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Who Actually Moves the Euro-Dollar Rate?
Most people assume the euro-dollar exchange rate reflects trade between the US and Europe. The reality? Trade-related flows account for just 3-5% of daily volume. The other 95% comes from institutional speculation, portfolio rebalancing, and bank hedging. In this episode, we break down the BIS Triennial Survey numbers, explain how a pension fund's currency trade gets amplified through the banking system, and reveal why retail traders are essentially playing a different game entirely. We also explore the yen carry trade unwind of August 2024 and ask whether AI and algorithms have eliminated…
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