{"id":614465,"date":"2023-03-05T07:50:09","date_gmt":"2023-03-05T13:50:09","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/03\/05\/traders-ditch-dollar-as-cfds-gain-ground\/"},"modified":"2023-03-05T07:50:09","modified_gmt":"2023-03-05T13:50:09","slug":"traders-ditch-dollar-as-cfds-gain-ground","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/03\/05\/traders-ditch-dollar-as-cfds-gain-ground\/","title":{"rendered":"Traders Ditch Dollar as CFDs Gain Ground"},"content":{"rendered":"
\n

This time last
\nyear, many retail traders were wondering whether the volatility caused by
\ncentral bank monetary strategies to combat inflation by raising interest rates
\nwould persist. They received their answer within weeks as Russian tanks rumbled
\ninto Ukraine and the world suddenly felt like a more dangerous place.<\/p>\n

At such times, the
\ntraditional approach is to pile into the US dollar. But, dollar weakness has
\nbeen the key market trend in recent months with an uber-hawkish Fed and rising
\ninflation now in the rearview mirror. As the rest of the central banking world
\nplay catch-up with the US, rate differentials have narrowed and, thus, added to
\nthe downside pressure on the greenback.<\/p>\n

\u201cChina\u2019s reopening
\nhas prompted a surge in China-sensitive currencies such as the Australian
\ndollar,\u201d explained Justin McQueen, a Market Specialist at Capital.com. \u201cCombined
\nwith natural gas prices falling off a cliff, this bodes well for the euro with
\nthe economic outlook looking comparatively more optimistic than just a few
\nmonths ago.\u201d\n<\/p>\n

According to
\nMcQueen, these big macro events have contributed to increased interest in FX
\ntrading<\/a> with traders taking a view on USD’s potential recovery and where the
\nyen will gravitate next.
\n\u201cInterest in
\nUSD\/JPY picked up in the early weeks of this year,\u201d he continued. \u201cIt is still
\ntoo early to identify specific levels of increase from last year, but FX
\nmarkets have so far been one of the top three most traded markets on our
\nplatform in 2023 with EUR\/USD and GBP\/USD also among the most popular pairs
\ntraded.\u201d<\/p>\n

In 2022, Capital.com
\ntraders chased momentum by nearly tripling the number of trades made compared
\nto 2021, gradually diminishing their net long holdings in favour of net short
\npositions and becoming more cautious by increasing the number of trades with
\nstop-loss orders. This indicates that retail traders were engaging with the
\nmajor macroeconomic events that impact a currency and were ready to modify
\ntheir positioning during moments of elevated volatility.<\/p>\n

In terms of
\nspecific products, CME Group<\/a> reported a decline of just over 7% in rolling
\nthree month average daily volumes for FX futures and options in January
\ncompared to the previous month.<\/p>\n

\n

\"CME<\/p>\n<\/figure>\n

FX traders are
\nseeing larger profit\/loss swings than they might have known for the last decade
\nor more. Such volatility is cyclical and likely to come down at some point, but
\nthe question of \u2018when\u2019 makes greater education around risk management essential
\nfor retail traders.
\nThat is the view
\nof Pete Mulmat, the CEO of IG US, who refers to trading growth being driven by the
\nsame three currency pairs as McQueen.<\/p>\n

\u201cThe action has been in those majors,\u201d he
\nsays. \u201cThat said, a resurgence in the Australian dollar has brought pairs
\nincluding that currency back onto many traders\u2019 boards.\u201d<\/p>\n

In 2023, fears of
\na global slowdown look set to dominate as the impact of interest rate hikes
\nbegins to take hold. While many central banks will be looking to end their
\nhiking cycles this year, the pace at which they do so is likely to differ, and
\nthis will be a key element of trading.<\/p>\n

\u201cIf some of the
\nsmaller central banks are forced to turn dovish on economic weakness ahead of
\nthe bigger banks, it is likely that there will be more divergence to trade for
\nboth FX day traders and skilled investors alike,\u201d observes
\nStavros Lambouris, the CEO at HYCM International.<\/p>\n

A good example of
\nthis is the Reserve Bank of Australia (RBA). Recent inflation data came in
\nabove the market\u2019s maximum expectations, which has made the case for a more
\naggressive RBA<\/a> and a terminal rate that could rise higher than 3.5%. On balance,
\nthis should keep the AUD supported against the NZD and traders should watch for
\ndivergence between the RBA and the Reserve Bank of New Zealand for trading
\nopportunities.<\/p>\n

