Monday, Mar 01, 2010
Sterling drops it's drawers (again)...
FT: Traders build up record bets against sterling
Sterling fell to a 10-month low below $1.50 against the dollar on Monday as figures revealed speculators had built up record bets against the pound and concerns grew over the UK’s record budget deficit. Positioning data from the Chicago Mercantile Exchange, often used as a proxy for hedge fund activity, showed investors raised their short positions in sterling to 62,884 contracts, worth $6.1bn, in the week to February 23. This was up from 56,079 in the previous week.
Posted by mrflibble @ 11:41 AM (2576 views) Add Comment
56 Comments
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1. techieman said...
Classic comment on here a couple weeks ago that the £ was 5/2 to go below 1.50 by the end of the month. close but no cigar, funny that.....hmmmm
2. titaniccaptain said...
Gold is up again!!!!!!!!.............WTF!!!!!!!!!
Every time I hear a reasoned argument for why not to buy gold it goes up and up and up.......will someone please tell me why.
3. jack c said...
@titaniccaptain - Did you ever hear the one about the economics lecturer who decided to teach his parrot all there is to know about economics? - he taught it to say Supply and Demand.
4. titaniccaptain said...
Jack C LOL!!!!!
5. techieman said...
actually whenever - and accepting that news doesnt actually drive the markets - someone on the floor couldnt explain a move, they would say "more buyers than sellers" or vice versa.
6. mountain goat said...
"The announcement that the UK’s Prudential was buying US insurer AIG’s Asia arm for $35bn, $25bn of which will be in cash, also put pressure on the pound." - FT
Come again?
7. str 2007 said...
Yes it definately seems to be on the way down.
There was a huge drop this morning at 11.36 of almost 200 points (2 cents) in the space of 3-4 minutes, which I'm pleased to say I was on the right side of.
It's slowly regained quite alot of that since (I took the profit off the table techieman).
What's interesting though is why it suddenly happened and what suddenly stopped it ?
I'm not a conspiracy theorist as such, but having heard of the CPT Crash Protection Team operating in America it makes me wonder if there is a similar system in operation here and how it works against a whole market.
8. greenmind said...
According to BBC Radio 4 news the fall in the £ is due to fears of a hung parliament. Anyone know if there is any truth to/proof behind this statement? Whats a hung parliament got to do with it!?!
9. titaniccaptain said...
@greenmind
The markets don't like uncertainty....makes them hesitant to trade.
10. Crunchy said...
Sterling - some thing are more obvious to some than they are to others. lol
11. str 2007 said...
greenmind
Well exactly, that's not exactly new news and further won't be confirmed until an election. Therefore I can't see why something as vague as that could make sterling drop so suddenly at 11.30ish.
But I do wonder if these falls will lead to BoE being forced to increase rates.
I don't know the point at which they would be forced, if at all.
Strange times.
12. str 2007 said...
In fact as a second thought putting up interest rates shows they care and perhaps the markets would short sterling even harder if they did, knowing they can't put them up forever and creating a Soros type sterling crisis all over again.
13. another alan said...
That theory goes that a hung parliament would find it difficult to cut the budget deficit, giving less confidence to sterling and not helping the possibility of inflation (a v brief answer)
14. estrader said...
@6 - To raise the $US25 Billion in cash they will need to sell the equivalent in £
15. str 2007 said...
13 estrader
Is that what caused the sudden drop then ? A big futures contract going through or something ?
16. jack c said...
Pound under pressure on political concerns - www.ft.com/cms/s/0/0fbd16c8-0f19-11df-8a19-00144feabdc0.html?ftcamp=rss
17. mark wadsworth said...
Sure, things are looking grim for sterling, but aren't they looking equally grim for the Euro, the US dollar, the Yen and so on?
18. techieman said...
pound down on.... take your pick of fitting the news to the moves.... nice one STR2007, its never wrong to take a profit... except when it is!
:-).
19. crash n burn said...
@titanic captain
Is it just me, or does there seem to be an inverted head and shoulders forming on the gold? Look at the daily chart.
20. techieman said...
The only thing that surprises me is that anyone is that surprised. Well except FMP and Crunchy both proponents of the dollar collapse theory.
