Central banks absorb most of the losses, then speculators.
it would depend who is the Counterparty, meaning how the profits are made, but of course as from a certain level, due to the profits made that moved the markets in one direction, central banks would take it in the chin and or currency stability would have to intervene. we are in a pool : there s a definite volume of water, so it is a "win-lose" situation -- this is why liquidity injection creates inflation : this is because you have more money "chasing" the same number of goods / services.
example : interest rates are rising making few $ billion worth of Options on futures contracts worthless, or exotic financial instruments worth close to zero : you have a counterparty ( a creditor) or a clearing house (collateral, whose mission is to provide liquidity, so it has to take the loss) : result is that market on those instruments will drop ... with a panic selling.
for forex what make liquidity is bank and the heart of bank is CB.
so the answer is inflation.
so this is the point what i want to discuss. is it us dollar weakening bcs of inflation made by speculator? not from fundamental blablabla...
think about this possibility.
Inflation is a monetary phenomenum, only-- which means only institution dealing with currency issuance are involved in inflation : CBs through what is called fractional reserves....
Speculators are just, as their names say, speculators : they try and make a profit out of currency moves, through technicals or fundamentals signals--
thus the US$$ is being inflated and thus debased according to CBs money issuance which inflate the US$$ base and thus triggers more money "chasing" fewer goods = higher good and service prices!
Speculators and banks (markat makers, instit. traders) influence currency value, not currency base, a money is just the reflection of a country's foreign policy and economic situation....hope i was clear enough...
I trade off the charts and while I agree the Cable is over bought I cant agrue with what I see on the 4hr...