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Man’s Best Friend?

At FXPIG we believe there is always something to say about the market even if ranges are narrow, techs are neutral and Trump isn’t on a tweet storm.

Liquidity. The trader's lifeblood. Don’t be misled into thinking it will always be there. Like your best friend, you will miss it terribly when it's gone!

The advent of tech-led innovation took banks (the suppliers of liquidity) by surprise. Their introduction of technological advances has always been slow, introducing new methods only when forced to.

This PIG lived among the bankers for a long time and saw the protection of voice brokers as almost parental in its severity. The first screen based broker was irreverently nicknamed “the toy” and was never expected to catch on. Now all banks are using platforms to trade, voice broking in FX is moribund and liquidity has gone through the roof.

The moral of the liquidity story is that when it’s there it’s great but when its gone its flash crash time. There has been a herd mentality developed as platforms have become the norm in liquidity provision. Everyone will provide liquidity until one doesn’t want to anymore then no one does.

Sellers trying to find bids see big figures dropping like Autumn leaves.

Remember June 23/24?

Thankfully “Black Swan” events are rare so overall market liquidity has improved, and this has led to the upsurge in retail traders.

At FXPIG we supply liquidity in all market conditions. No, we aren't superhuman, we just pride ourselves on building partnerships with our clients and the market.

So, back to the markets. Last week, the FOMC released the minutes of their latest meeting; the first since they hiked rates. Their discussions seem to have been more akin to a tea party than a meeting of the (supposed) finest financial minds in America. To pronounce that a rate hike in March will depend on the latest economic data betrays the legacy of Greenspan and Bernanke!

Advance guidance is nonsense if it relies on single month’s data. PIGs know, it’s all about the trend.

Trump had a tentative winge (for that is all it was) at the Chinese calling them Grand Champions of Currency Manipulation. Big words but they fall short of the currency manipulator charge that would actually force some action. The President is being characterized by being someone with a lot to say but a little short when it comes to actions. This week he will be addressing a joint session of congress. He will need to get off the campaign trail and start to enact a few policies.

Janet Yellen, Chair of the aforementioned FOMC, also peaks this week to a business men's convention and she will also need to produce a better indication of the Fed’s intentions or abandon her stance and revert to a more “distant” approach. You never know, the markets may quite like having the ability to second guess handed back to them!

We also have the release of Purchasing Manufacturers Indexes (PMI) in the U.K., U.S., and Eurozone. These indices provide a useful guide to manufacturing output and are one of the sole consistent indicators across all economies. A read above 50 is expansion, below 50 contraction. The U.K. is the most at risk of a fall recent readings of around 55 following the huge increase in input costs last month. This could easily follow through into PMI data but a contraction is highly unlikely.Finally, we are approaching the triggering of Article 50 of the Lisbon Treaty when the U.K. will formally give notice of its withdrawal from the EU. There is a lot of chatter about the pound falling once negotiations begin in earnest but this PIG is calling a bottom! The Government has promised the trigger by March 31 so expect a statement confirming this as soon as this week.

At FXPIG we believe there is always something to say about the market even if ranges are narrow, techs are neutral and Trump isn’t on a tweet storm.

Liquidity. The trader's lifeblood. Don’t be misled into thinking it will always be there. Like your best friend, you will miss it terribly when it's gone!

The advent of tech-led innovation took banks (the suppliers of liquidity) by surprise. Their introduction of technological advances has always been slow, introducing new methods only when forced to.

This PIG lived among the bankers for a long time and saw the protection of voice brokers as almost parental in its severity. The first screen based broker was irreverently nicknamed “the toy” and was never expected to catch on. Now all banks are using platforms to trade, voice broking in FX is moribund and liquidity has gone through the roof.

The moral of the liquidity story is that when it’s there it’s great but when its gone its flash crash time. There has been a herd mentality developed as platforms have become the norm in liquidity provision. Everyone will provide liquidity until one doesn’t want to anymore then no one does.

Sellers trying to find bids see big figures dropping like Autumn leaves.

Remember June 23/24?

Thankfully “Black Swan” events are rare so overall market liquidity has improved, and this has led to the upsurge in retail traders.

At FXPIG we supply liquidity in all market conditions. No, we aren't superhuman, we just pride ourselves on building partnerships with our clients and the market.

So, back to the markets. Last week, the FOMC released the minutes of their latest meeting; the first since they hiked rates. Their discussions seem to have been more akin to a tea party than a meeting of the (supposed) finest financial minds in America. To pronounce that a rate hike in March will depend on the latest economic data betrays the legacy of Greenspan and Bernanke!

