News & Resources

Market Analysis

Latest Insights
Press Releases
Latest Insights

Market Wire
Strange Blackout Strikes Currency Markets

by Karl Schamotta | August 21, 2017

A highly unusual astronomical phenomenon has thrown global currency markets into upheaval, with the sun disappearing over a wide swath of North America during the last few minutes. As the unexplained blackout takes effect, traders are struggling to perform simple mathematical operations (such as calculating cross rates and interpolating broken-dated forward differentials) without the assistance of solar-powered calculators. Due to the rising cost and complexity of computation, exchange rates are being quoted to the first decimal place, and liquidity in foreign exchange options has disappeared completely.

Superstitious investors are convinced that the end is nigh, referencing research done by the mathematician Steve Puetz – which found that at least eight of history’s biggest stock market crashes occurred within the six day period around a full moon that occurred within six weeks of a solar eclipse (including the Dutch Tulip Mania of 1637).

Spooked investors are selling out of Bitcoin, leaving the cryptocurrency up less than $13,500 USD for the day – its worst performance this year.

On the flip side, recently-blinded investors are performing technical analysis much more effectively.

Bottom Line: Until the thief who stole the sun gives it back, risk-sensitive assets are likely to come under selling pressure. We would suggest that corporate hedgers should approach this market environment cautiously (while making appropriate sacrifices to the sun god).

*Don’t take any of the foregoing too seriously. We wrote it in the dark.

 

To receive our weekly market briefing, breaking market wires and research reports direct to your inbox subscribe! 

“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.

Cambridge Global Payments (“Cambridge”) provides this document as general market information subject to: Cambridge’s copyright, and all contract terms in place, if any, between you and the Cambridge entity you have contracted with. This document is based on sources Cambridge considers reliable, but without independent verification. Cambridge makes no guarantee of its accuracy or completeness. Cambridge is not responsible for any errors in or related to the document, or for damages arising out of any person’s reliance upon this information. All charts or graphs are from publicly available sources or proprietary data. The information in this document is subject to sudden change without notice.

Cambridge may sell to you and/or buy from you foreign exchange instruments (including spot and/or derivative transactions; both kinds are here called “FXI”s) covered by Cambridge on a principal basis.

This document is NOT: 1) Advice of any kind, or 2) Approved or reviewed by any regulatory authority, or 3) An offer to sell or a solicitation of an offer to buy any FXIs, or to participate in any trading strategy.

Before acting on this document, you must consider the appropriateness of the information, based on your objectives, needs and finances. For advice, you must contact someone independent of Cambridge.

Certain FXIs mentioned in this document may be ineligible for sale in some locations, and/or unsuitable for you. Contact your Cambridge representative for further information regarding product availability/suitability before you enter into any FXI contract.

FXIs are volatile and may cause losses. Past performance of a FXI product cannot be relied on to determine future performance.

This document is intended only for persons in Canada, the US, and Australia. This document is not intended for persons in the UK or elsewhere in the EEA. In Australia, this publication has been distributed by Cambridge Mercantile (Australia) Pty. Ltd. (ABN 85 126 642 448, AFSL 351278); for the general information of its customers (as defined in the Corporations Act 2001). This entity makes no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law.

Fees may be earned by Cambridge (and its agents) in respect of any business transacted with Cambridge.

The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact the applicable Cambridge if you wish to use Cambridge services to enter a transaction involving any instrument mentioned in this document.

© Copyright 2018, Cambridge Mercantile Corp., ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Cambridge Mercantile Corp. See www.cambridgefx.com for contact details.