Surprise, surprise, China is calling for a new global currency to be controlled by the International Monetary Fund. This was in news release by Chinese central bank governor published on Monday, stepping up pressure ahead of a London summit of global leaders for changes to a financial system dominated by the U.S. dollar. It would become a new reserve currency, but also to be used for trade, investment, pricing commodities and corporate bookkeeping. China is not alone, with Russia also calling for such reforms and says it will press its case at the G-20summit. This is not the first time question of some kind replacement for the Dollar, came up, only these days it is getting more serious than ever. I covered this subject a little bit in Safe haven currency, and will look at this again in depth in a few days. Right now I simply don’t have time, trading must intrude.
One more fundamental development, though. Not very important today, perhaps, but a sign of things to come. UK inflation defied expectations to rise in February for the first time in five months, surprising market observers. O.K, who cares about market observers, it shocked market participants. This might signal rising interest rates much faster than anticipated, putting a major wrinkle into the fight with global financial crisis. So far central banks have been pumping money into their respective economies. In face of inflation, they might have turn off the presses, bringing current plan to a halt. This is not going to happen tomorrow, but one should be aware of this already emerging, if slowly.
I’ve had bunch of trades from yesterday, but the most important trading development that took place today had not been discussed since Twisted stories post was published. GBP-JPY finally broke out to the upside on daily chart. My entry was at 142.00, with first target at 148.00 and second at 162.00. I have been waiting for it a long time, this could be most important, at least interesting, trade of the year. For me this is big news which deserves own post. Soon.
Sell in EUR-GBP from yesterday worked as planned, for a change.
Trade initiated yesterday at 0.9380 reached the 0.9300 target. I decided to get into it again on the break under 0.9280. To be more precise, entry was at 0.9275. This trade produced 75 pips. I really like these simple trades on reversals. Trade breaks, takes out previous low, than rally happens to 100SMA. Easy entry, small risks. These situations happen very often an all time frames and are easy to find.
Next trade from yesterday was a sell of EUR-CAD. Position is still opened and I’ll go over it in the next post.
Another order was placed, this time in GBP-NZD.
I think a reversal on this chart is possible. Plan is to buy it at 2.6100, objective about 300 pips. This is a simple breakout trade, not much really to add. But I have small announcement: decided to take some time off and go somewhere where sun is shining, for 3-4 days. Not sure where yet, will know after I come back from a travel agent in couple of hours. Probably Mexico.
I did almost exactly the same with eurgbp.Two trades, two winners. I went over what you had done last time when selling this pair. Worked again. Thank’s!
Good news, Andy, You have been on the lookout for trades here for some time. Glad it worked for you.
I doubt anything will come out of this talk about new currency, at least not any time soon. Not many other major countries will agree to it. Too many other things happening at the moment.
Do you intend to hold on to gbp-jpy all the way to 162, or is 148 level more important? It could be a long time before 162 is reached.
If the price goes my way, I’ll close some of the trade at 148 and try to keep balance to 162, but probably after 148 I will move to another account and try keep buying 1H and 4H breakouts. It all depends on how the price develops. For now targets are valid.
Where do you find currencies like GBP/NZD? the broker I have a demo with doesn’t offer it. Is it better to move to one who offers more currencies to trade?
The “new” currency is years away, if at all. Not enough countries will agree to it, or to the mechanism of it, whatever that might be. What will happen, is that some exporters will start pricing goods in Euros to start with, and, eventually, maybe a basket of currencies. Something along the lines you suggested in that post over the weekend. BTW, you are taking another vacation?
GR, it is always better to have a choice, but not a necessity. They are people who trade just one currency and don’t need any more pairs. You, as a beginner, shouldn’t really worry about crosses like GBP-NZD. Give it some time, trade the majors and then see if you want to expand into the crosses.
[...] are not easy to trade. I know, excuses. My other trade from these pages was in EUR-CAD. After my post yesterday price movement slowed down and started to give signs of reversing, so on my way out I just closed [...]
[...] generate interest and I receive a fair number of questions regarding them. Such was the case with Call for a new global currency. Readers were interested of how this would work, what possibly could replace the dollar. [...]