There seems to be almost nothing going on in the forex market for the last few weeks. I've been wondering why. I was thinking that the market was slow because of Bernanke's testimony was coming up, but that is long gone and the market is still dead. Does anyone have any explanations? Thanks for any thoughts you may have.
Why are the Forex markets so dead lately?
- Thread starter travelingtrader
- Start date
look at bond markets how dead they are also. I remember reading that someone wrote last year that vola for Financials will be very low in 2006. I dont know why. Some of my explanations:
1. central banks are smarter and dont surprise markets anymore
2. Managed Futures and hedge Funds have too much capital and many of them only make money in Trends -- so they need to lose
3. Sale of structured products to public by banks. In some way or another those include short options. The poor market makers who buy those options need to make the theta back and thus keep vola down also. The public however does not do anything with their short options.
4. No important world news that could cause a panic in any direction
maybe other people have other explanations
for us low vola means more difficult markets -- for everybody else in the world low vola is good
1. central banks are smarter and dont surprise markets anymore
2. Managed Futures and hedge Funds have too much capital and many of them only make money in Trends -- so they need to lose
3. Sale of structured products to public by banks. In some way or another those include short options. The poor market makers who buy those options need to make the theta back and thus keep vola down also. The public however does not do anything with their short options.
4. No important world news that could cause a panic in any direction
maybe other people have other explanations
for us low vola means more difficult markets -- for everybody else in the world low vola is good
I think it is because it was manipulated heavily recently. I think the FED is involved in manipulating the USD.
I think no one wants to loose money against bigger player.
People also gossip about CFD or NDF contracts for those foreigners investing in UST. It's like paying extra % above the market yields to London investment banks to make them buy treasury paper.
It looks like there is exactly enough of buying of our debt every month to cover the account deficit. No more. No less. Just exactly.
That's why the market is dead.
You can't win with such forces.
Everyone is just watching what's gonna happen.
I think no one wants to loose money against bigger player.
People also gossip about CFD or NDF contracts for those foreigners investing in UST. It's like paying extra % above the market yields to London investment banks to make them buy treasury paper.
It looks like there is exactly enough of buying of our debt every month to cover the account deficit. No more. No less. Just exactly.
That's why the market is dead.
You can't win with such forces.
Everyone is just watching what's gonna happen.
Currencies are still dominated by interests.
US has at least 3 times 25bps rate hikes (one already in Jan 31).
Eurozone is likely to have the same amount of rate hikes as well in 2006.
Japan is going to end its "quantitative monetary easing policy", but the first step will be very prudent. By the end of 2006, the interests spread of Fed and BOJ may even be a little bit larger than now. While BOJ's rate hike will definitely hurt carry trade, its influence in 2006 can be small. Actually I think recent Yen strength due to speculating on BOJ policy change will be short term and will not lockup USD/JPY below 110 at the end of the year.
And no expectation for other major central banks to change key rates largely.
So it seems it is hard for big players in currency market to find a convincible excuse make others follow the trend they may build in 2006.
US has at least 3 times 25bps rate hikes (one already in Jan 31).
Eurozone is likely to have the same amount of rate hikes as well in 2006.
Japan is going to end its "quantitative monetary easing policy", but the first step will be very prudent. By the end of 2006, the interests spread of Fed and BOJ may even be a little bit larger than now. While BOJ's rate hike will definitely hurt carry trade, its influence in 2006 can be small. Actually I think recent Yen strength due to speculating on BOJ policy change will be short term and will not lockup USD/JPY below 110 at the end of the year.
And no expectation for other major central banks to change key rates largely.
So it seems it is hard for big players in currency market to find a convincible excuse make others follow the trend they may build in 2006.
Zoom to smaller time frame. There is tons of actionâ¦
This was an educated post in which I agree with. There are many takes on these issues discussed, but as I watch the JPY strengthen, it does not trade like it should....Hayek is the first person to post what my litte voice was saying...Up till now, i had attributed the fact that the yen is the most manipulated currency thus its abnormal behavoiur and reaction.....it's funny many called the weakening of the NZD correctly, but it shows...
We are??
I'm not. It depends on the pair... EUR/JPY trends VERY nicely. That and AUD/USD isn't too bad neither.