News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
More View more
Real Time News
  • There are many different types of forex orders, which traders use to manage their trades. While these may vary between different brokers, there tends to be several basic FX order types all brokers accept. Learn about different FX order types here: https://t.co/lIJdiz4xSz https://t.co/YUhC9cCDpy
  • The US Dollar has spent much of October giving back September’s gains. Is there any hope for change? Get your #currencies update from @JStanleyFX here: https://t.co/3EHa6PV5yH https://t.co/PrP9J2klJk
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/UalZ8cRSXB https://t.co/wDVd2QvcjO
  • The longer-term EUR/USD outlook will hinge on Thursday’s ECB guidance; any hint of a further easing of Eurozone monetary policy would weaken it, but that is far from guaranteed. Get your #currencies update from @MartinSEssex here: https://t.co/RmHCfIwdqp https://t.co/hvETa6mtft
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true. Simplify your trading strategy with these four indicators here:https://t.co/A4dqGMPylo https://t.co/M8WTvZgx2K
  • The Australian Dollar was under selling pressure this past week, but it held its ground. Bearish patterns brew in AUD/USD and AUD/JPY. Will EUR/AUD, GBP/AUD try to break higher again? Get your #currencies update from @ddubrovskyFX here: https://t.co/04kzJSqgNG https://t.co/ulPk1UneMM
  • Stocks are set to endure a string of data releases with market-moving potential in the week ahead in the form of tech earnings, European GDP and more, even as the US Presidential election clamors for the spotlight. #equities update from @PeterHanksFX here https://t.co/R6tpEvfXJb https://t.co/7koHTyh2AK
  • As we round our way towards a new week, Cable is within the confines of a bullish structure with beginnings back in September. Get your #currencies update from @PaulRobinsonFX here: https://t.co/NIbRTVmjqq https://t.co/zYma4Iq4dP
  • Myth or fact? One thing is for sure, there are a lot of misconceptions about trading. Knowing the difference between common trading myths and the reality is essential to long-term success. Find out about these 'myths' here: https://t.co/UGhbX6kn3H https://t.co/NE2RB1NT55
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/MVwUUltt6R
Careful Holding Euro Short Positions as Borrowing Costs Surge

Careful Holding Euro Short Positions as Borrowing Costs Surge

2014-06-27 14:45:00
David Rodriguez, Head of Product
Share:

- Forex rollover charges in Euro pairs have surged since yesterday

- We saw a similar dynamic last month and into the end of the first quarter

- Traders should be wary of holding Euro short positions into the close

Why are Rollover Rates so High?

A look at interbank forward markets shows that holding Euro short positions versus the US Dollar and Japanese Yen has become exceedingly expensive since yesterday.

Those forward rates showed that traders could earn interest rate credits in holding EURUSD-short positions just yesterday. Yet a sharp shift now means that being short EURUSD is now at its most expensive since a similar spike in borrowing costs at the end of last month.

Careful Holding Euro Short Positions as Borrowing Costs Surge

Source: Bloomberg Generic Price - “Consensus” Pricing

Indeed we saw an even more pronounced surgeinto the end of the first quarter, and it seems as though traders may continue to expect similar spikes at month and quarter end. The effect is likewise pronounced in Yen pairs, and the Euro/Yen in particular has seen large jump in overnight borrowing costs.

Careful Holding Euro Short Positions as Borrowing Costs Surge

Source: Bloomberg Generic Price - “Consensus” Pricing

Interbank rates imply that today’s charge on the Euro/Yen in particular is the rough equivalent of the past 25 days worth of interest rate charges. Traders should be wary of holding a EURJPY-short position into today’s New York session close, as this is when rollover charges/credits are debited or credited.

Given that FX market volatility currently trades near record-lows, these charges represent an especially large cost to a trader looking to capture smaller currency moves. Indeed, the sharp changes in interbank lending markets could in some cases make the difference between a winning and losing trade.

Understanding Forex Rollover

Trading forex on leverage involves borrowing one currency in order to purchase another. In effect this means traders will pay interest rates for the currency which they sell, while they receive interest rate payments for the currency which they buy. In FX terminology this is most often called “Rollover” or “Swaps”.

Overnight interest rates will guide whether the trader will ultimately pay to hold a position or earn interest on the trade, and any sharp changes in the supply or demand for a specific currency can shift overnight interest rates in a hurry.

This dynamic can be very seamless to the trader, and indeed the parent company of DailyFX in FXCM Inc. posts the Rollover rates for both “Buy” and “Sell” orders directly on their trading platform.

Read more on forex rollover on FXCM.com

Written by David Rodriguez, Quantitative Strategist for DailyFX.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES