Any insight on why the big run-up this morning?

Ok...at about 7:30am EST, the Dollar started a significant move that is still ongoing at this point.

I'm trying to find any major news release that triggered the move, but I really can't. I did hear oil was spiking yesterday, which explained the initial uptick on Sunday.

I was expecting to try and trade around the TIC release, but I didn't think that happened until later this morning (9am EST)...I couldn't find any economic data or world event that would cause a 70 pip move in the GBP...

I mean, I love the spike, but I'd like to know why it happened.

I don't follow the fundamentals ... but this is the latest I have from the FXCM trading platform on cable:


Hope it helps.

Akuma, thanks for the info

Just so you know, my interpretation of this article is a few-fold:
1) Higher interest rates make owning the dollar more attractive for large institutions because of the interest differential. If the Fed decides to STOP tightening, it obviously means the dollar is going to suffer in the short term as the affects of the eventual stop is calculated into the price. This is in line with a "broad" USD weakening that is occuring.

2) China selling dollars spells weakness for the dollar because Chinese investments of the dollar have always been high (primarily because the Yuan is tied to the USD). Releasing those dollars signals weakness as the market digest the implications. That said, it could be interpreted as the first step towards being able to actively trade the Yuan which would generally be good for all currencies because it would bring China inline with the rest of the world, making chinese goods more expensive and throttling back growth in the Chinese economy (while helping other economies grow with less competition - ESPECIALLY, the US, China's biggest investor).

3) The other GE report was mentioned because GE is a bellweather stock, and I suppose, this rejection of a merger means GE may not become as strong as investors would hope...it would affect the stock for sure, but I'm not sure of it's impact on the economy.

In addition to this information, I had an interesting conversation with my broker...who happens to be quite open about all things forex broker-ish...which can be really wild...but I do love it, makes me feel bad for thinking of leaving them...but I totally get it.

ANYWAY...she said that market is actually "suffering" from "low-liquidity" because of the holiday. Her justification is that with the Euro banks closed for business, market makers are actually running stops of USD bulls since the market was "generally" long on the USD. Without the Euro banks to step in every once-in a while, the tendency to breakout and trend for lengthy periods of time exist. Of course, as the Euro majors go, so goes most of the other currencies...hence 3 of the 4 majors are experiecing 1% gains against the USD. Euro banks would normally surpress this type of action, primarily because a stronger currency actually has a longer-term negative effect by eating away at profit as exports become more expensive to consumers abroad.

She also seemed to think there may have been a little speculation on the TIC going on as well...although she thinks it was less of this and more of the above.

Good stuff...she actually believed that market makers were running stops on USD bulls...

Personally, I don't really care, I just like being able to identify trends so early in the morning...makes days like to day more desirable...with or without news to back it up.

Very interesting information and interpretations there mrmikal, especially about the USD stop running theory, which to me seems to have some logic to it. I am based in Australia, and we are also closed today, so the Asian session really only had Asia moving it along, and today's range was well above the normal for asia. With little opposition to fight against, you, and your broker just may be right about the stop running.

Usually mentioning of company mergers and takeovers by FXCM news feed has to do with the need to spend, or buy a currency to fund the takeover/merger, this might have something to do with your point 3 perhaps, but like I said, I don't follow the news too closely these days after many a non-farm payroll trade

Still running asian sessions with this kind of range makes my trading day an easier one, and my sleep an early one

I agree with you completely. The price action is really all I care about. This one left ample opportunity in the GBPUSD, and GBPJPY for that matter... A very nice ride indeed...

SMJ

Great info and discussion...I wish that I had been disciplined enough not to try and cash in on the bad USD news this morning...I made two rookie mistakes (one, hitting Sell on GBPUSD when I meant to hit BUY...and two, trying to make back those losses by opening up an opposite position...I ended up down 80 pips in about 5 minutes...) I am kicking myself right now, and feeling a bit down, but I have learned a hard lesson: DISCIPLINE, as vegas states in his method, is key.

Don't feel down mwhalber about those mistakes (not necessarily just for rookies believe me ) ... the fact you have learnt a lesson puts you ahead of many others yet to make those same mistakes (as we all do ... lets face it).

Hey, don't feel bad. Lat night for some reason unknown to me now, I decided that USDCAD was a good long play. I went long and within 2 hours hit my stop. a loss of 47 pips times 3 lots... I plead either stupidity or temporary insanity..
oh well... SMJ

Oh my, I don't think That's EVER happened to ANYONE before ;-)

Trust me, you aren't the only trader to ever do that...I think I've done that a few times back in my equity days. However, seriously, though...you bring up a good point about forex ergonomics...while you really don't want to take too long to enter an order, a GREAT interface would prevent you from entering a bad order like this. Don't get me wrong, I totally understand that in a world where every second counts, it's better to lose 2 pips to slippage than it is to lose the spread + the wrong direction. The nice thing about forex (ESPECIALLY ON DAYS LIKE TODAY, with high volatility and many breaks around psychological numbers)...if you can see the trend on your chart, generally, you won't be wrong for very long...so in your mad dash to save those few pips, you made a big mistake...it happens to the best of them...just do your system, and never fight a strong trend.

LOL...thanks all...Feeling a bit better now...And waiting for that reversal on GBPUSD so i can show it who is really boss!!

The run-up against the dollar should hopefully open up some corrective action opportunities in the near future...and put me back on a winning track!

I am not sure about the stop hunting thing although I believe the move against the USD started like that, but it continued lower....Yesterday as the trading opened I decided to put a long term trade shorting the USD/JPY at 118.80...The price never went there actually, and the USD/JPY is trading at 117.60 right now...

In my opinion, what happened today is a worry about the future of the USD...Traders are worried about what's next for the USD...Indicators are saying that the US economy is slowing a little bit, and that interest rates hikes are coming to an end, at least for the time being, so, long dollar positions were closing, market makers were hunting for stops and people like me were looking to short the USD against other currencies, that's why the fall was immense....I am already long the GBP/USD for more than a week now...I believe that the minor downtrend of the GBP/USD has ended by todays' move, not confirmed yet for the EUR/USD or the USD/JPY....


Thanks,

Nader

I dont see any specific reason as of why today's run has ocurred. There hasnt been anything particular going on today to have fueled the run. I guess it's the market's way of reminding us of its unpredictability and a little touch of randomness.

As stated earlier, my broker explained it quite well to me...and honestly, she seemed think it was quite predictable.

As the market made it's way up, the tide just kept rushing in...without major banks playing a hand in the market, things can get out of control with market makers...the economic releases normally produce SOME volatility, and with them being on the more USD bearish side, the trend was naturally sustained.

I wouldn't call today a complete phenom...after about 8:30am EST, this market was going nowhere but up...all factors involved made complete sense to me.

Hello Everybody-

From the WSJ.

"The dollar began the day lower versus its major rivals after separate reports that China could reduce its U.S. Treasury buying and that the U.S. may finish its cycle of rate increases sooner than expected."


I tend to trade on fundamentals with a splash to technicals thrown in there. This was the reason behind my selling the $ across the board.

-Nick

I figured it had to go somewhere as it was getting squeezed between trendlines on the weekly chart. When GBP gapped up, I set my buy stop above the line and it worked great. It looks like things might be back to normal-length trends in these pairs which will be nice. There have been few good long-term trades since the beginning of last month.