Global Macro Trading Journal

Quote from luisHK:
I checked Oanda and Saxo and they seem to give a positive carry, but IB only pays 0.127% on EUR positive balance and charges from 1.53 to .533% on CHF negative balances. How do you see a positive carry with IB ?

http://www.interactivebrokers.com/en/p.php?f=interest
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No, sorry, I didn't mean that I see positive carry in IB. I meant that it should be positive, given where the fwds are in the mkt. Can you do FX fwds w/IB?

Generally, I'd say IB isn't playing nice and maybe you should consider taking your business elsewhere (if you can). 153bps with CHF O/N rate at 5bps! That's nice biz, if you can get it. Makes me wanna go long IBKR.
 
AFAIK IB don't offer forwards, the only option other than spot EURCHF I found on their product listing is RF, the eurchf future, and it's almost dead at the moment (weekly chart below):

I feel I don't trade enough forex to immobilize funds on a different account but might consider it if I add - or even hold- to this eurchf position. Also a better option for USDHKD might be welcome.
 

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IB doesn't pay interest on the first 10K of the position, this distorts the rate if the position is not large
I use Oanda for FX trading as IB is more costly(Oanda can go under without any sort of guarantees though)
 
It appears that your problem in both cases is IB (carry should be flat to tiny positive for USDHKD; this is what I would get w/my broker here in the UK). I am not really sure what to tell you. You sorta have to make a choice between money and convenience, I guess. Only you can estimate your expected holding period etc to make this decision.
 
Michael Pettis is bearish on the aussie for all the usual reasons, but warns the currency's strength in the face of a clear slowdown in China may have to do with well-to-do Chinese - seriously worried about social unrest - spiriting as much of their capital off of the mainland as possible. Australia is crawling with worried Chinese buying businesses and property - hence the demand for the currency.

Of course, this is terrible news for Oz, which - other than the soon-to-be gasping mining industry - is being strangled by the strong aussie. The adjustment in Oz may actually occur in something other than its currency.

I am actually much more pessimistic about Chinese growth prospects, commodity prices, and the pace of European recovery than anyone in this article, but even so we would have expected that the obvious prospective problems in Europe and China should have made themselves felt in the Australian dollar. So why has it remained so strong?

One reason may be related to what my student told me – a lot of Chinese capital is flowing into Australia. He, for example, has traveled to Australia nine times in the past year, mainly looking after business for his father, who has also been to Australia many times. The family has large investments in food, real estate and construction, and my student tells me he often arranges to meet in Sydney or Melbourne school friends of his who also happen to be in Australia for similar purposes. My guess is that at least part of the reason for a strong dollar, in spite of weakening growth expectations, may be that a lot of Chinese capital is flowing into Australia.

What would happen if growth in China slows significantly? This would probably result in a sharp drop in non-food commodity prices, which should cause much slower growth in Australia. But if a Chinese slowdown coincided with an increase in private Chinese capital outflows, it might be difficult for the Australian dollar to adjust downward sufficiently to help absorb some of the cost of the slowdown. In that case Australia might suffer low growth and an expensive currency – not a very good combination.



I'd link to the whole outstanding piece (of which the analysis of the aussie is just a tiny snippet), but it probably won't be up on his website for another week or two. Only big swinging dicks such as myself get an advance copy.:D
 
Arent a lot of people screaming the commodity run has been a bubble ready to pop for 10 years...

I think it is a very tricky sector to predict, despite having the strong belief myself the sector will stay strong for years to come.

Any temporary setback in Chinese growth or economic activity will be swiftly ofset over the years by their lack of arable land etc thus supporting the likes of the AUD and the commodity sector.

Just look at the oil crash of 08. you had 2 or 3 months to make money of it and then it went straight back up.

In my view the real end of the commodity boom will be driven by science rather then it ending cause some Chinese business men maxed out their credit cards.



I own the AUD and think it could peak towards parity with the Euro...:D
 
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