I'm more than a little hesitant on that one.

http://forecasts.org/ausd.htm

[manarak]

ah, that's funny - I wonder why my feeling is trend-adverse.

Mongolian Tuguik... LOL

I'd very much like to hold Brazilian Real at the legal interest rate there, but can't find a broker.

Which broker would you use to invest in Tuguiks?

[Naam]

ah, that's funny - I wonder why my feeling is trend-adverse.

Mongolian Tuguik... LOL

I'd very much like to hold Brazilian Real at the legal interest rate there, but can't find a broker.

Which broker would you use to invest in Tuguiks?

you can't hold BRL cash without an account in Brazil. to invest in BRL does not require bending backwards as there are dozens of bonds denominated in BRL, interest and repayment at maturity however in either USD or EUR at value date.

another approach is via NDFs (Non Deliverably Forwards) but with a rather high minimum trading volume.

personal opinion: i'd prefer BRL to the commodity currency AUD.

[Naam]

the Mongolian currency is highly restrictive. investing in it is similar to finding a 25 year old virgin Ladyboy in Pattaya's Walking Street.

[manarak]

another approach is via NDFs (Non Deliverably Forwards) but with a rather high minimum trading volume.

personal opinion: i'd prefer BRL to the commodity currency AUD.

Yes, but: where to trade? interactive, my favorite broker, doesn't do it.

And regarding minimum size: would 500k or 1M be enough? (err... in dollars or CHF or course)

...

err, wait - how will I get the BRL interest rate on NDLs?

...

or does it work the same as an EURIBOR for example, where you buy below 100 and get 100 at expiry, just that the profit gets paid in USD instead of BRL?

That would be interesting indeed.

Where to trade it?

Edited February 4, 2012 by manarak

[Naam]

another approach is via NDFs (Non Deliverably Forwards) but with a rather high minimum trading volume.

personal opinion: i'd prefer BRL to the commodity currency AUD.

1. Yes, but: where to trade? interactive, my favorite broker, doesn't do it.

2. And regarding minimum size: would 500k or 1M be enough? (err... in dollars or CHF or course)

...

err, wait - how will I get the BRL interest rate on NDLs?

...

3. or does it work the same as an EURIBOR for example, where you buy below 100 and get 100 at expiry, just that the profit gets paid in USD instead of BRL?

That would be interesting indeed.

4. Where to trade it?

1. only with a "real" and not online with mouse clicks.

2. it used to be $1mm, now widely available $500k.

3. that is exactly the case.

4. see "1."

[manarak]

hmm... The Australian Reserve will lower its interest rate on tuesday and I still don't know what to do.

The AUD won't fall much, because the market knows, so the rate cut is priced in already.

Would they cut by 0.5% instead of 0.25% ?

[manarak]

hmm... The Australian Reserve will lower its interest rate on tuesday and I still don't know what to do.

The AUD won't fall much, because the market knows, so the rate cut is priced in already.

Would they cut by 0.5% instead of 0.25% ?

turns out keeping my AUD was the right thing to do!

[Jayman]

Well the RBA held rates today and even though the bad news out of China is not helping the AUD any it seems that for now at least the AUDUSD is holding. Lets see how the job numbers for Aus print in a few days.

I do think there is a good chance that the rate will get cut before year end. Maybe at the Oct 2 announcement.

For now, it's all eyes on the BOC, BOE, and ECB (in that order) as they all have rate decisions this week as well. And then to close the week with the US Non-farm payrolls.

Of course we are still waiting on the magic words from draghi that the bond purchases have started up again.

Edited September 4, 2012 by Jayman

[yoshiwara]

So I am going to keep my AUD.

I wouldn't be holding a currency just because of the interest return. The AUD is a narrow (materials) proxy trade on China and China needs a Europe turnaround.

In the event of the ECB moving towards bond buying this week and a resultant bounce in the AUD I would use as an opportunity to get out at $1.05+.

In at ~ .95-.975, out at 1.05. To be traded not held.

Edited September 4, 2012 by yoshiwara

[Jayman]

AUD gdp numbers were horrible.....

RBA ready to cut rates - Peter Martin

Wed, Sep 05 2012, 01:07 GMT | FXstreet.com

FXstreet.com (Barcelona) - The Reserve Bank of Australia "is preparing to cut interest rates in the wake of a free-falling iron ore price and the first billion dollar wind-back of an existing mining investment program," notes Peter Martin, economics correspondent for Australia's two leading newspapers. The economist adds: "The Bank is ready to cut rates as soon as next month. It sees no need to wait for the traditional Melbourne Cup day board meeting after the release of the inflation figures in late October."

[PCA]

http://www.currencytradermag.com/downloads/index.php

comes once a month and sometimes contains readable stuff. Interesting for newbies maybe. It takes a subscription which is free.

[manarak]

I revive my own thread, I'll now discuss FOREX here instead of in the financial crisis thread and the gold thread, because a FOREX thread is the right place for FX discussions, right?

I'm perplexed by the latest developments, and rather happy not to be in the market right now.

