Last night senate voted down proposed bailout of US automakers. Response was swift and severe. Asian markets sold off and currencies followed. Yen rose dramatically, breaking through 90.00 USD-JPY level, the supposed “line in the sand” sketched out by Bank of Japan. In an interesting twist of events, Shoichi Nakagawa, Japanese finance minister, made a statement that ”intervention isn’t in my mind at all”. But he did say he was watching currency movements with “great interest” and was “shocked” by the sudden moves. As violent as the initial reaction was, it also didn’t last long. JPY reversed and kept weakening, albeit in more measured pace.
This event effected one of trades I mentioned yesterday, buy in CAD-CHF.

Price dipped to under 0.9600 and I entered a long trade at 0.9592. After few hours it started to go my way and stop was placed at 0.9558. Not long after that results of the vote on Detroit bailout hit the wires and Canadian Dollar hit the skids. I was out with 34 pips loss. Needless to say, remaining order at 0.9760 is cancelled.
Not everything was bleak. Reversal of JPY presented some opportunities in GBP-JPY.

Two good trade produced 60 pips each. Admittedly I got a little lucky on the second trade, as my objective was overreached by only 3 or 4 pips. There was one more trade later on, but after some choppy moves I closed with 14 pips loss.
Any remaining order that was discussed on these pages over last few days is cancelled. I will likely revisit some next week, namely EUR-GBP.Mike K.