This really surprised me. Couple of banks, Goldman Sachs and Morgan Stanley, have formally asked the Federal Reserve for permission to repay a combined $20 billion received from TARP (Troubled Asset Relief Program). Surprise is the word “permission”. While I never really read fine print of TARP, probably few people did, this comes as news to me that banks who took the money, and in some cases were forced to, need a permission from government to repay it. Both banks’ requests are pending, and no decision has been made on whether they will get approval from Federal Reserve. I’m not into conspiracy theories, nor am I anti government, but find this particular issue peculiar. If banks have enough funds to maintain required reserves, meaning they are on sound footing, why do they need to be granted permission to repay money to FED? I’d like to think that government would be happy that taxpayers are getting the funds back. Politicians would get a chance for a few minutes of fame, claiming how great bailouts work and scramble for credit to their names. Instead it seems that government wants to maintain operating restrictions on banks, that came together with TARP money. Appears that authorities like the partial ownership of financial institutions. Maybe they like to dictate how much executives are allowed to make? Power trip?
Pound, and Pound traders, must have felt a little power to day also. GBP made a new high for the year against USD, reaching above 1.5500. Of bigger interest to me was GBP-JPY, which I cover often on these pages. Had a good trade yesterday and opened next one. Beast continued upward strongly hitting 149.00 which was target for second trade.
Turned out to be a great trade, netting quick 252 pips. More on the beast farther down.
Another trade from last post was a buy in EUR-AUD. This one had the opposite outcome.
Australian Dollar just kept getting stronger. Shortly after my entry there was a feeble attempt for a reversal, but it failed miserably. At any rate, I got out on this sharp down move, at 1.7624, dropping 104 pips. For now I’ll be watching 4H chart and possible reaction at just under 1.7500. This pair has a support there. Will see if it holds.
Back to the beast. In a post Risk appetite and GBP-JPY. I discussed a longer term trade, using daily chart. Last time it was mentioned, that is. Currently price is getting closer to that entry.
Buy order is at 151.65. Longer term objective is still 162-63. It still can take couple of days before price gets to the buy level and I wouldn’t be surprised if there is another pullback of 300 pips or so. However, the chart looks good for a successful breakout, when it happens.
In the next post I’ll try to take a look at other Pound pairs of interest, namely GBP-CHF and EUR-GBP, that is, if nothing more interesting happens. I’m getting winded ( can you say it about writing? who cares!).
Mike K.
This longer term beast trade, do you still expect it to reach objective before the end of August? That was a projection you made earlier. BTW, nice trade. You know, on Sunday night/monday morning everybody was talking about shorting this pair. Same yesterday.
As of right now, yes, end of August is an outside range of expectation. Price must break out first.
That EURAUD collapse punched me in the nose as well but managed to make a few pips back on the late aft. USDCAD weakness ..all history now, on to the next
Well, government gives competition as an answer to why permission is needed to repay loans. But I think they don’t want to let go of the controll they have now.
Mark, EUR-AUD was not too bad. These are small value pips, so GBP-JPY more than covered it… Do you trade yen pairs at all?
Damian, they will probably sight that for now close oversight is necessary in order to help this process along. Or something like that.
Mike, I’ve been reading your blog for about 3 months now. During this time you showed 1 or 2 trades when you sold gbp/jpy. Other than that you wer buying. Vast majority of these trades worked out good. Can you diclose how many pips you cleared this year trading only the beast?
Did you try euraud again? I managed 55 pips, but don’t know if I exited prematurely.
Yes – GBPJPY and occasionally USDJPY
Stan, I really don’t know. Outside of the very short term trades I take daily, maybe 4000-5000 pips? Not sure.
Heather, see next post.
[...] on the platform. Highlight of the day. This carries some importance for me. I have a longer term GBP-JPY buy order pending at 151.65, and price almost triggered it. It will probably go during next up swing. I see it [...]
[...] on life support by pumping money into? Yen fell hard today, especially the beast, supporting my GBP-JPY trade which was initiated last week. This is another one of the longer term trades I’ve been taking, [...]
[...] to escape government restrictions such as caps on executive compensation and others. They needed a permission from FED to do it. After holding out for few weeks, authorities granted approval to some of the banks which [...]
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