Currency Trading Update

There is a big difference between the strategies of contestants 1 and 2 versus contestants 3 and 4/5: the former are trading frequently on a short-term basis, while the latter are hoping that slow and steady gains will allow them to win the race. Contestant number 1 has done well buying EUR/USD rallies, as the surge in the pair has allowed him to rake in over $90,000 in profits over the past two days. Meanwhile, contestant number 2 has been trading GBP/JPY almost exclusively since the start of the contest, typically executing positions a few times a day as they pair has traded within a pretty well-defined range. By honing his strategy, this trader has managed to make roughly $140,000 in profits since the start of the week.

On the flip side, contestants 3 and 4/5 (same person, two portfolios) have stuck with EUR/USD and have only made a handful of trades since the start of the contest and have generally kept their most profitable positions open for 1 - 2 weeks at a time. In fact, both of these contestants have executed single trades that netted them over $100,000.

It remains to be seen what sort of strategy will prove to be the winning one, and with 7 weeks left in the contest, there’s plenty of time for someone else to take over the lead.

The release of key economic indicators will slow down substantially as we enter the New Year, but we’ve got two that may be worth watching overnight:

Asian Trading Session
12/18, 23:30 ET (approximately, no official set time)
Bank of Japan Rate Decision – The Bank of Japan is widely expected to announce that they are leaving rates unchanged at 0.30 percent tonight. While there is no official time of release, we typically see the news hit the wires between 22:30 ET and 00:30 ET. There is potential for this to be very market-moving, but not for your typical reasons. Indeed, given the rally in the Japanese yen over the past few months, Japanese exporters have felt the brunt of the impact, and the government is becoming increasingly concerned. In fact, they’ve started to attempt verbal intervention, as Finance Minister Shoichi Nakagawa said last night that he has “the means” to cool the appreciation of the yen. Japan has a long history of successfully intervening in the markets, as they hold the second largest amount of foreign currency reserves in the world (China holds the most). As a result, it will be important to watch for comments by the Bank of Japan pointing toward intervention, or perhaps even a physical one, overnight.

European Trading Session
**No key indicators due to be released.

US Trading Session
12/19, 12:00 ET
Canadian Consumer Price Index - At 7:00 ET on Friday, Canadian CPI for November is anticipated to plunge 0.8 percent during the month while the annualized pace is forecasted to tumble to an 8-month low of 1.5 percent. Meanwhile, the Bank of Canada’s core CPI measure may actually hold steady at 1.7 percent. Given the sharp drop in commodity prices since the summer and slowing in the Canadian economy, there is potential for weaker-than-expected readings and thus, the Canadian dollar could pull back. On the other hand, signs that price growth is not slowing in line with the Bank of Canada’s forecasts could push the Canadian dollar higher.