What can speculative dollar positions tell us about currency direction? In our latest instalment of Corporate Treasury Data Insights, we look at how corporates can reduce risk during market interest rate dislocations and an active central bank monetary policy environment.
- While FX volatility has eased in recent months, corporates are still facing an uncertain macroeconomic landscape where possible interest rate hikes could result in further turbulence.
- To better manage FX exposures, treasurers can use Refinitiv Eikon to view traders’ speculative open positions, obtain accurate price data for critical dates, and view relative analytics and trading opportunities using the Currency Performance Tracker.
- Join our upcoming webinar on 31 May to hear from industry experts at IBSFINtech, Wipro and KMPG on managing and hedging corporate FX risk.
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Chart of the Month | Traders net short against the US dollar vs Euro
FXCOTR app in Refinitiv Eikon highlights the net short USD position vs EUR, contrasting to long USD position vs other currencies in the G10.
Volatility dominated the FX market in 2022. Driven by high inflation, rapidly rising interest rates, and geopolitical issues, the dollar reached to 20-year highs, while the pound and euro slumped to 37- and 20-year lows respectively.
While FX volatility has moderated in recent months, the macroeconomic outlook remains unclear. The next stage of the central bank policy cycle may yield some surprises.
Although we may be entering the endgame of the current tightening cycle, differing economic conditions across the major economies may result in increasingly divergent central bank rate decisions – leading to higher volatility for some currency pairs.
What data and analytics can corporates use to better manage their FX exposures in an active central bank monetary policy environment?
- View trader’s speculative open positions – As shown in our monthly chart, FXCOTR in Eikon shows net short or long positions in currency futures – indicating the possible future direction of USD pairs. Select FX-COTR in the drop-down from the FX Guide (FXG)
- Obtain accurate price data for critical dates – Treasurers can access Turn-Adjusted Special Date RICs. These are broken date tenors with maturity dates on specific business days, including end of month, end of quarter etc. For example, EURUSD for end of Q2 can be seen on EUREOQ2=RFB. The full service is available on FXBLEND.
- View relative analytics and trading opportunities – The Currency Performance Tracker (FXPT) provides a heatmap which shows the relative performance of selected currency pairs for a given historical period.
Join our webinar on 31 May to hear from industry experts at IBSFINtech, Wipro and KMPG on current trends in risk management, industry scenarios for efficient risk management and expectations for the future.
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Refinitiv Corporate Treasury Newsbeat |
- Unlocking the value of LSEG for corporate treasury | Discover how our new suite of solutions, developed with IBSFINtech, Billboard TFX and Finmechanics, meets the needs of the corporate treasury workflow, including cash management, market monitoring, pre-trade analysis, and funding: Unlocking the value of LSEG for corporate treasury | Refinitiv Perspectives
- LSEG signs long-term partnership with Barclays | The agreement includes a wide range of capabilities to support Barclays. Barclays is also in discussions with LSEG and Microsoft to become a member of their Design Partner Programme, following the strategic partnership that was announced between the two companies in December 2022. This will bring a step-change in services for customers, including an enhanced version of the desktop with seamless Teams communication and Microsoft 365 interoperability with built-in compliance for the first time. Click here to read the announcement in full.
- LSEG partners with Mastercard to enhance digital identity and fraud solutions for customers in the US | GIACT, an LSEG business, recently announced a partnership with Mastercard to leverage its Open Banking capabilities to provide a secure account verification solution for customers. Click here to watch an overview.