Markets

FX Markets: Are we moving toward a less globalized state of affairs?

By: Ivan Dexeus, Mark McCormick, Ellie Griffiths

May 24, 2022 - 3 Minutes
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Earlier this year, our firm was recognized as one of the Top 10 firms in forwards dealer rankings as recognized by Risk.net and FX Markets.

"We make sure we understand what the client needs," says Ivan Dexeus, Managing Director and Head of FX Dublin. "We tailor our offering around insightful market colour, tight spreads on eFX platforms and a very active salesforce that will seek axes on the larger interests."

How do you decipher what's currently driving FX markets?

"You take a step back and look at the bigger picture. The Russia-Ukraine war. Inflation. A post-pandemic world. Are these the drivers you look at? Not in insolation," says Mark McCormick, Director and Global Head of FX Strategy. "Look at these as recurring global events. War. Politics. Social change. These are the constant drivers of markets. The Russia-Ukraine war is not a constant driver in isolation, but war itself – or political division – is."

Analyzing historical data, we can effectively predict how markets are likely to react to comparable events. These broader drivers constantly repeat themselves throughout history, but in a different, more modern way each time.

How are these events causing volatility in FX markets?

A keen observation to note is that we appear to be moving toward a less globalized state of affairs. Prior to Russia's attacks on Ukraine, events like Brexit, the actions of U.S. President Trump, trade wars between U.S. and China, and USMCA, suggest that global leaders are more interested in supporting a national or domestic trade agenda than supporting a global one.

The uncertainty over how the world wants to be organized going forward because of this political discord is what is causing volatility in the markets. To this we need to add the hawkish turn of central banks around the world as they react to the rise in inflation.

The only constant is change

The most predictable part of reading financial markets is that change is constant. Understanding how the world is habitually changing and reshaping allows our team to effectively evaluate market risks. Having spent decades in this space, we're able to continually adapt our framework to these changes and allow our clients the flexibility to react and organize their goals to fit a constantly changing world. Our team combines this knowledge and insight with additional resources across the entire TD enterprise to provide accurate and tailored pricing models for our clients.

FX Forwards is a significant area for our firm, with the global market representing 65% of all FX trades. Leveraging our keen ability to analyze what's happening in the markets, we tailor our services and products so clients can enter and exit the market at very competitive prices while having minimal market impact.

eFX at TD Securities

The successes we've had, coupled with the fact that FX has become more of an electronic business over the years, has led to a strong focus and further development of our eFX platform. By working closely with our quantitative, technology, sales and trading teams, we make sure to keep pricing strong and as consistent as we can to provide great client experience.

We take a data driven approach, closely monitoring key metrics (such as hit ratios) alongside platform data. We are continuing to invest in our eFX product to enable more customisation and greater connectivity for clients. TD also engages with third party companies for innovative execution solutions and to be able to offer clients new and exciting services, for example FX HedgePool, XTX Markets and Curex.

The views or opinions expressed herein represent the personal views of the writer and do not necessarily reflect the views of TD Securities or its affiliates. This material is intended to provide commentary on the market for commodities discussed herein. Not Advice: The information contained in this material is for informational purposes only and is not intended to provide professional, investment or any other type of advice or recommendation, or to create a fiduciary relationship. Neither TD Securities (USA) LLC (“TD Securities USA”) nor any of its affiliates (collectively, “TD”) makes any representation or warranty, express or implied, regarding the accuracy, reliability, completeness, appropriateness or sufficiency for any purpose of any information included in this material. Certain information may have been provided by third-party sources and, while believed to be reliable, has not been independently verified by TD, and its accuracy or completeness cannot be guaranteed. You should not make an investment decision in reliance on this material, which is intended to provide only brief comments on the topics addressed, and is based on information that is likely to change without notice. Not Securities or Derivatives Research: This material has not been produced, reviewed or approved by TD’s securities or derivatives research departments. The views of the author may differ from others at TD, including TD securities or derivatives research analysts. Not Independent: The views expressed in this material may not be independent of the interests of TD. TD may engage in conflicting activities, including principal trading before or after posting this material, or other services involving commodities discussed in this material, or related financial products. TD may have a financial interest in the commodities discussed in this material, including, without limitation, a financial product that references such commodities. Not An Offer or Solicitation: Nothing contained in this material is, or should be construed as, an offer, a solicitation of an offer or an invitation to buy or sell any commodity, or any financial product that references such commodity, and it is not intended for distribution in any jurisdiction where such distribution would be contrary to law. Risk of Loss. Transactions in commodities, and financial instruments that reference commodities, involve risk of loss, and are subject to the risks of fluctuating prices. You should weigh potential benefits against the risks. Past performance is no indicator of future performance and the Materials are not intended to forecast or predict future events. Not a Valuation: This material is not an official valuation of any commodity mentioned herein. Any pricing information provided is indicative only and is not intended to demonstrate actual results that may be achieved by any transaction in any commodity, or any financial product that references such commodity.

Headshot of Ivan Dexeus

Ivan Dexeus
Managing Director and Head of FX and Commodities, Dublin & Co-Head of European Institutional FX Sales

Headshot of Ivan Dexeus

Ivan Dexeus
Managing Director and Head of FX and Commodities, Dublin & Co-Head of European Institutional FX Sales

Headshot of Ivan Dexeus

Ivan Dexeus
Managing Director and Head of FX and Commodities, Dublin & Co-Head of European Institutional FX Sales

Iván leads the FX and commodities team in Dublin that is responsible for providing EU clients with liquidity and solutions to their hedging and directional currency needs and which makes markets in currency swaps and eFX. Previously, he was the lead FX salesperson for French speaking clients and the Nordics at Credit Suisse’s London office, where he worked for 8 years.

Headshot of Mark McCormick

Mark McCormick
Director and Global Head of FX Strategy

Headshot of Mark McCormick

Mark McCormick
Director and Global Head of FX Strategy

Headshot of Mark McCormick

Mark McCormick
Director and Global Head of FX Strategy

Mark helps to manage the bank’s research efforts for the major foreign exchange markets, along with developing the analytical framework used for market analysis, forecasts and trade ideas across different asset classes. Before joining the bank, he worked as a Global Macro Strategist at Credit Agricole Corporate and Investment Bank in New York.

Headshot of Ellie Griffiths

Ellie Griffiths
Vice President and Global Head of eFX Sales

Headshot of Ellie Griffiths

Ellie Griffiths
Vice President and Global Head of eFX Sales

Headshot of Ellie Griffiths

Ellie Griffiths
Vice President and Global Head of eFX Sales

Ellie is responsible for providing proactive client relationship management to grow the eFX Business and overall FX Business. In her role, Ellie manages a dedicated eFX sales team that works together to globalise their eFX client efforts. She analyzes client and platform data, identifies gaps and actions the necessary changes.

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