How I cashed in on the ‘Draghi Bounce’

John C Burford looks to profit from the effect of Mario Draghi’s interest rate decision on the pound versus the dollar.

The euro has strengthened in recent days by around four cents. Was that the result Mario Draghi was looking for in order to achieve his stated aim of boosting the EZ' inflation rate when he launched his Big Bazooka last week? Well, with a stronger euro, imports become cheaper to buy and instead, the deflationary pressure is intensified, not weakened. Oops.

But of course, my readers were fully prepared for this seemingly perverse market reaction. Logically, the prospect of having a huge pile of euros fresh off the ECB printing press would weaken it. But we know that logic has little bearing in the markets when everybody believes it.

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CONTRACTS OF £62,500Open interest: 210,983
Commitments
38,41266,26316,857137,13488,700192,403171,82118,58039,162
Changes from 24/11/15 (Change in open interest: 12,920)
6,0081,480-7908,07510,99713,29211,685-3721,235
Percent of open interest for each category of trader
18.231.48.065.042.091.281.48.818.6
Number of traders in each category (Total traders: 269)
28472528397493Row 8 - Cell 7 Row 8 - Cell 8
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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.