\u201cCentral bank
\nintervention will continue to play a key role in FX trading,\u201d adds Lambouris.
\n\u201cTraders are accustomed to keeping up with the latest moves, and we often see
\nthe markets anticipating policymakers\u2019 reaction to economic data \u2013 whether it
\nis new inflation print or employment figures \u2013 to establish the state of the
\neconomy.\u201d<\/p>\n

With US inflation
\nexpected to fall around 3% by the end of the year, concerns are likely to
\ntransform into wider fears about global growth and recession. Previously, many
\nanalysts were predicting a bounce in the dollar as fears of a US recession
\n(followed by a global recession) dominated.
\nNow, the
\nincreasing likelihood of a soft landing from the Fed is causing analysts to cut
\ntheir forecasts of the USD\u2019s performance this year, and emerging markets are
\nexpected to gain at the expense of the greenback.<\/p>\n

\u201cContinuing
\ngeopolitical tension around the globe will have a major impact on trading,\u201d
\nsays Lambouris. \u201cWith the conflict between Russia and Ukraine
\napproaching its one year mark with no end in sight, it may be difficult to
\nprice in risk. However, talks of a ceasefire could lift all financial markets
\naround the globe in 2023.\u201d<\/p>\n

Muamar Behnam,
\nthe Head of Global Retail Sales at Swissquote reckons diversification within
\ntraders\u2019 portfolios is the main trend in the retail trading space in the early
\nmonths of 2023.<\/p>\n

\u201cWe see fewer
\ntraders trading only currency and a move towards diversification just like in
\nthe more traditional non-leveraged side of the business,\u201d he says. \u201cThe trend
\nis clearly towards portfolios with a combination of currencies, bullion (gold
\nand silver), energy and agricultural commodities.\u201d<\/p>\n

Furthermore, Behnam refers
\nto increased interest in single-stock CFDs.
\nHe agrees that
\nretail traders are more aware of what is going on in the world and that the
\nconflict in Ukraine, rising interest rates, and inflation numbers have all had
\nan impact on trading behaviour which is not going to stop any time soon.<\/p>\n<\/div>\n

\n

This time last
\nyear, many retail traders were wondering whether the volatility caused by
\ncentral bank monetary strategies to combat inflation by raising interest rates
\nwould persist. They received their answer within weeks as Russian tanks rumbled
\ninto Ukraine and the world suddenly felt like a more dangerous place.<\/p>\n

At such times, the
\ntraditional approach is to pile into the US dollar. But, dollar weakness has
\nbeen the key market trend in recent months with an uber-hawkish Fed and rising
\ninflation now in the rearview mirror. As the rest of the central banking world
\nplay catch-up with the US, rate differentials have narrowed and, thus, added to
\nthe downside pressure on the greenback.<\/p>\n

\u201cChina\u2019s reopening
\nhas prompted a surge in China-sensitive currencies such as the Australian
\ndollar,\u201d explained Justin McQueen, a Market Specialist at Capital.com. \u201cCombined
\nwith natural gas prices falling off a cliff, this bodes well for the euro with
\nthe economic outlook looking comparatively more optimistic than just a few
\nmonths ago.\u201d\n<\/p>\n

According to
\nMcQueen, these big macro events have contributed to increased interest in FX
\ntrading<\/a> with traders taking a view on USD’s potential recovery and where the
\nyen will gravitate next.
\n\u201cInterest in
\nUSD\/JPY picked up in the early weeks of this year,\u201d he continued. \u201cIt is still
\ntoo early to identify specific levels of increase from last year, but FX
\nmarkets have so far been one of the top three most traded markets on our
\nplatform in 2023 with EUR\/USD and GBP\/USD also among the most popular pairs
\ntraded.\u201d<\/p>\n

In 2022, Capital.com
\ntraders chased momentum by nearly tripling the number of trades made compared
\nto 2021, gradually diminishing their net long holdings in favour of net short
\npositions and becoming more cautious by increasing the number of trades with
\nstop-loss orders. This indicates that retail traders were engaging with the
\nmajor macroeconomic events that impact a currency and were ready to modify
\ntheir positioning during moments of elevated volatility.<\/p>\n

In terms of
\nspecific products, CME Group<\/a> reported a decline of just over 7% in rolling
\nthree month average daily volumes for FX futures and options in January
\ncompared to the previous month.<\/p>\n

