ForexLive » Sean Lee

Latest turnover statistics on the FX market

Sean Lee — Fri, 03 Sep 2010 02:00:33 +0000

USD$4 trillion a day in turnover
Market has doubled in size in the last 6 years
Simple spot deals make up 37% of the market
The most traded currencies in order are the USD, EUR, JPY, GBP, AUD, CHF and CAD
Emerging markets now account for 20% of all turnover
Most trading occurs in the UK with almost a third of the market with the US, Europe and Asia equally sharing the remaining two-thirds
Of the major pairings, EUR/USD is the most heavily traded making up almost 30% of all transactions. This is followed by USD/JPY, cable and AUD/USD.

One piece of data which is not included is the percentage of this market which is made up by retail trading. I believe this number is between 25%/30% but if anyone has more recent data then please let me know.

Around the markets

Sean Lee — Fri, 03 Sep 2010 01:42:46 +0000

Nikkei +0.7%, Seoul and Sydney are both around 0.25% higher.

Gold is at $1253/oz and oil at $76.50/bbl.

Risk on or off? Have a look at AUD/CHF

Sean Lee — Fri, 03 Sep 2010 01:06:48 +0000

There can surely be no currency pair which gives a better indication of how the market is assessing the risk trade than AUD/CHF. If China is booming, the world economic prospects seem good and the AUD is rallying. If doom-and-gloom are preoccupying peoples thoughts, then the CHF is rallying.

A quick look at the long-term AUD/CHF chart shows that risk in general has been back in favour since March 2008 but it took a turn in May this year. The 38.2% retracement of the big upmove came in at .8925 and that has proven to be good support thus far. If we break back below there then risk would seem to be off again and we could fall as far as .8150 when the risk trades should find new support. If the .8925 recent low and and now trendline support were to hold firm, then we should be looking to a major rally in all risk trades over the next few months.

Definitely a pair at least worth watching if not trading.

Japan sees likely US opposition to FX intervention

Sean Lee — Fri, 03 Sep 2010 00:27:31 +0000

Bloomberg are reporting that Japanese officials are reluctant to engage in FX market intervention because they fear strong opposition from the US authorities.

Japanese economy: Corporate Capex falls less than expected in Q2

Sean Lee — Fri, 03 Sep 2010 00:08:30 +0000

Japanese corporate capital expenditure fell by 1.7% in Q2 compared with last year, which is less that the 6.5% fall which had generally been forecast.

This suggests that optimism in the corporate sector is better than expected and the strong JPY is having less impact than many thought.

Nikkei opens +0.4%

Sean Lee — Fri, 03 Sep 2010 00:05:41 +0000

USD/JPY is slightly higher but overall the FX market remains very quiet

Quiet start to Asian trade

Sean Lee — Thu, 02 Sep 2010 23:49:46 +0000

No sign of any risk aversion to emerge this morning although the AUD/USD is slightly lower already. I expect most traders will be looking for day-trading opportunities or they will be closing/reducing their positions prior to the NFP later tonight.

The initial lead will come from regional stockmarkets which are expected to rise by around 0.5% on average.

Payrolls contest open for business

Sean Lee — Thu, 02 Sep 2010 23:08:49 +0000

Click on this link and put your best guess forward, presuming of course that it hasn’t already been taken. Two-time winner Iman has already taken the -140k and you’d better be quick or all the good ones will be gone.

Rio Tinto says Q4 iron ore prices to fall by 13.3%

Sean Lee — Thu, 02 Sep 2010 22:28:22 +0000

The adjustment in pricing is related to the new pricing mechanisms which the major producers have implemented (over the Reuters newswires).

Obviously this type of price decrease will have some sort of negative impact on currencies like the AUD, CAD and BRL as the year progresses. The AUD/USD has slipped 15 pips, now back below .9100.

Citi Techs recommend short GBP/AUD position

Sean Lee — Thu, 02 Sep 2010 21:57:35 +0000

Sure GBP/AUD is in a definite short-term downtrend and it has been since 1.76 but to start selling on the 1.68 handle,when the risk of a retracement rally would seem to be very high, is certainly a risky proposition. The break below the 61.8% retracement level is also a bearish sign and suggests a possible full-retracement to 1.62 but it’s certainly not conclusive.

Personally I’d prefer to try buying dips in line with the uptrend which began in May at 1.62. Neither side of the market would seem to have a particular advantage here so jumping into any trade mid-stream seems a bit reckless to me.

