Currency Trading Update

Wednesday's leaders in the currency trading portion of the Million Dollar Portfolio Challenge were knocked down a few notches as one trader moved up four spots in the rankings to end Thursday as contestant number 1. How did he do it? A handful of very profitable long GBP/JPY positions. GBP/JPY is actually one of the less popular pairs in the contest, as yesterday's stats show that 4.55% of trading volume was contained to the pair, compared to 40.4% in EUR/USD, 12.37% in USD/JPY, and 10.12% in EUR/JPY. At the time of writing, contestant number 1's portfolio balance was actually above the $1 million mark, as a resurgence in risk appetite overnight and throughout the morning sent the Japanese yen crosses higher.

Event risk will be very low at the start of next week, though the New Zealand dollar could respond to an important indicator at the end of the US trading session on Monday:

Asian Trading Session
*No key indicators due to be released

European Trading Session
*No key indicators due to be released

US Trading Session
01/19, 16:45 ET
New Zealand Consumer Prices (4Q) - New Zealand's consumer price index is forecasted to have fallen 0.4 percent during the fourth quarter, bringing the annual rate down to 3.5 percent from 5.1 percent. The quarterly contraction would be the first in two years and the sharpest drop in ten years, and may also add to speculation that the Reserve Bank of New Zealand will cut rates aggressively during their next meeting on January 28. As it stands, both a Bloomberg News poll of economists and Credit Suisse overnight index swaps are forecasted a 100 basis point reduction to 4.00 percent, and this sentiment could weigh on the New Zealand dollar. However, if inflation pressures prove to be stronger than anticipated, the currency could actually rise.

Terri Belkas
Currency Strategist
Forex Capital Markets LLC

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