Forex Investment and Currency Trading

Since mid-September, emerging market currencies have depreciated versus non-USD majors by 2.5% on average. This shift is coming after about 2 months of flat performance between EM and G10, which in turn followed an out performance of EM currencies within July. In general, EM FX moves have been related with broader USD trends. EM currencies were rallying during the first stage of the USD rally, from late July to early August. Markets started re-assessing lower the growth prospects
outside the US OECD.
In the process of downgrading ex-US growth expectations, an increasing number of long term US investors started to either cash [...]

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FX Bottom-Line: CAD’s commodity status is fading as the US credit crisis deepens. In its place, USD is emerging as the main driver of CAD/crosses as CAD’s North American status trumps all other considerations. This is not unchartered territory, but reflects a familiar relationship associated with US recessions. The USD roller-coaster ride is continuing and ‘clever money” is often caught wrong-footed, but as long as the US uncertainties linger CAD/crosses will take their primary direction from broadbased USD changes.
Crude oil rallied toward US$110/bl earlier this week. NOK obliged and followed oil higher to outperform its G10 peers. CAD, however, lingered [...]

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AUD/JPY and the evolution of risk
AUD/JPY 1-year implied volatilities had seemed to suggest that the worst of the financial crisis was passing in the wake of the collapse of Bear Stearns in mid-March. However, as uncertainty and risk aversion flared again, it became clear that the global financial crisis was fully entering Phase IV. AUD/JPY has very closely tracked the evolution of risk, as given by the AUD/JPY 1- year IV, since the crisis started in mid-2007. As AUD/JPY remains directionally sensitive to risk tolerance, the success of the US Treasury Secretary Paulson’s US$700bn financial bailout and central bank efforts [...]

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One-cancels-the-other orders
A one-cancels-the-other order (more commonly referred to as an OCO order) is a stop-loss order paired with a take-profit order. It’s the ultimate insurance policy for any open position. Your position will stay open until one of the order levels by the market and closes your position. When one order level is reached and triggered, the other order automatically cancels.
Let’s say you’re short USD/JPY at 107.00. You think if it goes up beyond 107.50, it’s going t keep going higher, so that’s where you decide to place your stop-loss buying order. At the same time, you believe that USD/JPY [...]

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