Interesting note on EUR/CHF regarding hedge fund positions

Sean Lee — Thu, 02 Sep 2010 21:28:20 +0000

I was opining yesterday that the price action in EUR/CHF is suggesting to me that we again may be able to consider a contrarian trade. Despite very heavy option-related selling, the pair jumped 200 pips in two sessions which suggests to me a market that is very short.

Now Citi Bank market analysts have come out and said that the hedge fund market is very short this pair, and they would probably know.

Technically there is no indication yet of any bottoming formation, and USD/CHF continues to trade in a very bearish fashion close to its recent lows, but I think EUR/CHF is one trade the contrarians among us should continue to monitor closely.

ForexLive Asian market open: Quiet markets as holiday season ends

Sean Lee — Thu, 02 Sep 2010 21:03:49 +0000

September for the FX market is normally a volatile time when traders in the major financial centres return from the summer holidays and start trading in earnest again. It looks like September hasn’t quite begun yet and we have to wait until the upcoming long weekend in the US is over before the real action begins.

Ranges were tight overnight and we can expect something similar in Asia, although it is risk-off Friday so that’s usually good for a flurry or two.

Good luck today and TGIF.

EUR/GBP: Big two-way action

Sean Lee — Thu, 02 Sep 2010 01:07:51 +0000

AS Gerry reported overnight, some of the big Middle-Eastern players were very active buyers in EUR/GBP yesterday. The break above .8280 also encouraged some technical buyers to enter the market, both on a stop-loss basis and also initiating fresh longs.

A friend of mine who sees a lot of the bigger interbank flows and orders suggests to me that selling the rally may prove to be an excellent risk-reward trade. He suggests waiting until .8350/.8400 and if the market stalls there for a session or two, then sell with a reasonably tight stop looking for a test of .8000.

EUR/CHF: Interesting price action overnight

Sean Lee — Thu, 02 Sep 2010 00:38:44 +0000

Despite the very heavy option-related selling below 1.3000 which took the market as low as 1.2850, EUR/CHF has bounced back very impressively. When a market bounces hard despite being in a strong downtrend and despite heavy selling still occuring, then we may be close to a bottom.

Another point to keep in mind is that the flat trendline support in USD/CHF comes in at 1.0020.

All music to the ears of a contrarian like myself but I’ve been burned a few times already so I will proceed with caution.

Nikkei opens +1.6%

Sean Lee — Thu, 02 Sep 2010 00:05:19 +0000

USD/JPY and USD/CHF are both slightly higher in very early Tokyo trade.

Quiet start to Asian session: AUD/USD back at stop-loss level

Sean Lee — Wed, 01 Sep 2010 23:50:03 +0000

The heavy stops were all positioned above .9080 and AUD/USD rallied to a high of .9116 after they were triggerd in NY. Now we have fallen back to this level on the usual Asian market profit taking.

The other majors are trading quietly inside 15 pip ranges.

Buba trying to oust controversial board member

Sean Lee — Wed, 01 Sep 2010 23:34:06 +0000

The German Bundesbank has unanimously expressed its wish to see controversial board member Thilo Sarrazin ousted from his position.

Australian election update

Sean Lee — Wed, 01 Sep 2010 23:10:27 +0000

The news is that there is no news. We’re still stuck in the horse-trading pen and it looks unlikely that we’ll have any result this week.

The independents had asked both parties to present their policy costings to the Australian Treasury for assessment. The Liberal opposition initially refused and now we know why. Treasury found an AUD$7 billion gap in their costing estimates. Ah politicians, at least you know where you stand with them.

EUR/USD: Range trading expected with a bullish bias

Sean Lee — Wed, 01 Sep 2010 22:46:28 +0000

Strong moves higher overnight in EUR/GBP, EUR/CHF and EUR/JPY have turned momentum in favour of the EUR, in the short term at least. Buying dips would seem to be the favoured strategy whilst this cross action is taking place.

Dealers report bids starting at 1.2750 through 1.2730 which should support at least during the Asian session. Mixed bag on the topside with stop-loss buyers and profit-taking sellers mixed together until we get close to 1.2900 when the sellers start to dominate.

Cable: Sell orders reported starting at 1.5515

Sean Lee — Wed, 01 Sep 2010 22:18:47 +0000

Sovereign players have been very busy in the cable over the last week or so and more orders are being reported.

It’s unlikely that Asia will witness any big moves today but if cable does rally and stall at 1.5515, then you’ll know that the offers are decent in size.