Forex considerations thread

Are there profit opportunities out there in forex?

The foreign exchange market is a global decentralized or over-the-counter market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling and exchanging currencies at current or determined prices.

Right now the weak Euro is making news. Here is today’s article from the Wall Street Journal:

But feel free to discuss here profit opportunity you see with any foreign currency, anything from the Euro, to the Loonie, to . . . . . whatever! Any foreign currency you like.

True story:

I still remember an instance decades ago where the British pound sterling was just falling out of bed on the low side. I was watching the price action in disbelief and sensed opportunity to stock up on sterling using my powerful dollars.

However, I was very busy working in those days and I really did not have the time or experience needed to pull the trade off. So:

I did not act, sterling recovered, and I missed out. Opportunity lost.

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FX is pretty efficient and hard. Good if you want to make macro bets, otherwise it’s just an excuse for the money changers to give you a bad deal.

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Time to go vacation in London. It will just be expensive vs. shockingly expensive after currency effects, lol.

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To me Forex trading seems just like casino style gambling but without the fun of playing cards or a big spinning wheel.

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Just ask Mrs. Watanabe.

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It is definitely a great time to travel internationally if you can pull it off. We’re heading down to Chile and Argentina this September. Looking at menu prices at some of the finer places in Mendoza, and taking into account the “blue market” rate for currency, $20 will get you a filet and sides and another $10 will get you a bottle of malbec.

Really looking forward to that trip.

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Congrats on your upcoming vacation. Were you able to find reasonable airplane tickets?

My wife got in on the AMEX Platinum 125k + 15X per dollar deal on restaurants/shop small. We were able to amass points very quickly and with little effort, and were able to redeem for free on LATAM with little effort. I got the Park Hyatt in Mendoza for 12k points/night and the Doubletree in Santiago for a similar 28k Hilton points per night.

Our two splurges on this trip - we hired a private English speaking driver for the vineyards in Mendoza for three days, and are staying at a Relais & Chateaux up in San Pedro de Atacama. Well, I guess the flights between cities could also be categorized as a splurge, too. They seemed really expensive for the distances involved.

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Omg. Me too. Got a random UA $1000 business class ticket to GRU for June and gonna do a side trip to EZE. My motto is sort of that if I can’t afford to vacation somewhere expensive, I just go somewhere cheaper, lol. South America fits the bill nicely. Who needs Western Europe or Hawaii, lol?

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Awesome! I wholeheartedly agree. Wine is a hobby of ours and we were debating Spain/Portugal vs hitting Mendoza and the Chilean vineyards outside Santiago. We could afford both, but similar money/points got us significantly nicer flights (business class), lodging, and private tours in Chile and Argentina versus flying economy for 10 hours from the west coast to Madrid or Lisbon, staying in 3 star hotels, and booking shared tours and activities.

To be fair, as Shin mentions, the Euro is hurting too - almost at par with the dollar now. But tourists are still flocking in droves to Europe and so inflation for related services is red hot. Judging by what I’m seeing in Argentina and Chile, it’s nowhere near as crazy down there. Maybe that’s the sketchy reputation for safety in that part of the world, I dunno. But from what I’ve gathered, Santiago and (to a lesser extent) Buenos Aires are safer than many cities in the US.

Would love to hear the trip report when you get back!

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Bonus points for deep SA being cold in June. Beats the 93 and humid New Orleans weather for sure.

Safety is sort of relative I guess. We have multiple carjackings daily here.

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Hah, for us in the PNW, we’ve been dealing with unseasonably cold, drizzly weather all spring. Today was the first nice day we’ve had in a while, which meant it was all spent doing yard work, lol.

Safety-wise I think it’s just reputation. When we were down in MSY during mardi gras in 2017, one of our friends was pickpocketed during one of the parades. In Seattle, rarely a day goes by without some story about an attack from a mentally ill person against an innocent bystander, or sometimes a tourist. But, to be fair, as locals we speak the language, know the areas to avoid, and don’t stick out like sore thumbs.

I think the traveling public thinks of the political situations in Venezuela, Bolivia, and the violence in Central America and paints the entire continent with that broad brush. That’s a shame because I think deep SA in particular offers some pretty intriguing activities for the adventurous traveler at very reasonable prices. Especially (bringing the thread back on topic) when you consider the forex rate.

When you can get a high end, luxury hotel in an urban center for under $200 a night, eat at a steakhouse for under half of what it costs in the US, and do some pretty cool outdoorsy stuff in the Andes… you’d be crazy to pass that up, no?

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El-Erian’s op-ed in the Financial Times centered on dollar strength as the US Dollar Index has risen to levels not seen in two decades, recently rising above 104. The index last week marked a nearly 10% gain for 2022 before slightly paring its gain.

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As reflected above, we see what a marvelous investment was the Russian ruble at the beginning of the Ukraine war.

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Euro US Dollar parity. So near yet so far.

Will it happen? And if it does, will the situation be sustained?

The dollar is likely to be supported strongly if the Ukraine war intensifies and Chinese outlook deteriorates further.

In contrast, a Chinese recovery and some form of diplomatic breakthrough in Ukraine would tend to underpin the Euro.

Once the Fed has tightened quickly to 2%, the outlook is much more uncertain.

There will be some pressure for a pause, especially given the lags involved in monetary policy and this pressure will intensify if the economy stumbles.

Medium-term expectations have been scaled back. Credit Agricole notes that market expectations have been scaled back; “More recently, however, the FOMC’s hawkishness has started to lose credibility, after the deteriorating US data of late has revived recession fears and forced investors to pare back their rate hike bets to the detriment of the USD.”

Looking at the monthly charts, there remains no absolute affirmation that EUR’s decline from 1.2349 (January 2021 highs) has ended.

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Not sure how much this matters, but maybe it does if people think it does.

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