Important economic news were released today. Numbers rather than news, since there was nothing new about announcement. Financial world simply waited for numbers to define how bad the official reality was. Euro Zone economy shrank by 2.5% in the first quarter of 2009. This is the fourth consecutive period of contraction, believed to be the worst since the end of WW2. Official statistics only go back to 1995. At the core of the problem seems to be sharp decline in German economic output, which fell 3.8%. This is the worst performance since at least 1970, when the then West Germany started to compile data. To put it in perspective, USA recorded 1.6% slump, France’s output fell by a mild 1.2%, Britain by 1.9% and Italy shrank by 2.4%. Put in this content, almost 4% contraction of a leading, mature economy, Germany, is big. Some countries reported even larger declines. Latvia and Slovakia, for example, both reported about 11% slump. Meanwhile in Hong Kong government announced gross domestic product would contract by up to 6.5 per cent this year. Sour news.
There is some talk about EUR loosing ground on the news, but when I look at EUR-USD, no major sell off is evident. Nothing outside average daily fluctuation happened today, but this pair is setting up about 200 pips move down next week. Of course by then other fundamentals will emerge and they will be credited with, or blamed for, the move. More interesting was that Euro, and its sister CHF, sold off against GBP. Pound-Swissy just had a very nice breakout to the upside (anybody in on it?), while EUR-GBP is developing situation which I might cover more closely over the weekend.
Taking a hint from Europe, one of my accounts contracted also. I’m happy to say that this decline was more modest, about 0.5%, and will not cause market reaction. Trade in NZD-JPY was behind it.
This was the set up from yesterday. Two buy orders were placed. Breakout was not filled and the one on the pull back was stopped out for 50 pips loss, hence account contraction. I’m leaving it alone and take a fresh look at Yen pairs on Sunday. Regardless, it was a good week. All other trades mentioned on these pages were winners, previous transaction in NZD-JPY, EUR-NZD, GBP-CHF and EUR-CAD. Nothing to complain about. I can only hope every week is like this.
Mike K.
Are these the only trades you take during the week? One loss and much smaller than any of the wins. I’d say this is very good.
No, this is only a small portion of my total activities. And yes, it has been a good week.
It sounds like USD is going to get stronger soon. You seem to agree based on what you wrote about Euro.
took the GBPCHF breakout of the daily inside bar at 1.6830 in the direction of that bar with a target of around 1.72
nice from SNB to intervene or at least the rumor was so
took already profit for 3/4 of the position around weekly close
I’m short EURCAD with the breakout of the daily IB with stop above high at 1.6000 which is almost 76.4 % retracement of the last down move
target for partial take profit around 1.57, remainder open
Cheers Thomas
Sounds great. I also had a trade in GBP-CHF and closed it as well. If it was not for the end of the week, I’d carry it on. Think it is heading higher, so there will be more buying in near future.
Good job, guys. I’ve been taking only long trades in gbp/chf and was in trade on Friday. Just like you, managed to get out before the close with nice profit. Didn’t get too greedy. We have to do it again soon.
We’ll be doing it over and over for some time now.
[...] Germany, the “engine” of Euro zone contracting by 3.8%. I wrote about it in an earlier post. Today it was time for Japan to show a report card. It was not pretty. The world’s second [...]