With all the doom and gloom around, I’ve been cheering myself up recently by reading obituaries. These are far less depressing than all the newspaper pages on the recession/depression. I’m sure I’m not alone in looking forward to the festive season, which appears to be coming a little earlier this year.
FX volumes really dropped off this week, not surprising given that the US markets were shut for Thanksgiving. Talking to some of my sell-side chums, most said that on the whole it was only customers with a genuine need to trade that were doing anything. And lots of funds are apparently wary of redemptions through December, so they have largely decided to stop for the year. Interesting enough. I’m sure their management fees cover 12- and 11-months though.
The result is that when orders do hit the market, price moves are exaggerated. This happened on Wednesday afternoon when Standard Charted supposedly bashed cable down a couple of big figures. The buzz is that the trade was related to the bank’s £1.8 billion rights issue, announced Monday.
Clearly there are a lot of ifs and buts in this one, but apparently the norm is to hedge the FX component of such transactions at the time the terms of the rights issue are announced.