Swiss National Bank has its regularly scheduled monetary policy meeting tomorrow. No interest rate changes are expected, but everybody is interested in possible easing on intervention threats. Economic numbers from Switzerland are much better than EU. Recession was much milder, and so far economy seems to be recovering faster than in Eurozone. Rumors fly that SNB will put an end to selling CHF. Surely it will not be spelled out like that, but language of the announcement is supposed to provide clues. They are most concerned about EUR-CHF exchange rate, however, should Franc respond to the news, it will likely be in all its pairs.

Couple of days ago, when I was writing last post, Japanese Yen pairs formed a decent rounded top on hourly chart. Rounded tops tend to be reliable reversal patterns. The term “reversal” is a little unfortunate. Just like most other chart patterns, they don’t necessarily indicate an all out reversal, but correction, or at least a pause in prevailing trend. They are typically good for one swing down under base of the pattern. Base is defined by connecting two lowest points on both sides of the top. Simple move under that level indicates possible sell.

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After couple of good days late last week, Pound opened this one on a down note. Fairly strong one at that. Trouble started to brew right from the start, when many of GBP pairs opened down, with gaps. Those gaps were very small, not really tradable by themselves, as far as I’m concerned, but their direction often indicates prevailing trends for next day or so. Even if gaps are filled, that’s where trends turn in original direction of the gap. At any rate, opening didn’t look all that great for GBP. Or my trades.

Not everybody sees current fall in GBP as strictly speaking bad thing, for either Pound or UK. Some economists claim it is welcome, because it should  help exports, and all trade, especially with Eurozone. It could even speed up recovery outpacing that of EU for considerable time. Guess it makes sense in a larger picture. Problem with larger picture is, that no matter how rosy it looks, it can’t really be defined well enough to be of help to active traders. For example, I generally agree that Pound is oversold now, but will not hold on to losing trades because of promising picture on the horizon. Or beyond.

First to go was GBP-AUD. Clearly the weakest of the three remaining trades, it was closed just few hours after the open, for a loss of 63 pips. Not much in relation to the gains I sought.

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For all the talk about Chinese government relaxing its exchange rates policy over last year or so, nothing happened so far. And it doesn’t look it is going to happen any time soon, either. China’s central bank governor said today that current scheme is necessary to cope with the global economic crisis and said China will be cautious about retreating from the policy. Mr. Zhou Xiaochuan that “unconventional policies” should remain in place for as long as global outlook remains uncertain. Well, this opens the door for the Renminbi to remain pegged to the USD forever, because, lat time I checked, “outlook” for anything is never certain.

Every now and then we’ve been hearing about some changes from Beijing, but all this seems to be just an elaborate plot of prolonging current status quo. There are clearly no intentions to play the ball. By some estimates, Chinese currency is overvalued about 40% in relation to USD and perhaps even more against other currencies. It doesn’t help that governments of other countries sit on their hands and not really pushing for changes. Sure, there is a lot of talk, but mostly in the media, not from from officials. If I recall correctly, during his campaign, our sitting president was promising left and Right to “get tough with China”. Guess he forgot about it.

It looks like Chinese Yuan will become real trading instrument for some time. That is from the perspective of average Forex trader. While CNY is available on some trading platforms, what is the point of trading it, or trying, if it doesn’t move? We’ll have to wait longer. Thankfully, we have other currencies available, and s0me of them move a lot. Like the British Pound, which have been selling off badly lately, pretty much across the board. However last couple of days, and Friday in particular, brought improvement. Buyers finally stepped in, if briefly. I was one of them.

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