Monetary Policy Often "Disgusting", Forex Traders Lose Big
Monetary Policy Often "Disgusting", Forex Traders Lose Big - Several recent uncertainties have made October the worst month to trade forex or forex. It was discovered by Hedge Fund Research (HFR), an organization that provides data for the hedge fund industry.
The HFR Coin Index fell to 4.37% in October and was at its lowest level in four and a half years. The monthly decline was also the largest since the creation of the HFR Currency Index in 2008, according to Reuters.
The HFR Currency Index shows the performance of currency investment managers on a monthly basis.
In addition, of the approximately 40 HFR-owned indices with various assets, only foreign exchange indices have doubled this year. This means forex traders are losing money this year and October is the worst month.
Emergency global economic conditions following the COVID-19 pandemic. Some countries can recover quickly, while others are still struggling to recover but are suffering from high inflation.
The Chinese economy has changed again: once high, now sluggish and even threatened by stagflation.
The monetary policy pursued by the central bank often surprises, even the market's confidence in the central bank has also declined.
“Market confidence in the central bank's monetary policy is currently waning,” said JPMorgan's forex strategy team.
High inflation prompted the central banks of Brazil and Russia to aggressively raise interest rates. Meanwhile, Turkey's central bank cut interest rates when inflation was high.
Markets last week expected the Bank of England (Bank of England / Bank of England) to raise interest rates last week instead of leaving them.
Likewise, the Reserve Bank of Australia / RBA ruled out a rate hike in 2023, although inflation has already reached its target.
The US central bank (Fed), which last week cut or wrote off the cost of its asset buying program (QE / QE), also caused confusion in the market. The Fed said it will remain patient with the rate hike and indicated that it will only raise rates in 2023.
However, high inflation has forced market participants to see the Fed raising interest rates next year.
Building on the FedWatch CME Group's tool, the market now sees a 43.2% chance that the Fed will raise rates by 25 basis points to 0.25% -0.5% in July next year.
In addition, at the end of 2022, the market sees a probability of 31.4% for an interest rate of 0.75% -1%.
This means that after the release of inflation data, the market sees that the Fed has a chance to raise interest rates 3 times next year.
It is reported that due to these various circumstances, forex traders have lost a lot this year. According to Ken Haynes, President of HFR, various trading patterns, from carry trades, momentum and value to volatile trades, suffered losses in October.