The ECB announced they would buy every crap EU-govvie bond thrown at them, the reaction of the market is the following:

- EUR gains vs. USD

- EUR gains vs. CHF

- EUR gains vs. XAU (gold)

Massive bond buying is logically creating more money and diluting the value of the EUR, yet the market reacts in the opposite way.

The thing that surprises me most is EUR vs. CHF. last week at 1.205 and now 1.212.. <deleted>? The EUR is total crap and the Swiss had to intervene to keep the EUR at 1.20 minimum, otherwise the EUR would have plunged below parity. Now the ECB confirms by its bond buying that there is an even deeper crisis, but the EUR gains vs. CHF???

the EUR also gains vs. XAU.

Let's imagine why the markets react like that.

Maybe the market sentiment is:

- that the ECB is doing the right thing and saving the EUR

- that the bonds bought by the ECB will not cause losses but huge profits for the ECB in the long run, meaning the market thinks that with the ECB intervening, the EUR currency crisis has reached its bottom

=> cash is flowing out from CHF to be invested in EUR, probably in equities.

comments?

and what is the right thing to do if the above is true?

- invest in EUR equities?

Edited September 7, 2012 by manarak

[Naam]

and what is the right thing to do if the above is true?

the right thing to do was stocking up big on HY in general as well as T1 and LT2 bonds when Draghi first announced his intentions. at that time it must have been already clear that the Bundesbank will be the only one opposing.

but now there's the problem to decide whether to make hay and cash in or whether the sun will go on shining for some time

[Naam]

meaning the market thinks that with the ECB intervening, the EUR currency crisis has reached its bottom

the EUR currency crisis is like Jesus. people talk about him but nobody knows him or has ever seen him. here too the tide has turned already two weeks ago, easy to realise when looking at the reduced commercial USD shorts and exploding EUR longs.

p.s. Angie in Berlin could have thrown a spanner into the gearbox. but even she had to realise that she was outmanned and outgunned.

[Naam]

cash is flowing out from CHF to be invested in EUR

some of my EUR and USD cash flowed yesterday as well as today into CHF.

[12DrinkMore]

cash is flowing out from CHF to be invested in EUR

some of my EUR and USD cash flowed yesterday as well as today into CHF.

Hope that bolsters up the CHF, although the SNB would not be unhappy to see more flowing out of CHF and dropping it a bit further.

Manarak: did you jettison some AUD or still hold them?

I've still got a fairly large chunk, but the latest economic data coming out of Aussieland is a bit dire. They have gone on a housing and digging stuff out of the ground binge, and are suffering from the "Dutch Disease".

But on the plus side the CB's have reportedly been buying AUD.

[Naam]

cash is flowing out from CHF to be invested in EUR

some of my EUR and USD cash flowed yesterday as well as today into CHF.

Hope that bolsters up the CHF, although the SNB would not be unhappy to see more flowing out of CHF and dropping it a bit further.

Manarak: did you jettison some AUD or still hold them?

I've still got a fairly large chunk, but the latest economic data coming out of Aussieland is a bit dire. They have gone on a housing and digging stuff out of the ground binge, and are suffering from the "Dutch Disease".

But on the plus side the CB's have reportedly been buying AUD.

in another thread Manarak mentioned he is out. AUD's free fall has stopped but nobody know how long that will last.

[manarak]

cash is flowing out from CHF to be invested in EUR

some of my EUR and USD cash flowed yesterday as well as today into CHF.

Hope that bolsters up the CHF, although the SNB would not be unhappy to see more flowing out of CHF and dropping it a bit further.

Manarak: did you jettison some AUD or still hold them?

I've still got a fairly large chunk, but the latest economic data coming out of Aussieland is a bit dire. They have gone on a housing and digging stuff out of the ground binge, and are suffering from the "Dutch Disease".

But on the plus side the CB's have reportedly been buying AUD.

in another thread Manarak mentioned he is out. AUD's free fall has stopped but nobody know how long that will last.

Yes, went out at 1.03, then I made some cash with gold, and I have been flat for a week now, sitting on CHF and I still don't know what to do with it.

EUR strenghtening against CHF is the weirdest thing I saw in the past months, I can only explain it with CHF massively flowing into EUR.

AUD free fall stopped... well it has just been a couple of days, let's see what the trend is.

I wonder if the constitutional court will withdraw Germany's support to the ECB or not. Isn't the verdict due Sep. 12th?

[Naam]

I wonder if the constitutional court will withdraw Germany's support to the ECB or not. Isn't the verdict due Sep. 12th?

it will be a non-event. whatever their ruling it won't have an immediate impact on what Dragi plans to do. the real problem is the implementation of his plans which are laced with "ifs" and "buts". talk is cheap, action is required. at least the biggest hurdle (Merkel) was cleared no matter how much Bundesbank's Weidmann is bitching.

my problem is whether to realise recent book profits or ride the wave a little longer

[Jayman]

Hope that bolsters up the CHF, although the SNB would not be unhappy to see more flowing out of CHF and dropping it a bit further.

Manarak: did you jettison some AUD or still hold them?

