Currency Traders Spy Opportunity In Crazy Times

In Depth

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Simon Fowles starts work each day at 5 a.m. — and he considers this the good shift. Fowles, a currency trader with Wells Fargo in San Francisco, says he chose the time slot because he likes to catch a little bit of the market action in London and a little bit in Asia.

What Fowles does routinely might seem crazy to the rest of us. "I just bought a million pounds here," he says, mousing around on his computer screen. "Just put your price action in, hit your level and you're done."

If you're a currency trader like Fowles, here's what you do. You sit and watch the way different nations' money shifts. You watch the British pound or the Canadian dollar change its position relative to the U.S. dollar. You do this all day long — every second. One moment your target currency is trading at 1.2346, the next at 1.2347. You wait for the exact right moment to sell or buy. It's like you're making a bet: You think the Canadian dollar will go up in the next three seconds, so you buy a bunch of them within the next two seconds.

Take Max Kaufman, who sits in a row of traders. Kaufman's got eight computer screens in front of him, filled with jumping numbers, charts, graphs. He's waiting to get in on the Canadian dollar. While he's taking in eight screens' worth of information, he is also chatting online with his buddies at other banks.

"I'm hearing that there's gonna be a righthand-side dollar Canada fix on the Bank of England close," he says, and then offers a translation. "What that means is there's gonna be a lot of buyers at 8 o'clock our time, which is in three, no two more minutes. I just bought it at 19 and its already trading at 1.1930."

Further translation: In those 10 seconds, the Canadian dollar went up by .0011 [from 1.1919] against the American dollar, and Max made some money for the bank.

A $3 Trillion Market

Large banks, governments, companies, speculators, take part in this market every day, all across the world. One trader could make a move like Kaufman's a thousand times a day. More than $3 trillion gets traded daily on the foreign exchange market.

This is a world where Americans in polo shirts know — and care — about the Moldovan leu. It's a world where dollars "perform" and a world that, for these guys, never stops. Out to the movies, at Grandma's for Thanksgiving, they're tapping away at their little hand-held currency reader gadget just checking the situation for the Japanese yen or Zimbabwean dollar.

Just like the rest of us, these guys depend on the world's being somewhat predictable. But Fowles says the predictable world disappeared last month.

From 2003 to 2006, he says, the British pound strengthened by 28 percent against the dollar. "In two weeks last month, it lost 23 percent of its value," he says.

A currency shift that used to take three years now takes two weeks. "That's what we're seeing," he says.

Investors are scared, and they're moving their money around like crazy. And since investors have money everywhere — all over the world — their frenetic trading drives real currencies berserk. Lately the Australian dollar has been on a roller coaster, the Japanese yen can't shoot up fast enough and the Mexican peso lost 8 percent of its value in one day.

The constant changes make it impossible to price imports and exports. It becomes incredibly hard for employers to pay international staff. But for the currency traders, the upended landscape presents an incredible opportunity to make lots of money — and to lose money like never before.

Fowles says you just have to adjust — he expects they'll be surfing the tsunami for the foreseeable future. For a person in his position, he says, the future means at least once a week.

Chana Joffe-Walt reports for member station KPLU.

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