\n

\"CME<\/p>\n<\/figure>\n

FX traders are
\nseeing larger profit\/loss swings than they might have known for the last decade
\nor more. Such volatility is cyclical and likely to come down at some point, but
\nthe question of \u2018when\u2019 makes greater education around risk management essential
\nfor retail traders.
\nThat is the view
\nof Pete Mulmat, the CEO of IG US, who refers to trading growth being driven by the
\nsame three currency pairs as McQueen.<\/p>\n

\u201cThe action has been in those majors,\u201d he
\nsays. \u201cThat said, a resurgence in the Australian dollar has brought pairs
\nincluding that currency back onto many traders\u2019 boards.\u201d<\/p>\n

In 2023, fears of
\na global slowdown look set to dominate as the impact of interest rate hikes
\nbegins to take hold. While many central banks will be looking to end their
\nhiking cycles this year, the pace at which they do so is likely to differ, and
\nthis will be a key element of trading.<\/p>\n

\u201cIf some of the
\nsmaller central banks are forced to turn dovish on economic weakness ahead of
\nthe bigger banks, it is likely that there will be more divergence to trade for
\nboth FX day traders and skilled investors alike,\u201d observes
\nStavros Lambouris, the CEO at HYCM International.<\/p>\n

A good example of
\nthis is the Reserve Bank of Australia (RBA). Recent inflation data came in
\nabove the market\u2019s maximum expectations, which has made the case for a more
\naggressive RBA<\/a> and a terminal rate that could rise higher than 3.5%. On balance,
\nthis should keep the AUD supported against the NZD and traders should watch for
\ndivergence between the RBA and the Reserve Bank of New Zealand for trading
\nopportunities.<\/p>\n

\u201cCentral bank
\nintervention will continue to play a key role in FX trading,\u201d adds Lambouris.
\n\u201cTraders are accustomed to keeping up with the latest moves, and we often see
\nthe markets anticipating policymakers\u2019 reaction to economic data \u2013 whether it
\nis new inflation print or employment figures \u2013 to establish the state of the
\neconomy.\u201d<\/p>\n

With US inflation
\nexpected to fall around 3% by the end of the year, concerns are likely to
\ntransform into wider fears about global growth and recession. Previously, many
\nanalysts were predicting a bounce in the dollar as fears of a US recession
\n(followed by a global recession) dominated.
\nNow, the
\nincreasing likelihood of a soft landing from the Fed is causing analysts to cut
\ntheir forecasts of the USD\u2019s performance this year, and emerging markets are
\nexpected to gain at the expense of the greenback.<\/p>\n

\u201cContinuing
\ngeopolitical tension around the globe will have a major impact on trading,\u201d
\nsays Lambouris. \u201cWith the conflict between Russia and Ukraine
\napproaching its one year mark with no end in sight, it may be difficult to
\nprice in risk. However, talks of a ceasefire could lift all financial markets
\naround the globe in 2023.\u201d<\/p>\n

Muamar Behnam,
\nthe Head of Global Retail Sales at Swissquote reckons diversification within
\ntraders\u2019 portfolios is the main trend in the retail trading space in the early
\nmonths of 2023.<\/p>\n

\u201cWe see fewer
\ntraders trading only currency and a move towards diversification just like in
\nthe more traditional non-leveraged side of the business,\u201d he says. \u201cThe trend
\nis clearly towards portfolios with a combination of currencies, bullion (gold
\nand silver), energy and agricultural commodities.\u201d<\/p>\n

Furthermore, Behnam refers
\nto increased interest in single-stock CFDs.
\nHe agrees that
\nretail traders are more aware of what is going on in the world and that the
\nconflict in Ukraine, rising interest rates, and inflation numbers have all had
\nan impact on trading behaviour which is not going to stop any time soon.<\/p>\n<\/div>\n

Read More<\/a>
\n Paul Golden<\/p>\n","protected":false},"excerpt":{"rendered":"

This time last year, many retail traders were wondering whether the volatility caused by central bank monetary strategies to combat inflation by raising interest rates would persist. They received their answer within weeks as Russian tanks rumbled into Ukraine and the world suddenly felt like a more dangerous place.At such times, the traditional approach is<\/p>\n","protected":false},"author":1,"featured_media":614466,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28412,26185],"tags":[],"class_list":{"0":"post-614465","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ditch","8":"category-traders"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/614465","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=614465"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/614465\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/614466"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=614465"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=614465"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=614465"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}