The US market was rife with talk ahead of this weekend's G20 meeting, speculating that China would be singled out for manipulating major currency markets, due to their habit of leveraging their reserves via option plays.
This had already brought carry plays into focus, when another rumour hit, this one that a Chicago based hedge fund had got whacked in the energy markets to the tune of $4bn, and that they were liquidating carry trades to pay for either A) The losses, B) The margin call or C) Fund redemptions. The hedge fund later denied the rumour (but declined to discuss specific performance). However there was a lot of smoke, and most guess at least a little fire.
Two other hedge fund names were also in the mix. The result of all this was USD/CHF opened at 1.2535, dropped to 1.2423, bounced back to 1.2460, and closed at 1.2445. EUR/CHF dropped from 1.6010 to 1.5950, closed at 1.5960. GBP/CHF dropped from 2.3635 to 2.3550, closed at 2.3575. CHF/JPY ran up from 94.40 to 94.68 where it closed. CAD/CHF closed at 1.0850 a 3-mth low. Eyes on G20 comments.
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