Thoughts from the Trading Trenches
20 Years ago | April 01, 2014 9/29/23, 12:00 AM
In the April issue
GTA Forex and Global Markets Survey (2nd Quarter)
The second quarter 2014 GTA Forex and Global Markets Survey has seen a some tempering of views from the start of the year survey. Traders are still bullish on the dollar vs. the EUR and JPY but less so than in the survey conducted at the start of the year. The same holds true for bonds where sentiment remains for higher yields but with a smaller peak than previously cited. Outlook for equities remains mixed and traders are mixed on gold. .
The annual Forex and Global Markets Survey received responses from 101 global traders and was conducted from March 24-31. One goal of the survey was to gauge sentiment as to whether the outlook has changed since the start of 2014. The following are the survey results:
THE 2014 HIGH FOR USDJPY WILL BE:
Trader sentiment remained bullish for the USDJPY but expectations for the high for the year were lower than the start of the year survey. 14% expected the high to be below 105 vs. 5% in the prior survey and 35% above 110 vs. 68% in the poll at the start of the year. The highest concentration (51%) was within 110-115 vs. 38% in this region at the start of the year survey.
THE EURUSD CLOSE FOR 2014 WILL BE:
Traders remained generally bearish on the EURUSD but the percentage calling for a sub-1.30 close to the year (42%) was down from the start of the year survey where 58% expected a sub-1.30 close. The highest concentration was about evenly split between 1.25-1.30 (29%) and 1.30-1.35 (28%) vs. the start of the year where 36% called for a 1.25-1.30 to end to the year. 18% expected a close above 1.35 vs. 24% in the prior survey. 15% expected a close above 1.40 vs. 9% in the start of the year survey.
THE PEAK YIELD IN THE U.S 10-YR NOTE IN 2014 WILL BE:
Most of those polled continued to look for higher yields but to a lesser extent than the poll showed at the start of the year. As for the yield on the critical U.S. 10-yr note, 18% expected the peak yield to be below 3.00% (vs. 10%). The highest concentration was between 3.00-3.20% (54%) vs. 27% in the region in the prior poll. Those looking for peak yields above 3.4% fell to 10% vs. 36% in the prior poll.
THE S&P CLOSE FOR 2014 WILL BE:
The bias for the S&P 2014 close was miixed to a slight tilt to the downside. 54% expected the 2014 close to be below 1800 and 46% above vs. 42% and 58% in the start of the year survey. The highest concentration of closes was sub-1700 (29%) with 25% expecting a close within 1700-1800 and 25% within 1800-1900. 21% were calling for a close above 1900.
SPOT GOLD WILL CLOSE 2014 AT:
This was a new question added to the survey and saw expectations mixed across the various ranges. 18% expected a close for the year above $1500, 16% within $1400-$1499, 19% within $1300-$1399, 24% within $1200-$1299, 18% within $1100-$1199 and only 5% below $1100. To sum up, 53% saw a close above $1300 and 47% below this level.
After Fed Chair Yellen's comments do you expect the Fed to have raised its Fed Funds target by July 1, 2015
Sentiment was definitive here with 62% expecting a rate hike before July 1, 2015 and 32% expecting an interest rate increase after mid-year.
Has your opinion on the importance of NEWS in forex trading changed over the past year?
The replies to this question were almost evenly divided between strongly (33%), somewhat (32%) and not at all (35%).
Summary: After a first quarter where the market traded largely contrary to consensus forecasts (e.g. weaker USDJPY, firmer EURUSD, lower US bond yields, firmer gold, uncertain equities),sentiment did not change but the outlook was tempered vs. expectations expressed in our start of the year survey. What was interesting is the way Yellen’s comments seemed to have influenced rate hike expectations but this can easily swing depending on economic data. The replies to the importance of news question was interesting in that there was not a higher concentration in strongly in a market that remains hyper-sensitive to headlines.
