What sterling's slump means for Britain's housing market
By Saqib Iqbal Ahmed, Carolina Mandl and Dhara Ranasinghe
NEW YORK/LONDON (Reuters) -Trading in tumultuous foreign exchange markets is akin to being in a casino right now, according to some traders navigating markets that have been whipsawed as central banks and governments try to right their economies.
In the last week, sleep-deprived traders have worked flat-out advising clients on the markets' extraordinary moves: the crash of Britain's pound to an all-time low, the Japanese monetary intervention to prop up the falling yen, and the euro's deeper plunge below dollar parity.
Towering above all is the mighty U.S. dollar which is trading at a two-decade peak. Some see no end to the wrenching volatility.
"It really is like a casino right now," said John Doyle, vice president of dealing and trading at Monex USA, who said he is being more hands-on in talking to clients and extra cautious about risk.
"We have had to be extra vigilant of our internal trading policies to ensure we are not taking any undue risks," said Doyle. "Discipline has been key."
Deutsche Bank's Currency Volatility Index – the historical volatility index of the major G7 currencies – jumped to a two-and-a-half year high of 13.55 on Monday.
The British pound fell about 5% against the dollar over the last two sessions, its worst 2-session drop since March 2020, drawing comparisons with the typically more volatile emerging market currencies. The yen remains near a 24-year low against the greenback, despite Japanese monetary authorities last week intervening in the foreign exchange markets to boost the battered currency for the first time since 1998. While Sterling and the yen have fared extremely poorly against the dollar, the greenback's meteoric rise has spared no major currency. Every G10 currency has slipped against the dollar this year, for an average fall of about 16%.
"It's been a hectic few days for sure, and sleep has been sorely lacking," said Michael Brown, head of market intelligence at payments firm Caxton in London. "I'll blame sterling rather than my coffee habit for that, but heading to bed at 11:30 and waking at around 3:30 to cable (the US-Sterling rate) hitting record lows certainly wasn't much fun."
Moves have surprised long-time currency traders and investors.
Akshay Kamboj, co-chief investment officer at Crawford Ventures, a hedge fund trading currencies said while he had been expecting a deep correction in sterling "this deep was not anticipated."
"Our team is working around the clock from multiple global locations," said Kamboj, adding he is not trading sterling because the pound's direction now depends entirely on how the Bank of England reacts.
VOLATILITY HERE TO STAY
The volatility is unlikely to stop.
"It does feel like the groundwork is still there for more disorderly moves," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets, who added the driver would be dollar strength which is dependent on how hawkish the U.S. Federal Reserve is in raising rates.
The U.S. dollar has dominated due to soaring U.S. interest rates, a comparatively strong American economy and demand for a haven as global financial markets have turned more turbulent this year.
That has exacerbated problems around the world.
With the yen weighed down by the ever-widening gap between the yields on U.S. and Japanese government debt, the euro hurt by worries over an energy crisis and its impact on the economy, and the pound slammed by concerns the new government's economic plan will stretch Britain's finances to the limit, dollar bulls have been quick to press their advantage.
While FX traders are no stranger to volatility, the confluence of various risks makes this moment stand out.
Unlike March 2020, the last period of heightened volatility, where policymakers were united and had largely similar responses to the pandemic, traders now are faced with central banks reacting in their own different ways as they deal with soaring inflation and currency weakness.
"In previous times it's been a macro economic story, but this is very much a central bank story with them all jostling over rate hikes," said Chris Huddleston, CEO at FXD Capital, who has been former FX and bonds trader for the past 20 years.
Meanwhile the dollar's continued strength bodes ill for global financial markets analysts at Morgan Stanley said in a note on Monday.
"Such U.S. dollar strength has historically led to some kind of financial/economic crisis … If there was ever a time to be on the lookout for something to break, this would be it," the analysts said.
(Reporting by Saqib Iqbal Ahmed, Carolina Mandl, John McCrank in New York and Dhara Ranasinghe in London, writing by Megan Davies; Editing by Aurora Ellis)
(Bloomberg) — Most Read from BloombergGermany Suspects Sabotage Hit Russia’s Nord Stream PipelinesEverything-Selloff on Wall Street Deepens on 98% Recession OddsStocks, Commodities Drop; US Treasury Yields Surge: Markets WrapJohn Paulson on Frothy US Housing Market: This Time Is DifferentHurricane Ian Makes Landfall in Cuba as It Churns Toward FloridaChancellor of the Exchequer Kwasi Kwarteng will publish a medium-term fiscal plan on Nov. 23, alongside a forecast by the government’s budgetary w
France's prime minister said that Europe must ensure values including human rights and abortion access are respected in a response to Italy's election result.
Liz Truss has thanked the crown prince of Saudi Arabia for his help securing the release of five Britons captured by pro-Russian forces in Ukraine, in their first call since she became prime minister. Aiden Aslin, Shaun Pinner and John Harding have been identified as three of the Brits freed "by the skin of their teeth" in a surprise prison swap last week. The Foreign Office had been working for months to support those detained, but it is believed the crown prince of Saudi Arabia, Mohammed bin Salman, was crucial in negotiating the release.
In a contradictory message, the UK central bank said it wouldn't hesitate to hike interest rates if needed, but didn't announce an emergency meeting.
Rocketing LNG cargo prices have squeezed out dozens of smaller traders, concentrating the business in the hands of a handful of international energy majors and top global trading houses. This grip is not expected to ease until 2026 when more liquefied natural gas (LNG) starts to materialise and lower prices, adding to supply worries for poorer states reliant on it to generate power and driving up costs for big Asia economies. The global LNG market has more than doubled in size since 2011, ushering in dozens of new entrants and the expansion of smaller players in Asia.
