Online Forex Trading

London SUMMARY

There were a few themes to London’s session today with the main headline being the focus on the carry trade. In Asia we heard comments from the IMF’s Rato on the carry trade which London traders used to hammer down USDJPY and the JPY crosses. Rato warned that the increasing growth of yen carry trades could deepen global economic imbalances and he urged Japan to make clear that deflationary pressures are diminishing. With this, EURJPY gained tremendous amounts of momentum once it cleared 158.60, tanking a big figure along with USDJPY. While this may not be the end of the carry trade, it certainly is a significant correction in the market with a major possibility of shifting in IMM positioning going forward.

In other majors, the EURUSD was firm at the open with GBPUSD mostly offered, lifting EURGBP. Once Cable finished clearing stops under the NY lows, vicious moves came to the forefront. EURUSD took off trading above the figure and GBPUSD went on a tear this time clearing NY highs above 1.9660. The commodity currencies did not par take in the dollar sell off however, with the Kiwi coming off significantly in a range of about 60 pips and Aussie seesawed it’s way in a 30 pip range with no clear direction.

There was no primary data out today in London, which portrays the magnitude the London FX market can have in terms of volatility amongst all pairs. As such, the dollar really is looking bleak here at the early part of the week but key on support levels for a possible reversal of the trend, especially if we get better than expected data out of the US.