Week started with a bang. Big moves in all financial markets, including currencies. Yen went on a run and USD has some day, too. All kinds of reasons are given as to why this is happening. Anything from “Imminent GM bankruptcy” to ” profit taking”. I like that one. There are some gems hidden among today’s news. UK revealed projected budget deficit. It is expected to peak in the range of £170-180 Billion, or about 12% of national income, the highest level of public borrowing ever, during peace time. Well, this in itself is nothing new. All governments are operating in the red, why should Great Britain something special. What is news worthy, though, is the fact that for the first time Treasury  conceded for the first time that the government will not recoup the full costs of its banking interventions. When this whole mess started, our government and others (UK for one) claimed that injecting money into ailing banks, was not only necessary, but would also make taxpayers some profit.  We were being told these were only loans, which will be repaid. Evidently this is no longer the case, if it EVER was. Alistair Darling,   Chancellor of the Exchequer(Treasury), admitted that a loss provision must be included in the budget and the bill could be as high as £60 Billion. This are current expectations. From what we know about government operations, this is only the beginning. At this point there is no reason to believe that situation in USA will be any different. With our commitment to bailouts much higher than in UK, it is a realistic assumption to see losses respectively higher as well.  I want to know what Mr. Bernanke has to say now. Is everything still great on this side of the pond, or is it a harbinger of bad news for us?
No matter what the reason, Pound tanked today. Just rolled over and dropped. Thankfully I reversed my stance on GBP-JPY, as explained couple of post ago. All of Yen pairs fell sharply. This made for a good day, if very busy. Lot’s of trades.

This was a little faster than expected, nice 342 pips. I’m going to leave this alone for now. Other Yen trades, AUD-JPY and NZD-JPY will be discussed tomorrow.Trade from yesterday, was also initiated. A buy of EUR-NZD. As a matter of fact I already closed it, too.

I might have jumped the gun here, but price moved so fast in few minutes, it had making of a blow out top. Now, I’m pretty sure this pair will go higher, but it could take some time. I was closing a lot of trade at around this time, so I zapped this one, too. At any rate, 204 pips, nothing wrong with that.
After rather explosive day like today, I expect some consolidation tomorrow. One new order. Just few days ago didn’t think I’d be placing it any time soon.

This is a short term buy order in EUR-GBP. I’m not looking for a big move, about 80 pips or so. Still think that longer term this pair is heading lower, but for now will see how much upside potential is there. Not too much, I think.
Did I say today was busy? Not enough time to cover it all, maybe tomorrow.

Mike K.