For the first time ever, LIBOR fell to under 1%. For those who don’t know, LIBOR stands for London Interbank Offering Rate, and it is what banks charge on loans when lending to each other. Three months rate for Dollar reached 1% in June 2003. That all time low held up until today. Many economists see it as a very good sign for future. It suggests possibility of a rebound in financial markets, due to growing confidence among market participants. Some people are stating that this clearly indicates the worst is over. I don’t think this alone should be taken as a measure of recovery. Virtually all major central banks in the world have near zero or very low interest lending policy. Sooner or later it was bound to be reflected in LIBOR and other benchmarks. Most interesting fact is the all time low part, but this also could be a warning- these markets don’t stay at such extremes very long. To be more precise, today’s Dollar LIBOR rate was at 0.98%. By comparison Euro LIBOR is at 1.34%.
Not everybody is seeking rates this low. Reserve Bank of Australia’ held its cash rate steady at 3%, but that is still a record level, which seemed to benefit… NZD. Currency markets were lively on all these news. Notable mention goes to Pound, which made good gains today across the board, including the Dollar. It was quoted above 1.5100, area not seen in few months. For me EUR-GBP was a little more important, because that is what I discussed here couple posts back. This trade was initiated and is under way. Also, since I often discuss GBP-JPY and not that long ago I did a post on GBP-CHF longer term trade, any and all rallies in the Pound are welcome, with disregard to “why?”.
Yen, on the other hand was rather choppy not getting anywhere. I’m placing a buy order in EUR-JPY at 132.95, looking for about 100 pips. To be perfectly honest, it can easily go either way. Current consolidation looks bullish on some charts, bearish on others , CHF-JPY comes to mind. Admittedly, this is not the most convincing of set ups, but with my outlook for Yen as it is, why not? In the next post I might take another look at daily chart of the beast. Somebody had a question about a stop, it could be easier to explain it using chart. It will depend on what happens to more immediate trading, shorter time frames.
Mike K.
Mike, the way you trade, swing trading as you called it before. Could it work of small time charts, like 5 minutes ar maybe even 1 m?
Great post man, been following your website for only a short amount of time but love to hear about the exotics, especially the analysis you apply to them. Keep up the great work, I will be watching. Cheers and good trades to you and everyone.
Jonathan, thank you for your kind words.
Rob, yes this can be traded on all time frames. It depends on how busy I want to get. In general I think 1-4 hour charts are good, because decisions don’t have to be made immediately. But yes, 5M, 1M, it doesn’t matter.
Is it possible for you to post some trades on smaller charts, if the approach works on them? I’m sure you can find a lot of trading opportunities during the day on chart of eurjpy for example.
Not really, Rob. This would demand constant updates as both T/P and S/L can change. More like service type situation.
Do you plan to maybe start a service for active traders? Based on your track record, I’m sure there would be enough interest.
I watched the latest episode of “Deadliest catch”. It was about sinking of that one boat, with crew interviews. This was spooky. And the home video of the guys who died. Made my skin crawl. I can’t believe you used to do that.
Rob, I have no plans for this type of service at this time. Can’t make myself available for 10-12 h a day, and that’s what would be needed.
Michelle, I have not seen this episode. Try to catch a rerun.
[...] to their lowest level ever at 1.5980, undercutting low established in May of 1.6050. I discussed LIBOR at that time, under similar circumstances. It is not every day that all time extremes are [...]