HYCM was one of the first retail brokerages to be regulated in the UK. With over 40 years of experience and representation in the UK, Hong Kong, Cyprus and Dubai, the company has seen many upheavals in the market; Its chief currency analyst, Giles Coghlan, describes how traders reacted to this year’s record volatility and explains why commodities are a good choice as the world anxiously awaits a vaccine.
World Finance: Giles, how have HYCM and your traders reacted to this year’s crisis?
Gilles Coghlan: Well, HYCM already has the experience to successfully withstand some of the biggest market crashes and major volatility over the years, so our clients can be sure that they are trading with one of the top brokers. strongest and most secure in the world.
In fact, in terms of traders in general, they favor volatility; so you tend to see an increase in trading activity whenever you get global events like these causing the asset prices to fluctuate sharply. And many brokers are reporting increased volumes right now. So overall it has been good enough for business.
However, the record volatility also presents challenges. It is a very difficult investment environment, and the type of uncertainty in the markets right now favors a much shorter time horizon, as longer term investments – especially early in the market. year – were encumbered with considerable uncertainty.
For traders, it was actually a great time to take advantage of some of our free online webinars and workshops, which are located on the HYCM website, and hosted by myself every week; in order to really enrich and deepen their trading skills and knowledge.
World Finance: So, with your analyst hat on, which assets do you think are performing well in today’s environment?
Gilles Coghlan: Well, this is a topic that I have talked about a lot with HYCM customers. And it could be a really great time for commodities, as global growth begins to pick up thanks to global vaccine hopes.
Now, that could also be a very, very good time for gold. The Federal Reserve is expected to keep interest rates low until 2023; the United States is on the cusp of a massive stimulus package and levels of quantitative easing are at record levels. So one of the key areas we’ll be looking at is how quickly the Federal Reserve plans to raise interest rates. And as long as they keep interest rates low, you’d expect it to be pretty good for gold, which has risen and appreciated in all of the last major financial crises we’ve had. So long gold still looks good right now – but we need to keep a close eye on what the Federal Reserve is doing.
Copper is also very beautiful in the medium to long term. Electric vehicles are growing in popularity and are thought to account for about 9.4% of copper demand by 2030. And the current level is 2.4%. We therefore expect a good rise in copper prices in the medium term. We can therefore expect copper declines to find buyers in the medium term.
Another interesting product is nickel. According to Morgan Stanley, sales of electric cars are considered the most important of all commodities used in the production of an electric vehicle. So they predict that over the next five to ten years there will be significant investment in nickel mining and increased demand for nickel itself. So, over the next five to ten years, basic nickel could be a great investment.
World Finance: What about currency trading?
Gilles Coghlan: Well, I think the currencies you would expect to benefit from this environment are currencies that grow procyclically. Thus, typically the Australian dollar and the New Zealand dollar would benefit from higher commodity prices. If the US dollar weakens, it would benefit more antipodes currencies like the Australian dollar and the New Zealand dollar. And maybe a long AUD / JPY, or a long NZD / JPY, could be a great trade in the medium to long term as we come out of this medical crisis.
Learn more and watch Giles’ free webinars at HYCM.com