Advance guidance is nonsense if it relies on single month’s data. PIGs know, it’s all about the trend.

Trump had a tentative winge (for that is all it was) at the Chinese calling them Grand Champions of Currency Manipulation. Big words but they fall short of the currency manipulator charge that would actually force some action. The President is being characterized by being someone with a lot to say but a little short when it comes to actions. This week he will be addressing a joint session of congress. He will need to get off the campaign trail and start to enact a few policies.

Janet Yellen, Chair of the aforementioned FOMC, also peaks this week to a business men's convention and she will also need to produce a better indication of the Fed’s intentions or abandon her stance and revert to a more “distant” approach. You never know, the markets may quite like having the ability to second guess handed back to them!

We also have the release of Purchasing Manufacturers Indexes (PMI) in the U.K., U.S., and Eurozone. These indices provide a useful guide to manufacturing output and are one of the sole consistent indicators across all economies. A read above 50 is expansion, below 50 contraction. The U.K. is the most at risk of a fall recent readings of around 55 following the huge increase in input costs last month. This could easily follow through into PMI data but a contraction is highly unlikely.Finally, we are approaching the triggering of Article 50 of the Lisbon Treaty when the U.K. will formally give notice of its withdrawal from the EU. There is a lot of chatter about the pound falling once negotiations begin in earnest but this PIG is calling a bottom! The Government has promised the trigger by March 31 so expect a statement confirming this as soon as this week.

lastest Articles

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King Dollar’s reign could end on Powell’s testimony and trade war progress
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USD at the crossroads - ING
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US: Payrolls likely to increase 150k in June - TDS
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RBA: More rate cuts to come? - Westpac
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ECB’s Lane: No comments on monetary policy
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Gold slips back closer to overnight swing low, below $1415 level
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RBA delivers consecutive cuts - TDS
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USD/CAD Canadian Dollar Rises on Rate Divergence With Fed
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UK PM Candidate Javid: My absolute priority is to deliver a Brexit deal
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ECB: Tweak in policy rate forward guidance?
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USD: Further selling? – Danske Bank
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Gold jumps to over 3-month tops, around $1330 area
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USD/JPY climbs to 1-week tops, 110.00 mark back on sight
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EUR/USD remains under pressure around 1.1180
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USD/JPY treads water near 109.50 amid negative Treasury yields
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USD/CAD ticks higher to mid-1.3400s amid weaker Oil prices
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Market Analysis
EUR/USD unable to gather traction above 1.1200
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May’s Resignation means Brexit is Back to Square One
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Market Analysis
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Market Analysis
GBP/USD clings to modest recovery gains, 1.2700 mark back on sight post-UK data
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Market Analysis
EUR/USD Technical Analysis: Interim resistance emerges at the 55-day SMA at 1.1236
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Market Analysis
Gold in search of a firm direction, holds steady near $1275 area
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Market Analysis
EUR/USD remains under pressure near 1.1150 post-German GDP
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Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 22.05.2019
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Market Analysis
FOMC Minutes to portray a cautious tone
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Market Analysis
GBP/USD technical analysis: Hammered down to 4-1/2 lows, vulnerable to test 1.2600 mark
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Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY -21.02.2019
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Market Analysis
RBA: Rate cut in June and August?
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Market Analysis
EUR/USD resumes the downside near 1.1150 ahead of ECB, data
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Market Analysis
ECB's de Cos: European financial system remains fragile
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Market Analysis
EUR/JPY remains sidelined below the 123.00 handle
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Market Analysis
EUR/USD seen at 1.15 in 6-month – Danske Bank
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Market Analysis
USD/CAD Canadian Dollar Lower Despite Reaching Tariff Agreement With US
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Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 17.05.2019
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Market Analysis
Gold drops to session lows, retreats further below $1300 mark
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Market Analysis
EUR/USD: Short-term consolidation?
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Market Analysis
JPY futures: room for further depreciation
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Market Analysis
USD/TRY edging higher, approaches the 6.10 area
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Market Analysis
AUD/USD technical analysis: Bears flirting with 1-week old descending trend-channel support
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Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 14.05.2019
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Market Analysis
GBP/USD keeps the red below mid-1.2900s, 2-week lows post-UK jobs data
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Market Analysis
EUR/USD Technical Analysis: Recent tops and the 55-day SMA keeps limiting extra gains
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Market Analysis
EUR/USD: Balance of risks still favour 1.10 in 2Q19
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Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY -13.05.2019
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Market Analysis
BoE's Broadbent: Doesn't know which way rates would go in case of a messy no-deal Brexit
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Market Analysis
Dollar falls as the US-China trade war intensifies
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