I've still got a fairly large chunk, but the latest economic data coming out of Aussieland is a bit dire. They have gone on a housing and digging stuff out of the ground binge, and are suffering from the "Dutch Disease".

But on the plus side the CB's have reportedly been buying AUD.

in another thread Manarak mentioned he is out. AUD's free fall has stopped but nobody know how long that will last.

Yes, went out at 1.03, then I made some cash with gold, and I have been flat for a week now, sitting on CHF and I still don't know what to do with it.

EUR strenghtening against CHF is the weirdest thing I saw in the past months, I can only explain it with CHF massively flowing into EUR.

AUD free fall stopped... well it has just been a couple of days, let's see what the trend is.

I wonder if the constitutional court will withdraw Germany's support to the ECB or not. Isn't the verdict due Sep. 12th?

If you are looking to trade the event the court's rulling is scheduled to be released at 1700 thai time on the 12th

[manarak]

Looks like things are going back to normal.

The USD continues its fall, thus gold is just slightly higher in real terms (about 2%).

The EUR comes back down to 1.20 CHF.

The AUD is back where it was one week ago, looks like it will continue to fall vs. CHF

[12DrinkMore]

Looks like things are going back to normal.

The USD continues its fall, thus gold is just slightly higher in real terms (about 2%).

The EUR comes back down to 1.20 CHF.

The AUD is back where it was one week ago, looks like it will continue to fall vs. CHF

I no longer know what is normal.

[Naam]

I no longer know what is normal.

normal is "business as usual"

[manarak]

German Constitutional Court decided in favour of ESM. Armaggedon postponed, can kicking further down the road continues. outlook for worthless fiat paper positive.

Gold's falling - this and earlier lower borrowing costs for Spain and Italy kinda confirm my earlier thoughts about the market considering this milestone as the turning point or bottom of the crisis.

What's the best strategy now?

High yield bonds?

Equity indexes?

Some FX?

Commodities?

Edited September 12, 2012 by manarak

[yoshiwara]

Yes, went out at 1.03, then I made some cash with gold, and I have been flat for a week now, sitting on CHF and I still don't know what to do with it.

EUR strenghtening against CHF is the weirdest thing I saw in the past months, I can only explain it with CHF massively flowing into EUR.

AUD free fall stopped... well it has just been a couple of days, let's see what the trend is.

I wonder if the constitutional court will withdraw Germany's support to the ECB or not. Isn't the verdict due Sep. 12th?

No, not weird. The SNB have deliberately been entering the market and selling CHF against EUR. Their target rate is 1.1

You can take CHF off the safe haven list unless you think the EUR will disappear, but even then the SNB will have a few shedloads of EUR to dispose of.

Edited September 12, 2012 by yoshiwara

[PCA]

Yes, went out at 1.03, then I made some cash with gold, and I have been flat for a week now, sitting on CHF and I still don't know what to do with it.

EUR strenghtening against CHF is the weirdest thing I saw in the past months, I can only explain it with CHF massively flowing into EUR.

AUD free fall stopped... well it has just been a couple of days, let's see what the trend is.

I wonder if the constitutional court will withdraw Germany's support to the ECB or not. Isn't the verdict due Sep. 12th?

No, not weird. The SNB have deliberately been entering the market and selling CHF against EUR. Their target rate is 1.1

You can take CHF off the safe haven list unless you think the EUR will disappear, but even then the SNB will have a few shedloads of EUR to dispose of.

what???? Where would you have that weird information from?

[yoshiwara]

Yes, went out at 1.03, then I made some cash with gold, and I have been flat for a week now, sitting on CHF and I still don't know what to do with it.

EUR strenghtening against CHF is the weirdest thing I saw in the past months, I can only explain it with CHF massively flowing into EUR.

AUD free fall stopped... well it has just been a couple of days, let's see what the trend is.

I wonder if the constitutional court will withdraw Germany's support to the ECB or not. Isn't the verdict due Sep. 12th?

No, not weird. The SNB have deliberately been entering the market and selling CHF against EUR. Their target rate is 1.1

You can take CHF off the safe haven list unless you think the EUR will disappear, but even then the SNB will have a few shedloads of EUR to dispose of.

what???? Where would you have that weird information from?

Here are two link references. One from the WSJ and the other from Bloomberg. My one error is that the official target rate is 1.2 and not 1.1.

http://tinyurl.com/9vb69g7

http://tinyurl.com/bp5hm4q

[12DrinkMore]

No, not weird. The SNB have deliberately been entering the market and selling CHF against EUR. Their target rate is 1.1

You can take CHF off the safe haven list unless you think the EUR will disappear, but even then the SNB will have a few shedloads of EUR to dispose of.

Not sure I understand your post.

The target rate is maximum 1.20 against a lot of upward pressure. What does 1.1 mean? That would surely mean the SNB allowing the CHF to appreciate even more, which they clearly do not want.

Currently simply the threat of selling limitless CHF against the EUR seems to have done the trick without costing an arm and two legs. The EUR is not going to disappear anytime soon.