BOOK REVIEW FX weeks . That highlights the
power Draghi has over the market, it also shows his skil l as the second most impor tant central banker in the world.
FXTM What do you think about the extreme monetary polic y measures announced by the Bank Of Japan at the beginning of April?
KB I
think they have It has taken risky
action. As we have seen in the US, QE can take some time to work.
taken 4 years of QE from the Fed to boost the US economy, so the BOJ better hope they have not run out of ammunition. Overall, if the policy is designed to weaken the yen, then the BOJ needs to get Japanese investors involved in selling the yen for us to see another leg higher in USDJPY.
FXTM How about the “Carney effect” on GBPUSD? If you had to pick a direction would you be bullish or bearish on the Cable in these next couple of months ?
KB I think the “Carney effect” has been priced into Cable since he
was first announced as Governor late last year. Further QE could be more difficult to achieve than the market thinks because of 1, some MPC members are doubtful of the impact of more QE on the UK economy, and 2, Carney does not have a deciding vote on the MPC, so just because he may be in favour of more easing does not mean it is going to happen. This could support the
downside in GBPUSD
around 1.48. There is a risk that the Cable could strengthen at the start of Carney’s reign if he does not push through more easing.
than they
KB Obviously gold is not a currency in the traditional sense of the word; it is not the average unit for
Retail traders are in a much better position
were 5+ years ago,
the internet and social media offer a huge amount of information for traders
FXTM How would you explain the recent decoupling in risk sentiment
– Stock Markets
are rallying across the Globe, commodities and commodity currencies are falling to the USD. Is King Dollar back?
KB I think it’s down to the US. US stocks are rallying because the US economy looks in its healthiest state for many years. However, commodities are also under pressure because of the commodity boom in the US,
these However,
exchange days. from
2008 to the end of 2011 one of the pillars pr opp i n g up gold was QE
and
the prospect of currency debasement, especially the dollar. Since then the market has focused on the hunt for yield, which has hurt the price of the precious metal. It has been under sustained selling pressure,
as it does not offer
any yield to investors. Thus, you could argue that in recent years gold has been treated like a currency with an interest rate of 0% and no prospect of rates ever going higher.
FXTM As every trader knows, it’s
FX TRADER MAGAZINE July - September 2013 65
which could see the US become a net oil exporter in the coming years. This is weighing on commodity prices
and hurting
currencies like the Aussie and the NZD.
FXTM As you mention in your book some people trade Gold like a currency. What’s your view on this – is Gold a currency?
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