Sticking to Contrarian Call Propels Analyst to Top of FX League
(Bloomberg) — From her desk overlooking a trading floor in the heart of London’s financial district, Jane Foley watched markets go from strength to strength and began wondering if she’d gotten it all wrong.
It was early January and Foley, a star currency strategist at Rabobank, was betting on a stronger dollar — a contrarian view she had developed in early 2018 and maintained with conviction ever since even as consensus veered toward an increasingly sour future for the global benchmark currency.
What perplexed Foley in early 2020 was the confidence in western markets, a faith she found completely at odds with the situation in Wuhan, the Chinese city where the coronavirus emerged last year and had since cut off the city from the rest of the world.
“The market ignored it, ignored it, ignored it until Bang! Suddenly we had an enormous reaction.” Foley said in a series of interviews discussing her work. “It went from complacency to panic almost overnight.”
Now that the pandemic has gone global, shutting down economies on an unprecedented scale and laying waste to once lofty forecasts, Foley’s view — once again — looks prescient. The dollar had its best quarterly gain since 2016 as the market panic prompted investors’ flight to safe assets.
Long before the virus, Rabobank was predicting a U.S. recession, the Federal Reserve slashing rates to zero, and emerging markets struggling largely because of the impact from last year’s trade wars. This would stoke demand for the dollar as a haven.
Top League
Foley and her team have retained their position for a third straight quarter as the top predictor of Group-of-10 currencies in Bloomberg’s latest rankings, solidifying her status as an astute currency forecaster.
Under Foley’s leadership, Rabobank’s currency team has been among the top ten most precise forecasters for eleven straight quarters since mid-2017 — a feat unmatched by any other survey participants. But in a market as fickle as currencies, Foley isn’t fixated on industry accolades like league tables and rankings. For her, the thrill lies instead in being able to pinpoint underlying risks and trends that drive markets, she says.
In the still male-dominated world of finance, it isn’t just her currency view that stands apart. She has spent the past decade at a Dutch multinational bank structured as a cooperative mainly supporting food and agriculture businesses, rather than at a large investment bank. In her job as a strategist, clients range from traders to agricultural business owners rather than hedge funds.
Her customers tend to be one or two removed from farmers and they teach her about topics not directly linked to her job – be it about cattle feed or green coffee beans.
Tuna Trauma
Foley is no stranger to getting her feet dirty meeting clients in her decades long career. Be it a chicken farmer or a supplier of canned tuna – though the latter left her so overwhelmed by the smell that she couldn’t eat the tinned fish for a year, she says.
Providing a sense of direction has become increasingly complex, given currency markets can completely change course on a comment, a tweet — or lately a virus outbreak.
While Foley did not foresee the severity of the pandemic and its blow to the economy, the spread of the virus in China and the trade wars shaped her pessimistic outlook. She had been advising clients to protect themselves against market volatility.
Foley got some valuable job training decades ago working in an unlikely venue — the pub, where she says she learned to be fast on her feet, run calculations in her head and assert herself in a male-dominated environment.“It was perhaps the only job in the service sector where you could be rude back to your customers and it was fine,” says Foley, seated in one of the bank’s sunny meeting rooms overlooking London’s river Thames in an interview before the city curtailed movement. “In the trading room in that era, it was the same sort of thing.”
The world of banking and Foley have both come a long way since she got her first taste of London’s financial nerve center with a summer job at a merchant bank age 17. In roles years later, the workplace was a beehive of men who all looked confusingly alike in their blue or white shirts, making it virtually impossible to tell them apart, Foley says. Voice brokers shouting down the phone or at each other turned vast trading floors into testosterone-filled engine rooms that left her ears ringing, she recalled.
Past Crises
Now electronic trading has silenced floors and a lot has changed in the world of finance. What has endured is Foley’s fascination with foreign exchange, defined by unexpected moves and lightning-fast pace. It’s often the first market to react to news and data and is the backbone of all global trade.
No stranger to upheaval, Foley has lived through some tumultuous markets, from Black Wednesday in the early 1990s, when the U.K. exited Europe’s Exchange Rate Mechanism, all the way to the 2016 referendum where Britain voted to leave the European Union.
More than what Foley calls her “nerdy” credentials — her master’s degree thesis was in econometrics — it is voracious reading and “constant listening” that helps form a view and not succumb to market noise. While she takes in various perspectives and finds debating with her colleagues useful to stress-test ideas, she avoids following other banks’ research or being swayed by the consensus.
With a daily average turnover of $6.6 trillion, currency markets can be a maze, and Foley’s ability to explain topics succinctly has turned her into something of a star commentator. She appears frequently on business television, discussion panels and is often quoted in news articles.
“She is just as good as talking to a very sophisticated client as she is talking to say some of the non-financial media outlets where you need to talk in simpler terms,” says Christian Lawrence, a New York-based strategist at Rabobank, who worked under Foley for his first two years at the bank.
Small Team
Rabobank’s currency strategy team is relatively small, with just Foley and one other employee in London. She works closely with five others spread across the globe from Hong Kong to Sao Paulo to New York to Rabobank’s head office in Utrecht, The Netherlands.
She trusts the team’s experience more than complex models which tend to be rigid and are prone to breaking down when faced with unprecedented situations. For her, intuition and not being dogmatic in one’s views are crucial.
Foley’s days can sometimes start before 5 A.M. when she needs to get on air for radio interviews. Before the London lockdown, she would be at her desk well before 7 A.M. While she misses bouncing ideas off colleagues in person, working from home has a few silver linings, such as being able to lie in a little longer. Her husband, who left the oil industry and followed his passion to become a cricket coach, prepares lunch and Foley now has meals with her two children.
“For me that is the nicest thing about this work from home situation,” Foley says. “I have never done that before.”
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2020 Bloomberg L.P.
