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Tuesday, 16th April 2024
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Day-trading the currencies Back  
Paul McEnroe is a dealer on the Treasury & Institutional Desk at Bank of Ireland Treasury & International Banking. We take some time out to catch up with Paul’s foreign exchange trades, customer meetings and his search for a few weekend sporting bets.
6.30am: Alarm goes off. Six years on, and the early starts just don’t get any easier! It’s 6.45 before I finally manage to get out of bed.

7.30am: I arrive at the desk and take a few minutes to check my e-mails, read the papers and catch up on the overnight news via Bloomberg and Reuters. After that I pick up the phone to touch base with a number of interbank contacts, to hear about the overnight currency flows. Today, most of the action has again been in the euro, which has weakened further against the dollar following some overnight comments from US officials.

7.45am: I go along to the morning meeting with Dan McLaughlin, our chief economist, where he gives an analysis of the overnight market moves. Part of the briefing includes a rundown on the daily economic indicators that are due for release. Today, sees the release of the monthly employment data from the States. All market participants will be closely watching these figures, to get an idea of the state of the US economy following the recent falls in the stock market and several profit warnings from leading US companies. We expect the numbers to come in flat month-on-month, which is slightly worse than the consensus estimates, but we will have to wait for the figures to be announced at 1.30pm. Dan then discusses the future impact of recent data releases and rate movements, and how they are likely to affect customers in different business segments. He highlights areas of concern, and issues that might be raised with customers today. The meeting finishes with dealers from each trading desk discussing their views and positions.

8.10 am: Based on the morning briefing, I phone a number of our customers, whom I know will be interested to hear about the overnight market moves, and who may wish to deal based on this information, to reduce, or change their exposure in the market. Working on the Treasury & Institutional desk, our typical customers include: fund managers, banks, stockbrokers, insurance companies and multinational treasury centres. From day to day, customers may ask for a wide range of treasury products from foreign exchange spots, forwards, and options, to money markets, interest rate derivatives and commercial paper.

8.30am: Time for a quick coffee at the desk and a chat about the weekend’s upcoming football matches. The outbreak of Foot and Mouth has seriously diminished the sporting calendar, so we are forced to look further a field for the weekend’s bets!

8.45am: The next three hours are usually the busiest of the day as regards trading. Most of our morning trading will be on the foreign exchange and cash markets. The majority of customers will want to deal straight away, while some will place orders with us, to be dealt only if the market hits their desired level. A fund manager calls me with an interest to buy some Japanese yen to fund the purchase of some Japanese equities; he leaves me an order to buy Japanese yen against euro should the market hit 112.25. The lower overnight move in the euro means that some customers have the opportunity to hedge their exposures at a more favourable rate, and we see quite a bit of interest to buy euro against both the dollar and sterling. Another customer, working in the fund management business, calls looking for our interim view on the euro against the dollar. We believe there is potential for the euro to fall further from current levels. After further discussion, he explains that he has an exposure to a strengthening euro, and he is looking for a hedging solution. After taking details of dates and cash flows of the exposure, I agree to meet up with him later in the day, to discuss possible hedging strategies.

11.30am: I go to a meeting called by our Customer Technology Unit, to discuss our participation in multi-banked, on-line FX trading sites. We have a number of customers up and running on a pilot basis on such sites, in anticipation of greater demand for on-line FX delivery channels going forward.

12.15pm: Lunch time! I take a trip to the staff restaurant on the 5th floor with some of the guys from the desk for some lunch, and then back to the desk to try and finish reading the papers.

12.45pm: Just back from lunch, I get a call from Brenda Ryan in our US office, to discuss the BOI Liquidity Fund. The fund has been performing well recently based on our early anticipation of US rate cuts, and there are a number of US customers interested in investing. There has been a lot of customer interest in the fund, as it offers flexible cash management with an excellent mix of security and return without compromising liquidity - the three most important concerns of any treasurer. Brenda wants to have a conference call with one potential investor, to discuss some of their questions.

1.15pm: I work on pricing the FX options strategy for my customer meeting at 3.30pm. The customer, believes the euro will weaken further, but would like to lock in a ‘worst case’ dealing rate now, should the euro turn around and start to strengthen. The vanilla options are expensive, but our customer is happy to reduce premium costs by giving up some potential benefit, so I can tailor a structure to meet his specific needs.

1.30pm: My work on the options pricing is interrupted for a few minutes as the long-awaited US employment data release is announced. The headline number comes in very weak, falling 86k, against a consensus expectation of a rise of 60k. The markets are very volatile following the announcement, and trading activity picks up, as all market participants try to digest, and react to the numbers. It seems that the general perception is that the Fed will be forced to cut rates again at their next meeting to try to avoid recession and support growth. US stock markets rally, and the euro weakens further as traders are increasingly starting to believe that the ECB will not act as decisively as the Fed, causing European growth to suffer. Back to the proposal.

3.30pm: As planned my customer meeting begins and I present my proposed hedging strategies. We discuss the options available. He is happy to follow through on one of the proposals and we get down to agreeing the final details.

4.30pm: Back at the desk, I re-price the options trade and we book the deal, I return a few calls and respond to e-mails received while I have been away. A few interesting leads have emerged during the day, and I have a quick meeting with the guys on the desk about an upcoming interest rate hedging deal, on a large property development project.

5.15pm; I retire to Molloys for a few well-earned pints to start the weekend.

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