Plenty has been said over the years about Forex reserves held by central banks around the world. Financial press likens these statistics to a competition of sorts, who has more? Subject of these funds normally comes up when the fate of US Dollar is concerned. Speculations abound if the largest holders of foreign currencies reserves will continue to keep most of them in USD or start switching to  EUR. Or different one. This is supposed to set tone for major, long term trends in currencies. These days, discussions turn to spending the reserves rather than accumulating new ones. Many countries have to tap them in order to shore up their crumbling economies. Russia, holder of roughly $500 billion before the crisis started, have already committed about halve of it to support own financial system. China has pledged sizeable part of their reserves to domestic infrastructure projects. This could be as much as 20-30% of their total. Today Japanese government announced it will use part of its nearly $1 trillion in foreign funds to provide loans to Japanese companies operating in overseas markets, step to prevent tight credit conditions from stifling business activity. So far the amounts discussed are about $50 billion, but could be expanded to as much $150 billion.
When this current financial storm is over, next year, in 3 years, I don’t know, we might have very interesting situation. Large portions, if not all, of these reserves, might be spent or committed to domestic projects. This should change playing field in forex arena to some extent. One of possible outcomes could be absence of long trends, for some time. This is speculation, of course and nothing more. But should most countries really deplete reserves, who will finance and refinance US debt? Any ideas?
Last post suggested a buy in AUD-CHF. Entry price was met and I already closed, but with less profit than anticipated.

It was a nice run  with entry at 0.7495. I thought this trade would take 2-3 days, but in few hours trade was 80 pips in profit. Price retraced and made another run but failed to make high. Had to make a decision- do I sit on it for who knows how long with hopes for another 30 pips or should it be closed. I covered for + 69 pips. Not great but not too bad either.
Yen pairs started to recover and some of them might be ready to buy.

NZD-JPY was covered in depth on Sunday, so this is a follow up. In my view hourly chart is turning around and might stage a run on 50.50 level. I have a buy order at 49.30 with 100 pips objective. If the price makes new low, under 47.70, buy order will be moved to next high preceding the low. AUD-JPY looks good above 63.50.
Pound didn’t make any headway against other currencies, but especially Swissy. As a matter of fact it lost ground, yet agai. This calls for adjustment of my buy orders in that cross.

I set up 2 orders on hourly chart and still one other buy is on 4H chart. Not sure if and when this will happen, but I will not be able update it tomorrow. Have a function to attend and even looking forward to it. If something truly remarkable happens in the markets, I might post something at non-customary time, but its very unlikely.

Mike K.