PR Newswire This is the START of day message for the PR Newswire Disclose service ============================================================================== Disclaimer ============================================================================== The content and accuracy of all information published on the Disclose service is the responsibility of the originating company or organisation and not PR Newswire or distributing companies. These companies include (but are not limited to) Thomson Re
Nykode’s vaccine candidate boosted Spike-specific T cell responses and induced de novo T cell responses to non-Spike antigens found across SARS-CoV-2 variantsNykode’s Vaccibody technology combined with immunogenic T cell epitopes selected by Adaptive Biotechnologies generated broad and CD8 dominated T cell responses post-vaccinationNykode’s vaccine candidate was safe and well-tolerated at all three dose levels OSLO, Norway, Sept. 27, 2022 (GLOBE NEWSWIRE) — Nykode Therapeutics ASA (OSE: NYKD),
Press ReleaseVELIZY-VILLACOUBLAY, France — September 27, 2022 In New Drive for Growth, UK Grocer Asda Selects Dassault Systèmes’ Planning and Optimization Solutions to Transform its Transport Operations Third-largest grocer in the U.K. will deploy Dassault Systèmes’ “Perfect Logistics” industry solution experience, leveraging DELMIA Quintiq applications, to optimise ASDA’s transport services for its stores, suppliers and parcel clients and enable the logistics team to continue to innovate its se
HELSINKI (Reuters) -Fortum said on Monday it would draw a first 350 million euro ($337 million) tranche of a bridge financing deal made this month with the government to weather the energy crisis. The Finnish utility inked the 2.35 billion euro agreement with government investment company Solidium to cover soaring collateral needs in the Nordic power derivatives market. "For the moment, Fortum has sufficient liquid funds to meet current collateral requirements," Fortum said in a statement on Monday.
The Treasury moved to settle the markets with the promise of a Budget next spring as the pound tumbled against the dollar on Monday.
TotalEnergies' 119,000 barrel per day (bpd) Feyzin oil refinery in southern France is likely to remain offline until mid-October at the earliest, a CGT union delegate said on Monday. Feyzin was completely shut except for an alkylation unit on Sept. 16 after a leak at the fluid catalytic cracking unit and it is likely to remain closed for 4-6 weeks from that date, CGT union delegate Thierry Defresne said. The outage means around 40% of France's refinery capacity is offline at a time where Europe is looking to ease its dependence on Russian refined products.
). The rising technological advancements, rising labor costs and safety concerns, rising efficiency and productivity of manufacturing and warehouse operating companies, a significant recovery in global manufacturing, growing demand for automation in industries, rising demand for robots in manufacturing units and warehousing facilities, and rising emerging markets are just a few of the key factors driving the growth of the automated material handling market.New York, Sept. 27, 2022 (GLOBE NEWSWIR
LUTON, England (Reuters) -EasyJet said on Monday it would scrap its carbon offsetting scheme at the end of the year and instead target a 78% drop in emissions by 2050 via investments in efficient aircraft, sustainable aviation fuel and operating improvements. The British budget airline said it had contracted all its sustainable aviation fuel needs for the next five years from its supplier Q8Aviation, while it was also investing in technology to optimise the descent of its aircraft.
Global Hole Opener for Oil & Gas Market By Type (Fixed Diameter, Under-Reamers), By Well Type (Horizontal, Vertical), By Product Type (Fabricated, Integral, Small Rig Hole Openers (SRHO)), By Location (Offshore, Onshore), By Region, Competition Forecast & Opportunities, 2027New York, Sept. 27, 2022 (GLOBE NEWSWIRE) — Reportlinker.com announces the release of the report "Global Hole Opener for Oil & Gas Market – Competition Forecast & Opportunities, 2027" – https://www.reportlinker.com/p06320920
Germany's coalition government plans to scrap a levy on consumers' gas bills by Wednesday, the Frankfurter Allgemeine Zeitung reported on Tuesday, citing sources. The economy ministry said talks regarding the levy were ongoing. The need for the levy, which was planned to come into effect on Oct. 1 to help importers with the additional costs of replacing Russian gas, came into question after the government's decision to nationalise Uniper, Germany's biggest Russian gas importer.
AMSTERDAM (Reuters) -Gas production at the Groningen field in the Netherlands will be lowered to the minimal amount needed to keep wells operational in the coming year, as extraction is expected to end by 2024 at the latest, the Dutch government said on Monday. Production at Groningen, once one of Europe's major suppliers of natural gas, will be capped at 2.8 billion cubic metres (bcm) in the year starting Oct. 1, the government said, down from 4.5 bcm in the current year. The Groningen field, operated by a joint venture of Shell and Exxon Mobil, still holds massive reserves of natural gas.
The Chancellor has previously brushed off questions about the markets’ reaction to his mini-budget.
Global Market for GDPR Services Global Market for GDPR Services Dublin, Sept. 27, 2022 (GLOBE NEWSWIRE) — The "GDPR Services – Global Market Trajectory & Analytics" report has been added to ResearchAndMarkets.com's offering.Global GDPR Services Market to Reach $3.9 Billion by 2026 The global market for GDPR Services estimated at US$2 Billion in the year 2022, is projected to reach a revised size of US$3.9 Billion by 2026, growing at a CAGR of 18.2% over the analysis period. Solutions, one of th
Deutsche Telekom, Orange, Telefonica and 13 other European telecoms providers on Monday made their strongest push for Big Tech to share network costs, citing the energy crisis and EU climate change goals. The call comes as the European Commission prepares to seek feedback from both sides before making a legislative proposal that could force tech companies to help pay for the roll-out of 5G and fibre cables across the 27-country European Union. Prices for fibre optic cables, for example, have almost doubled in the first semester 2022.
Call Links will make it easier for people to start audio and video calls with up to 32 people