The latest stock market sell-off on Wall Street reminded us that anything can happen in the financial markets. The following three events stand out as part of the markets’ recent surprises.
September 7: USD/JPY
Currency traders have been watching in amazement at the strength of the Japanese yen. The yen has gained a staggering 15% against the US dollar this year despite ongoing efforts by the Bank of Japan (BOJ) to ease monetary policy.
The USD/JPY reached more than one-month highs on September 5. Traders hoping for a continuation of those highs were sorely disappointed. Just two days later, the USD/JPY tanked nearly 2 percent, or 200 pips. Traders who bought the USD/JPY above 103.00 might have saved a lot of pips by invoking dealCancellation. The market moved very fast, so dealCancellation, which gives you a 60-minute window to cancel your position, would have given you plenty of time to digest the losses and get the heck out!
September 6: US Dollar
In the United States, the Labour Day long weekend signals the unofficial end of summer. Traders expressed their dissatisfaction by selling the US dollar, which plunged against a basket of currencies on the first Tuesday back from vacation.
In reality, traders were responding to disappointing non farm payrolls data the previous Friday. Surprisingly, the dollar finished higher on Friday as traders realised that the creation of 151,000 jobs in August wasn’t so bad after all. Sentiment quickly turned bearish after the long weekend.
Traders who decided to buy greenbacks after Labour Day should have quickly caught on that the market wasn’t going to go in their favour. With dealCancellation, they could have avoided a 1 percent plunge in the dollar for the day.
August 31: WTI Crude Oil
It has been a weird couple of months for crude oil. The market spiked in early August after the Organization of the Petroleum Exporting Countries (OPEC) confirmed that it will hold informal talks with other major producers at a summit in September. This prompted hopes that major producers would finally agree to freeze output.
As the month wore on, traders realised that a production freeze was far from guaranteed (in fact, most analysts were sceptical that OPEC and non-OPEC members would agree on any meaningful resolution). That scepticism combined with a much bigger than expected rise in US crude inventories to trigger a massive retreat in oil prices.
The West Texas Intermediate (WTI) benchmark for US crude prices plunged nearly 4% that day. Traders who bet on a drawdown in weekly US crude stocks were sorely disappointed, and quickly found themselves on the wrong side of a landslide. Triggering dealCancellation any time after 10:30 am ET may have saved traders a lot of money and headaches.
The team at easyMarkets has introduced a new feature called dealCancellation* that allows traders to undo their losing deals up to 60 minutes after placing them. In all three instances above, using dealCancellation might have saved traders’ bacon. It could also prove a useful tool for anything involving the British pound.
The United Kingdom’s decision to leave the European Union (EU) triggered unprecedented volatility in the global financial markets. That’s because most traders bet on the UK remaining part of the EU. Any long positions on the British pound were absolutely massacred. As the votes trickled in, the GBP/USD plunged more than 10% to its lowest level in more than three decades. The pound sold off violently against the euro, yen and pretty much every other currency pair.
With dealCancellation, traders might have put an end to the bloodbath immediately after the Sunderland results came in.
More than two months later, the British pound still hasn’t recovered, and could face more sustained headwinds as the Bank of England looks to ease monetary policy even further to support a post-Brexit economy. Such events highlight the value of being as prepared as possible not only to trade but also to back away from trades that suddenly turn sour.
*Terms apply
“dealCancellation© Option is an ORE patent pending under the patent “Easy Cancellation Option” application number 62334455.”
21/09/2016 - sponsored by easyMarkets.com
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