I really like this. Our biggest lender, China, is “worried”. Premier Wen Jiabao was quoted during news conference as saying “Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried.” Most analysts, people who take these statements under microscope and dissect them to subatomic levels, looking for hidden messages, clues and innuendos, agree that Premier is talking about US Dollar. Washington is counting on Beijing to help pay for its series of stimulus packages by buying U.S. bonds. China already is Washington’s biggest foreign creditor, with an estimated $1 trillion in U.S. government debt. A weaker dollar would erode the value of those assets. Message seems to be clear- do not devalue our holdings through reckless spending.
Some people might see it as more sinister, a threat of not financing our debt and moving their foreign exchange reserves elsewhere. Timing of this statement will also come under farther analysis. Today is Friday the 13th, for the second month in the row, very rare event happening only, what, once every 8-9 years? I’m sure astrologers and tarot readers are trying to make connection to anything that is remotely out of ordinary on this account. Regardless, this subject (US indebtedness to China) will be coming up more frequently and might even be one of the leading causes to rising interest rates in near future. After all, we will have to entice bond buyers somehow. Frankly, our politicians must be reminded that we can not both spend and borrow into infinity. Great remark, I think.
Now the story of the week as far as my trading goes. It was described in New lows for Swedish Krona. Trade in SEK was suggested in that post and it has played out. Already!
Suggested trade was to sell EUR-SEK under last weekly bar. This platform doesn’t offer weekly charts (!!) so I sold at under most recent daily candle. For the magnitude, this turned out to be very quick trade, four days. Original target was between 4000 to 5000 pips, so I closed half of the position for about 4000 pips gain and the balance at a little more than 5000 pips. For the record, I also took the trade on weekly chart using another platform. That trade was closed late yesterday as well, for about 3000 pips profit. No doubt this a highlight of the week, and probably a month, too.
For some time I’ve been using NZD-JPY as an example of some of my trades. Post Conflict of time frames covers 4H chart buy set up. Finally, this order was filled.
Week ago I had some shorter term trades here, but missed the rebound couple of days ago. Current trade will probably last some time. For details see the original post. I will return to EUR-SEK for a moment here. This pair probably has much more room to go down, but I’m done with it now. Trade worked as intended, even faster, and met my expectations. I’m happy with the outcome. Will look for something else now.
I didn’t have the nerve to sit on Krona as long as you did. Per our email conversation, my gains were realized on the big move on Tuesday. Still about 2500 pips, the best trade I ever had. Thank you very much. Is EUR-PLN next to go?
Have some bad news, Renata. Good entry for EUR-PLN is already gone, unless you want to use daily charts.
The Chinese maybe worried, but I’m sure we don’t know half the picture.Who knows whay kind of wheeling and dealing goes on behind the scenes. Washington probably has ways to encourage China to lend us money.
They are making known the fact that weak dollar is not welcome. I don’t think they will dump what they hold now. These are conditions for funding any future ( just approved by congress) US debt. Make sure dollar stays strong or borrow money elsewhere.
This trade in EUR-SEK… I would not have believed you actually took it, if I had not read your post a week ago. You really nailed it, both timing and size of the move. Some day it will be me.
Thank you B.J, this trade worked out better(faster) than expected. I’m sure with a little work you will be finding trades like this soon. And better ones.
[...] very often , but think it is worth the risk here. I received a lot of positive feed back about the EUR-SEK trade. Thank you. There is another one of these more “exotic” currencies creating a [...]
[...] of Yen, yesterday I wrote about closing half of my NZD-JPY trade. Last time it was described in China is worried post. Progress slowed down and I decided to lock some profits. Exit was at 52.34 for 166 pips. The [...]