I’m glad this week is coming to an end. Of course, I say that every Friday and so do most people. Frankly, though, I need some time to go over charts and do some “profound” thinking. I can’t do it while starring at screen and looking for the next trade. Have this need to ponder over FED’s action on Wednesday, or rather the consequences, and try figure out in very broad terms what will happen next. In this context “next” means 6-9 months down the road. While most of my trading is short term, for those of you who don’t know, I also have a service for commercial hedgers and that requires long term view.
Some newspapers termed Wednesday’s action “Shock and awe”, while I see it as “Shock and … what?”. It didn’t hit me until few hours ago that in response to the news Dollar suffered biggest fall ever against the Euro since the creation of the single currency. When I look at it from this angle, only now realization comes of just how important this might be. Commodities surged wildly, with oil breaking above $50 mark. Markets are screaming “inflation ahead”, but how far down the road? Does it mean a start of another long term slump for USD? That’s what I mean, some heavy duty thinking is needed. Not that it will lead to any earth shaking conclusions, but at least I will have tried.
My short term trades will likely be as they are now, they mostly rely on shorter price swings. Like the ones from yesterday. There was a buy order in GBP-CHF, which didn’t materialize. I’m leaving it in place for now. If warranted it will be discussed again. Aussie-Yen buy was executed at 65.65. I closed it about 45M ago, being done for the week. At 66.27 it was short of target, but still 62 pips ahead.
It really was not a bad trade. Nice move after the breakout, no pullbacks. My trade in NZD-JPY started to get a little too long for my taste, so I closed it also. It was mentioned on these pages many times, most recently two days ago in FED decision.
I took about 2 weeks from the time order was placed to execution. There is more potential here, but I’d rather look for it on shorter time frame. Besides, this was a nice move and I really don’t want to get into some sideways move or deep pull back. Also, 300+ pips is not bad at all, something I can live with. With this, all trades mentioned in this blog are closed now, I think. Some orders remain valid, like sell in EUR-PLN or the fore-mentioned GBP-CHF buy. Will start fresh on Sunday.
Mike K.
Thank you for suggestions about what to trade. It strikes me as strange that you don’t talk much about dollar, or only in general terms. All the trades I see don’t include US dollar, just like these very nice trades today. Can you say why? Thank you.
Well, GR, I trade USD, only that in this blog I’d rather focus on other currencies. Some of them receive bery little coverage.
Yes, these trades are not bad indeed. When I was reading your previous post, the notion of buying AUD-JPY didn’t seem all that good. It worked and I’m impressed.
Swiss authorities sold Franc, our FED is flooding the market with dollar, in effect devalueing USD without direct intervention. Bank of England has done basically the same thing, to less attention. Do you think ECB will follow by introducing a “quantitative easing” of its own? In my view, it will.
After Wednesday I was thinking about buying USD-CHF. Swiss central bank surely doesn’t like the Franc to get so much stronger. Thought they would be intervening again. Then I remembered your statement earlier, few times, to not to trade just on expectations of intervention, only treat it as a bonus if it happens. On Thursday CHF was stronger still. Glad I didn’t get myself into it. But what about now, do you think Franc maybe ready to be sold again?
Michelle, I’m not sure what ECB will do, but I think you are right, some similar action will be taken, maybe just not as aggresive.
Renata, very good you recognized you can’t depend on CB to do or not do something. SNB never quantified what it was they were trying to accomplished, so it is a guess work on our part figuring out their next move. As far as USD-CHF goes, yes, I think it is ready for a bounce, mostly because USD sold off so badly last few days. Question is how much?
[...] anything and everything in its way will get destroyed. Zero sum game, just like Forex trading. On FridayI closed two trades in Yen pairs. NZD-JPY was longer term, while AUD-JPY lasted only few hours. Both [...]
[...] Shock and … what? | fxmadness.com fxmadness.com/2009/03/20/general/shock-and-what – view page – cached I’m glad this week is coming to an end. Of course, I say that every Friday and so do most people. Frankly, though, I need some time to go over charts and do [...]