Why do i say that? Well yes it is pound weakness but the Euro is also down against the greenback. So all i can say is:
http://www.youtube.com/watch?v=TE_VhqaxbYY
21. str 2007 said...
Crash & Burn
I assume you're talking in dollars not sterling ?
All very complicated and interwoven this.
I guess the Gold Bugs are right at the moment as even the strongest of currencies is looking weak against Gold.
22. timmy t said...
According to the Times its due to weak housing demand!! http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article7045133.ece
Personally I think lack of demand for housing is also responsible for the terrible weather, recent earthquakes and Katie and Peter splitting up. It's awful - I demand government intervention.
23. flashman said...
I don't normally comment on currency movements (busman’s holiday) but the recent falls in Sterling are largely caused by the collapse in the polling lead enjoyed by the Tory party. Also, in the few days before the poll results became known, Cameron and Osborne gave performances that caused dismay.
The AIG acquisition is a red herring.
24. estrader said...
"Sterling tumbled to a nine-month low against the dollar today after a fall in the number of home loans granted in January triggered fears that a recovery in the housing market is waning."
But...I thought the housing market was benefitting from the weak £ because it attracts foreign investors...I suppose that only works if it doesn't snow or something.
25. str 2007 said...
Hi Flash
Long time no hear.
It was the 'sudden' drop at 11.30 ish that interested me. I could see the overall fall being related to the election and other 'big picture' influences etc. but the sudden fall looked like something had happened unexpectedly.
BTW have you started those foundations yet ?
26. titaniccaptain said...
@Crash and Burn
I see many head and shoulders on a trend both up and down that's the confusing thing.
Is this Gold Rally a symptom of today's news about the mines falling victim to the earthquakes or is it a market reaction to the polls or both? which makes you wonder could this rally last until at least the election?
27. estrader said...
@25 "I see many head and shoulders on a trend both up and down that's the confusing thing."
Exactly. This is why you shouldn't pay much attention to pretty coloured lines and shapes. They are there to keep the weak hands and the public in the dark.
28. happy mondays said...
With the fall in sterling, Will this effect house prices ?
IE foreign investors buying property etc or trying to off load property..
29. flashman said...
Hi str 2007: sudden movements are not necessarily caused by an "event". Sometimes a few big trades are coincidentally placed at the same time. Sometimes one big trade triggers a few computer trades or even a blind following response from other traders. The press have to say something to earn their keep but there is definitely nothing dramatic going on.
I decided to apply for another house on the plot, so I won’t be doing the foundations for a couple of months. I've had several offers in the last few weeks to buy the plots. Most of the offers are from developers who are desperate to get their hands on development land. I don’t know what to make of it but the level of interest is unexpected
30. str 2007 said...
Happy Mondays
I'm not sure foreign investors are quite as 'property' focused as us Brits. But if you were going to buy something in the UK for holidays or perhaps young ones coming here to University, it's alot more attractive proposition now than it was 3 years ago.
About 30-40% more attractive depending on which house price poll and currency you take.
Unfortunately we have not beneffited from this fall in our own market.
31. flashman said...
str: I'll give you a shout when we are about to start the foundations
32. dill said...
I'm going to go on record here. Confidence in the UK is waning because it's set to become isolated. It has very little to offer any foreign player, in the future. Days of Empire have gone. This country must now play Servant - not Master. Time to adapt and stay mobile.
33. str 2007 said...
flashman
Cheers
34. happy mondays said...
str 2007 Thanks for the info.
35. dill said...
Oh dear! C'est la vie ou la guerre.
36. brickormortis said...
Regarding the drop at 11:30, I am privvy to some inside information. Apparently it snowed in Hull at 11:29. Apparently this stuff does all sorts to markets.
37. titaniccaptain said...
@Flashman
"Sometimes one big trade triggers a few computer trades" .....sorry to sound ignorant....are there automated systems that follow follow big trades and try to copy them with unapproved automatic trades?
38. techieman said...
hey flash - could you tell us the daily average volume in the forex market? Slice and dice anyway you want. Its a few trillion isnt it? So buying a few billion here while not a pi55 in the ocean, does amount to a pi55 in a swimming pool!
39. dill said...
