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USD/JPY Weakness Brings Contestant Back Into the Top 3

The contestant with the third largest balance in the overall Million Dollar Portfolio Challenge – which includes stocks and currencies – isn’t even in the top 25 of the stock-trading portion. Nevertheless, Edward Burke has managed to work his way up in the rankings by dominating the currency portion of the contest and making over $330,000 in EUR/USD trades alone. Indeed, his strategy of executing positions in the pair and holding them for only minutes at a time has served Burke quite well, as he has managed to avoid large moves in the currency markets. With only a week left in the contest, Burke’s currency portfolio lead of nearly $140,000 ahead of contestant numbers 2 and 3 put the odds very much in his favor.

Contestant number 2, Chi Ming Wong, is working on catching up, though. As of Friday, Wong held a currency portfolio balance of $294,717.92 and is currently floating profits of nearly $14,000. Thus far, a short USD/JPY position is working in Wong’s favor, as concerns about the solvency about Fannie Mae and Freddie Mac - the dominant providers of funding for home mortgages in the US – has weighed on both equities and the US dollar in general. While news on Sunday that the Federal Reserve Board of Governors granted the New York Fed the authority to lend to Fannie Mae and Freddie Mac if necessary has helped support US stock markets this morning, the government's seizure of IndyMac Bank has done little but add to evidence that conditions in the US credit markets and financial sector are bound to get worse before they get better.

Carlos Godfrey, meanwhile, is still in the top 3 with a portfolio balance of $283,542.16, as of Friday’s close. However, this is down almost $10,000 from Thursday’s close, as his short GBP/USD trade went against him. Godfrey re-entered the position on Friday at a higher price of 1.9883, but with the US dollar remaining broadly weak and bullish UK data anticipated to be released on Tuesday, this could become yet another losing trade.

Terri Belkas, Currency Analyst for DailyFX.com