Argument has never been that the crosses couldn’t move the majors it’s that anyone would be able to tell us that a particular move has come from buying in the crosses. In my experience the FX is a very simple product ion a very complex market. There are so many players in this market with different objectives. There is no central exchange. And the volume is just immense…… I remember first watching trading on EBS and being transfixed by the names flashing across the bid offer.
I only mentioned audjpy cross as Kathy used it too and when I did mention it I also conceded that eurjpy does tend trade in its own right as do eurgbp and eurchf as those four currencies are all major reserves.
I would agree that the central banks have a big psychological effect but they also control huge reserves these days. China and Japan together have almost 2.5trillion usd and that’s massive even in FX. And when you say central banks haven’t been able to control fx rates you’re probably thinking about the BoE or Italy in the early 90’s but in 2003/4 Japan quite successfully kept its currency low. The ability to buy your currency is limited by your reserves (BoE gave up half way through) but to sell your currency or devalue your currency is not really limited.
Anyway I don’t think we’ll ever agree on the above and it is a matter of conjecture on which I hope you agree we both have educated opinions. I think we’ve deviated quite a bit from her original article and my view of what she was saying.
This is a forum and disagreements are healthy. I still stand by my view that people starting out in this game should be careful how they read stuff. I’ll admit that I’ve read some articles by Kathy where I have learnt something but this one I felt was smoke and mirrors!!!!
|