The trading of the leaders in the top 3 is fairly consistent with that of the majority of contestants in the currency portion of the contest, as they have primarily entered EUR/USD and USD/JPY positions, which are by far the most popular pairs in the contest. However, they’ve been able to get ahead by catching big moves in the respective pairs by patiently keeping an eye on technical levels and the release of economic indicators.
The contestant with the largest portfolio balance made more than $29,000 on a single trade and ended Monday with $291,396.17. How did it do it? He sold EUR/USD last Friday as the pair tested 1.5650 and closed the position on Monday morning near 1.5500. Indeed, EUR/USD was hit hard on Monday by weaker-than-expected European economic indicators (see Monday’s Currencies Update for more). Contestant number 1 followed this up by flipping the pair a few times overnight, and successfully managed to avoid this morning’s event risk that has sent EUR/USD rocketing higher.
US consumer confidence, as measured by the Conference Board, fell to a fresh 16-year low of 50.4 in June from 58.1. The news was much worse than expected, as the index was forecasted to slump to 56.0. A breakdown of the report shows sentiment on the present situation, future, and labor markets turned increasingly pessimistic. These indexes have shown a consistent deterioration since December, and with the US unemployment rate rising steadily along with record high energy and food prices, consumer confidence is likely to slump further, boding ill for consumption growth in the US. This news is particularly market-moving because we have the Federal Reserve’s rate decision scheduled for release on Wednesday afternoon. The Fed is widely expected to leave rates steady at 2.00%, but because of the significant upside risks for inflation and hawkish rhetoric from various FOMC members, the markets were pricing in a small chance of a rate increase. However, given the dismal status of the US consumer and economy in general, the Fed has very little room for error and will likely keep rates unchanged for as long as possible.
Meanwhile, contestant number 2 – who ended Monday with a balance of $266,292.87 – has been in and out of the top 3 as he has built up his portfolio balance high enough to keep him competitive. However, he hasn’t made any decisive moves for quite some time, as his only open trades are long USD/JPY positions he entered in June 11 just below 107.00. USD/JPY has done nothing but consolidate between 107.00 and 108.50 since then, but contestant number 2 appears to be looking for a break higher. He is unlikely to get that sort of move today as the pair has tumbled on the back of the disappointing US consumer confidence data.
Like contestant number 2, contestant number 3 hasn’t done much recently as his balance was built up enough earlier in the contest to keep him high in the rankings. Nevertheless, this trader’s closing balance of $265,351.95 on Monday is nothing to scoff at. Contestant number 3 may not be able to hold his place for much longer though, as his long EUR/CHF entry this morning is going against him.
Congratulations to our top traders and good luck!
Terri Belkas, Currency Analyst for DailyFX.com