How far can the Dollar fall?
The US dollar
The US dollar is on the back foot, with EUR/USD touching 108 and USD/JPY breaking support.
Here is their view, courtesy of eFXnews:
President Trump’s travel ban – and his associated decision to fire the acting Attorney General – dominates sentiment and remains good for Treasuries, the yen (and gold), but bad for bonds and the dollar. How long will market sentiment to be affected? How far can the dollar and yields fall on this?
I’m not sure serious analysis is possible, and I don’t trust my gut instincts on something as far from the usual state of affairs, but my bias is still that we’ll get back to the Trump economic program, and the implications for Fed policy, before too long. More prosaically, markets will focus on the US jobs data due Friday.
So how to trade?
We still want to fade this bout of Yen weakness too, with the BoJ holding policy and still anchoring yields. This till leaves me looking fondly at long EUR/JPY as an idea, even if we still think it is 2 1/2 months too early for that trade really.
Courtesy of ForexCrunch.com
Dealing Desk Vs. Non
Dealing Desk Vs. Non Dealing Desk is always an ongoing debate in the FOREX world.
There are many misconceptions that are derived from this conversation
for which we will address in this article. First of all, lets outline the
Dealing Desk (Market Makers)
Dealing Desks (Market Makers) have the
- The spreads are
- Orders are filled on
a discretionary basis
- The trade is filled
by the broker taking the opposite side of the trade
Non Dealing Desk
Non Dealing Desks are
split between Straight through Processing and ECN (Electronic Communication
STP - Straight Thru Processing
STP - Straight Thru
Processing include the following characteristics:
- Variable spreads
- connects client and
LP (Liquidity Provider)
- Quote are from LP
ECN = Electronic
Communication Network and is a computer network that disseminates orders
entered by market makers to third parties and permits the orders to be executed
against in whole or in part. The most popular product traded through ECNs are
stocks and FOREX
Variable spreads or
A bridge between
client and LP as well as other traders
Price quotes derived
from LPs and other ECN Members
Depth of market
(1) ECNs are STP
ECN is different than STP as Straight Thru Processing (STP)
brokers simply place your trade order to the next counterparty which can be all
of the three types of brokers: ECN, Market Maker or again STP.
(2) FOREX Brokers are
out to get the client by stop hunting and that client losses go right into the
broker's bank account. This is the LARGEST misperception. The market maker broker (For instance Gain Capital) takes all
its clients positions and form a large single net position which is then taken
in or out of the pocket or hedged with other counterparty.
It is the recommendations of Mason Dean Capital to use a
market maker such as Gain Capital for all retail FOREX trading.
The Trump Effect
Now that the election is
over and Trump will be president in 15 days, we can focus on the implications
of a Trump presidency. Donald Trump aims to shake up the US political
establishment, which could potentially have a large effect on market volatility.
2017, the key economic policies set forth by Trump will have an impact on
various key financial markets such as US Dollar, Euro, Yen, Pound and other
important currencies as well as stocks, commodities and bond markets in the
event of victory.
has repeatedly stated in public his position that the US Federal Reserve and Fed
Chair Janet Yellen have been politically-motivated in keeping interest rates
low. He has essentially accused the Fed of attempting to create false
appearances of a healthy economy and stock market to embellish the Obama
Administration. Trump has deemed the rising US equity markets as a “false stock
market” that has been propped up by an overly accommodative Fed. This stance
against what he sees as politically-driven dovishness provides a hint that if
Trump gains the highest office in the land, he may be keen on instituting a
more hawkish Fed. In that scenario, the possibility of higher interest rates
going forward could lead to a stronger US dollar. In addition, Trump’s rhetoric
on international trade issues has deemed his policy position as heavily protectionist.
At least initially, this stance could lead to a further boost for the USD,
especially against emerging market currencies like the Mexican peso and Chinese
yuan." by James Chen