Forex Trading Pips Live Update, Tuesday 7th August

by Joe Oliver, Forex Trading-Pips

Swiss foreign reserves reached a record high of SFr406 billion in July after the Swiss National Bank bought tens of billions of euros to keep the franc from appreciating against the euro peg which is currently held at SFr1.20.

According to a recent FT article SNB has been trying to convert euro holdings into other currencies such as the Australian dollar and Swedish Krona, however recent numbers suggest the central bank has not been recycling euros as quickly as it has done in the past, raising speculation that it will continue to do so in the weeks and months ahead.

Central Bank intervention is creating a number of distortions in the financial markets and wreaking havoc for many previously successful funds and speculators. Last week Louis Bacon, founder of the $15 billion hedge-fund firm Moore Capital Management LLC, announced plans to give back $2 billion to investors citing ‘constrained and distorted markets’.

Louis Bacon’s Comments are Important:

“Markets are increasingly distorted by central banks’ attempts to squeeze drops of growth from an over-indebted private sector across much of the developed world”

“The political involvement is so extreme — we have not seen this since the postwar era. What they are doing is trying to thwart natural market outcomes”

“It is amazing how important the decision-making of one person, Angela Markel, has become to world markets,”

“I have underperformed market opportunities, so yes, I have questioned myself a little bit…  But I do think I can ultimately adapt to a changing market environment.”

This last comment is key and best expressed by Louis Bacon’s close friend Paul Tudor Jones who famously said that traders must “Adapt, Evolve, Compete or Die”.

The recent changes in the financial markets have left many traders confused and vulnerable, without a proven plan for the future: they have fallen victim to the Three Major Barriers to Trading Success