MCM's Currencywatch Adds EMS Calculations

CurrencyWatch, an optional screen service on Telerate operated by McCarthy, Crisanti & Maffei Inc. (MCM), is adding live EMS calculations and beefing up its coverage of European central banks, catering to what appears to be an area of growing interest to foreign exchange departments.

Cross-currency trading of EMS currencies doesn't offer spot dealers much scope for speculative profits unless a realignment is in the offing. However, forward trading is a different story. In order to keep their currencies stable, EC central banks have had to adjust interest rates frequently. This tends to make forward rates volatile.

By closely monitoring divergences of EMS currencies, CurrencyWatch says its analysts have built up a good track record in pinpointing interest rate changes.

One of the features that CurrencyWatch will be adding is a daily analysis of interest-rate trends.

The bread-and-butter of CurrencyWatch's operations is continuous technical analysis of currency movements. CreditWatch's analysts combine these computer-driven forecasts with fundamental analysis, including predictions of forthcoming economic indicators, to produce running forecasts of market activity over the next three hours. These forecasts appear regularly over a 24-hour cycle.

Unlike some screen services, CurrencyWatch doesn't try to measure what the consensus view is about future activity. "We are very much recommendation orientated," says Malcolm Cook, MCM's European director.

Although Reuters dominates the market for dealing room screens, Cook says that Telerate has a competitive advantage over Reuters because Telerate provides enough optional advisory services to keep dealers satiated with advice, gossip and rumors whereas Reuters provides mainly rates and news. "Dealers spend more time looking at advisory services than they spend on looking at rates," Cook avers.

MCM charges $200 per month for the first CurrencyWatch screen and descending prices for additional screens. Cook says that much of the growth of his service has come from banks switching from video to digital feeds, which allow CurrencyWatch to be displayed on internal screens and be combined with other information sources. When digital feeds are involved, CurrencyWatch's price is $1,500 per month.