Strategies to take advantage of currency volatility

What currency best reflects the changes in the price of precious metals? What benefits more environments of risk aversion? Paul Lambert, Manager of Understanding Cash Store Supreme explains, investors can profit in forex as times of high market volatility.

The turbulence during the quarter based hit risk assets and the currency market. No ban for Lambert, this volatility has affected an opportunity for investors in this category by macroeconomic factors and monetary policy and the evolution of commodity prices.

In this scenario, insists the manager Outright knowledge cash reserve that "the turbulence on the markets provide us with several windows of opportunity to express our expectations on macroeconomic issues worldwide currencies as a proxy for developments without directly investing in commodities, bonds or the underlying shares ".

For example, he stated that if the computer has a specific view on oil, a possible strategy have long or short positions in the Russian ruble or the Canadian dollar, two currencies with changes in the price of crude oil to take correlated.

"In Metals and Mining, the Australian dollar or the Chilean peso changes in supply, demand and prices for coal or copper or represent," says Lambert. "With regard to agricultural products, the New Zealand dollar would act as an exponent of milk prices, while the South African rand reflects many changes in the prices of precious metals."

In his view, if an environment of risk aversion, the euro, the dollar and the yen tend to benefit most currencies occurs. "In any case, the normally high liquidity of currencies in which we invest allows us to open and close positions quickly in response a events in the markets," he explains.

In order to avoid volatility in the currency markets does not lead to setbacks Lanmbert Team continually monitors its positions. "We are trying two for the operation, three or more times a week in response to events. Typically thoughts investments take three to six months, and about once a month a new idea is reflected in the portfolio". They show the company a

As they explain, it also helps that they are the flexibility opposing pairs to long and short positions and to cover positions. "Despite an operation for extended periods of high volatility, the fund has never lost in 2007 since its introduction more than 3% per month", experts say.

For the next few months, since signing it is convinced that the divergence in monetary policy will remain protagonists, assuming that the tightening cycle in the US to support the dollar. "We also believe that the" commodity currency "will be under pressure as long as there is an oversupply of oil, and how China is trying its economy to rebalance away from resource-intensive sectors" display.

As indicated at BNY Mellon, the total knowledge is money shop a fund scale liquid asset management and the UCITS supports that corresponds in a range of currency pairs a return Libor + 4% rate positioning searches (with long and short positions) between the markets of a number of issues to benefit, determine the movements of exchange rates.

The product is led by an experienced forex and team headed by Paul Lambert. He is chairman bottom Morningstar Alt - foreign exchange, with assets under management of EUR 384 million (31 December 2015).

The team invests primarily in the currencies of the industrialized countries (G10) and some emerging currencies whose liquidity is high. It also used selectively options to improve liquidity.