Fund managers who piled into EC first week couldn't care less about interest rate differential; interest rate play was the fashion for the last 6 months. More attention will focus on the TICS data now.
The EURO
- Thread starter Ivanovich
- Start date
First, interest rates are very much a part of currency moves - 6 months ago and at the very moment. Every other article is about rate speculation, as is every other blurb on Thompson in regards to currencies. Of course, everyone can be wrong, and you could be right I suppose.
TICS speculation is, incidently, directly related to people buying US debt which, incidently, is tied to the idea of rates.
TICS speculation is, incidently, directly related to people buying US debt which, incidently, is tied to the idea of rates.
Ivan missed the point. Over the past 2 years there have been two fashions reflecting forex specs' taste: buying higher interest rate currencies; and buying soundest currencies. Until last spring, specs shunned dollars despite Fed's adopting and provulgating hike regime. Since last summer, specs have favored higher interest rate currencies.
Nowhere did I claim to be the only one "right". Ivan evidently thinks all those fund managers who bought EC 300 pts higher since new year are too stupid to subtract 2.25 from 4.25. I guess Ivan is the only one who can add and subtract. TICS data shows net foreign capital flows. I suspect the cited fund managers might be thinking the dollar--regardless of interest rate differential--is not that sound. This lack of faith is what drove EC to 1.35 last year.
Buy EC dips: the fund managers have spoken very loudly, and they will be back.
Nowhere did I claim to be the only one "right". Ivan evidently thinks all those fund managers who bought EC 300 pts higher since new year are too stupid to subtract 2.25 from 4.25. I guess Ivan is the only one who can add and subtract. TICS data shows net foreign capital flows. I suspect the cited fund managers might be thinking the dollar--regardless of interest rate differential--is not that sound. This lack of faith is what drove EC to 1.35 last year.
Buy EC dips: the fund managers have spoken very loudly, and they will be back.
Who are you talking to? Is there any particular reason you're rebutting me in third person? Is English your second language?
Those people who drove up the EUR since the 1st did so not because they believed this or that about the current account. They did so because the prospect of interest rates moving to "on hold" by the Fed grew, while rates from the ECB were poised to move higher rather quickly. Trichet and the ECB were all hawking their way about how inflation warranted moves, and policy was very accomodative. Meanwhile, cries of a housing slowdown in 2006 caused many to believe that further increases in the Fed would end up being worrisome, and that the Fed's last statement about watching data before making future moves (because policy had begun to reach neutral levels) was more dovish than had been priced into the market.
So. Elementary FOREX for you: People did not buy EUR because of the fact that the US had higher rates. It was because the speculation was that rates in the EZ were going to go up, while rates in the US were going to go on hold. However, they did not buy because of the rates themselves, but because they know that higher rates mean higher EUR - and they are speculative funds. Hence, they take action on market speculation. Other funds - momentum funds - take action regardless of which way the spot goes, just so long as it goes somewhere.
But this had really nothing to do with the current account worries. Only amateur traders are quoting that as the reason because that's what they know from 2004 year end.
Those people who drove up the EUR since the 1st did so not because they believed this or that about the current account. They did so because the prospect of interest rates moving to "on hold" by the Fed grew, while rates from the ECB were poised to move higher rather quickly. Trichet and the ECB were all hawking their way about how inflation warranted moves, and policy was very accomodative. Meanwhile, cries of a housing slowdown in 2006 caused many to believe that further increases in the Fed would end up being worrisome, and that the Fed's last statement about watching data before making future moves (because policy had begun to reach neutral levels) was more dovish than had been priced into the market.
So. Elementary FOREX for you: People did not buy EUR because of the fact that the US had higher rates. It was because the speculation was that rates in the EZ were going to go up, while rates in the US were going to go on hold. However, they did not buy because of the rates themselves, but because they know that higher rates mean higher EUR - and they are speculative funds. Hence, they take action on market speculation. Other funds - momentum funds - take action regardless of which way the spot goes, just so long as it goes somewhere.
But this had really nothing to do with the current account worries. Only amateur traders are quoting that as the reason because that's what they know from 2004 year end.
I use third person for the same reason anyone else might: third person creates impersonal tone. Unlike many postors, I'm not interested in personal attacks.
Ivan didn't read my post. Funds sent EC to all-time highs last spring despite the Fed's announcing hike regime: clearly, funds couldn't have cared less about the rate differential last spring. Also, no one believes EC rates are going to pass dollar rates any time this decade. If you have any doubt, try doing what any rate floor broker might do: look at far-out shatz and ED rates. Where exactly do you see EC rates passing dollar rates?
Stay short EC; you guys have been wrong since new year, and you'll get your heads ripped off when the funds pile in again; keep fighting that tape.
Ivan didn't read my post. Funds sent EC to all-time highs last spring despite the Fed's announcing hike regime: clearly, funds couldn't have cared less about the rate differential last spring. Also, no one believes EC rates are going to pass dollar rates any time this decade. If you have any doubt, try doing what any rate floor broker might do: look at far-out shatz and ED rates. Where exactly do you see EC rates passing dollar rates?
Stay short EC; you guys have been wrong since new year, and you'll get your heads ripped off when the funds pile in again; keep fighting that tape.
Mr. Ivanovich, this was not nice at all.
I would like to remind you - you took a position against the market at 1.2008 and you had it stopped out with a serious loss.
We all make mistakes.
It pertains to our investments and the tone we use in discussions as well.
If you have comments pertaining to someones second language abilities - leave them to yourself.
Anyway - you are very American in all ways they are. Typical American.
Foreigner would never mention English as a second language.
It's a pure discrimination.
Let's try and keep this about the EURO!
-Kastro
-Kastro
Mr. Profit, and what are your comments about "typical American" if not inflammatory?
I speak Russian, German, Spanish and English. I'm married to a Russian, have lived in Moscow for several years, Berlin (albeit briefly) and now in Puerto Rico, as well as all over the US. I'm not you're "typical American". I responded impolitely to a message that was impolite in kind. Just like I am responding to you.
Let he who is without sin cast the first stone, eh?
Regarding my being stopped out - of course we all make mistakes in FX. The trick is to lose less than you win. The argument between myself and Mr. 3rd part speaker was not about being stopped out. It was about the reason behind today's EURO move. I pay to be informed as to why market moves happen. Most of the info I get from several pay sources is right.
His info was and is, not right. THAT is what the argument was about. Get your facts straight.