Forex Manipulators: Fiction or Reality?
Search for Puppeteers in the foreign exchange market is carried out by both ordinary traders and heads of state
Many beginning traders, faced with the problem of periodically non-working tools of technical and (or) fundamental analysis, begin to believe in the existence of a certain higher power that controls the markets. Instead of recalling that trading is a probabilistic process, and if the principles and laws of research always worked, there would be no losers in the market (which in itself is impossible), they call Kuklovodov sources of their own misfortunes. The most important task is to search for traces of manipulators in order to earn money by repeating their actions. Such a distorted approach to the market, as a rule, translates into flight from trading to another type of activity.
Obviously, in order to manage Forex, on which more than $ 5 trillion worth of transactions is performed daily, you need to have huge financial resources in your pocket. And the events of 2018 show that even such a person as the president of the United States, who could easily put together a team of chain dogs in the form of large banks, hedge funds, and investment companies, does not succeed. His comments on the dangers of a strong dollar and dissatisfaction with the Fed’s activities only lead to temporary weaknesses in the greenback. In the future, the market continues to use kickbacks for its purchases. Moreover, Donald Trump is an ordinary person, and he, like many novice traders, is trying to blame the Puppeteer for his failures.
In the fall, the market is actively discussing the question of whether the US Treasury Department will write a black mark on the currency manipulator to China? Given the fact that the American president and members of his team periodically pay attention to the 9% devaluation of the yuan against the dollar, while stating that Beijing is competitively weakening its own currency, it can be assumed that Steve Mnuchin is intensively exploring the possibilities of stigmatizing China. To do this, in accordance with the 2015 Law on Trade, a country must meet three criteria:
- Have a positive balance of foreign trade with the United States in excess of $ 20 billion.
- Have a surplus to GDP ratio of 3% or more.
- Actively intervene in the life of the foreign exchange market. Active intervention, as a rule, refers to interventions in the amount of 2% of GDP.
Alas, China can be called a manipulator only under item 1. The surplus of its foreign trade is constantly decreasing, and by 2023 it will not reach 1% of GDP. Moreover, the comments of the official Beijing representatives in most cases are aimed at stabilizing the yuan, and not at weakening it. So the head of the People’s Bank And Gang in October noted that the Celestial Empire is not going to use devaluation as a weapon in trade wars with the States.
From a fundamental point of view, the reasons for the USD / CNH rally are divergences in the monetary policy of the Fed and PBOC and in the economic growth of the USA and China. Donald Trump has repeatedly paid attention to the different directions of the S&P 500 and Shanghai Composite. According to him, looking at the charts of stock indices, you can understand who wins the trade war. So why doesn’t the American president say the same thing about the dollar and the renminbi? There is only one reason – he needs a scapegoat, on which he can hang his failures. And a better approach than finding a currency manipulator is not to be found. That is human nature.
So does it make sense to look for the beginning trader to blame for their own losses? Isn’t it better to continue to study the tools of technical and fundamental analysis and look for your own path to success?