No, no. Simple stops and limits.
40. flashman said...
Hi tc: most automated systems are triggered when a set of pre-defined parameters or conditions are met. The parameters within a "black box" are of course secret and they are all different but it is easily possible for an automated system to be triggered by the actions of another automated system. It doesn't necessarily mean that a system is set up to follow other trades or systems. It is unlikely that the designers would fail to have anticipate the type of trigger conditions created by another system but that does not mean that their system was designed for that purpose. There are a few systems that are actually designed to “respond” but most are not built for that purpose. Does that answer your question?
41. titaniccaptain said...
@Flashman
Very much so thank you
42. flashman said...
Hi techie: turnover seems to vary between 2 and 4 trillion. Btw, most people (yourself excluded) don’t realise that there are almost as many spots as there are swaps. The turnover figures are actually quite misleading because leverage and interbank makes it look bigger that it should when compared to other markets. Yes, it is amazing how many ripples can be caused by a piss in the swimming pool..
43. bellwether said...
Flash good job on freeman phil this am - at your best you are irritatingly eloquent.
On the subject of busmans holidays, transfering out of sterling at $1.67 seems to be working reasonably for me well but recall you were sticking with the old bird and saw no point in swapping savings out. Do you to any extent see us revisting last years lows v the dollar - we are already getting close to that against the yen - as an aside a currency which terrifies me but which the world continues to like for now.
44. 51ck-6-51x said...
techieman - Three* words: self-organised criticality.
* Words are still counted seperately when hyphenated aren't they?
45. flashman said...
51ck: My pissing and ripples comment was a crude nod to the “frequency of aftershocks” law (you are talking about Omori and crew aren't you, or have I gone off at a tangent?)
46. techieman said...
maybe im a bit slow today 666 but you got me there! On both the grammar and what you are trying to convey..:-).
Am guessing am gonna feel stupid pretty shortly.
47. techieman said...
Thank god - it was SOMETHING clever!!
48. Jeremiah said...
As has been mentioned before, I think Cameron etc. are deliberately 'underwhelming' expectations in order to spook markets prior to the election. Presumably this will be to precipitate some form of crash on Nulab's watch. This will help the tories to get elected highlighting the fact that the blame for the financial collapse and the required subsequent draconian remedies lies squarely at Nulab's feet.
49. flashman said...
Hi bellwether: I keep my savings in Sterling because I am currently buying sterling denominated assets and because I feel that this is a safer strategy for me at this time. It's not really a vote of confidence in Sterling, although I have no particular reason to 'vote' against it. It’s easily possible that we will visit last years lows against the Dollar if it looks like Labour will get back in. The market really hates the idea of that. If a Tory lead opens up just before the election, then consider closing your shorts pronto. Another thing to look out for is Obama making serious headway with his healthcare proposals. The market hates the idea of that too, so if it looks like he is making headway then tread carefully. The Yen is always interesting because Japan is a unique story. Japan has extreme economic and fiscal negatives and extreme positives. That's why the currency can swing about so much. If it goes down people start thinking about all the positives and vice versa
50. bellwether said...
Thanks Flash, all noted. I'll watch the polls. It's a pity the tories have DC as their lead, secretly I think everyone thinks he is a completely anodyne pri*k and that seems to be killing their prospects.
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52. str 2007 said...
...a wolf in sheep's clothing.
Jar Spoon Spoon Jar
What does that mean ??
53. jack c said...
@str 2007- I guess the "Jar Spoon Spoon Jar" bit refers to part of Tommy Coopers act (dont know if you are old enough to remember him?) and it's been used in a few responses on here in recent months - where it fits into the HPC debate however I have no idea as it's all a bit too cryptic for me.
54. vinrouge said...
str @ 50
Jar Spoon Spoon Jar
What does that mean ??
I don't know either, but it's maybe the same as this but with tenners.
http://www.youtube.com/watch?v=L9UMvfKBaZI&feature=player_embedded
55. voiceofreason said...
Jam today maybe ... ?
56. str 2007 said...
Well thanks for all your suggestions.
Still don't get it myself, even after watching the great Tommy Cooper.
Perhaps the vaciouspolitician can explain it for us & who the Wolf in Sheeps Clothing is.