Excellent point, Bob…
Speculators may go for short-term gains of that magnitude, but investors seeking stable returns [I]over longer periods[/I] would avoid such high-risk operations and channel their energy (or pay someone to
do so on their behalf) into low-risk capital preservation.
This is why the USD is less valued during risk-on times but very valued during risk-off periods, as a safe haven
into which capital can be parked for safekeeping.
Our retail mentality is very much geared toward raising capital, whereas large capital holders are very much seeking capital preservation above all else. That is why even FX desks within the commercial trading sector (banks) hedge through, for example, options: every investor needs protection against loss… We may (or may not) use stop losses; larger investors or speculators may use hedging or safe-haven assets, but in the end, it all boils down to the same principle…capital preservation…
I am sure I am getting a lot of my facts wrong, so please if there is someone in the know, do come back and point out my flaws (I have no experience of working in banks, nor of having large capital, so I am only regurgitating second-hand knowledge, if you like)!