With holiday a distant memory now, some interesting Forex developments took place. Most note worthy was strength of the Pound. For the first time in seven months or so GBP-USD, the “cable” reached 1.6000 level today. Action was not limited to this pair, as most GBP crosses had a run up, including all of those followed here. Which is good for my trades and orders placed in them. However, this nice appreciation might be overdone to some degree and some correction is very possible. More about it later.
For some time now popular press have been talking about economy “bottoming out” or the crisis “turning around” implying the worst may be over. Today one of the central banks disagreed with this view. Statement from Riksbank of Sweden said just that. They don’t think the worst is over yet, which pertained to a world-wide situation, and not strictly speaking Sweden. With this in mind, Riksbank said it was raising foreign currency to boost its reserves. By the way, SEK fell sharply on the news.
I don’t think we can call the crisis “over” as long as we have unresolved problems of large magnitude on our hands. GM is the perfect example. It looks like the company will not be able to complete restructuring in order to qualify for more government aid. Key bondholders rejected proposal to exchange debt for stock. At this point, chapter 11 bankruptcy filing is almost certain. While fate of 100′s of thousands of jobs is hanging in the balance, talking about any global recovery is a little premature. On the bright side, looks like panic market moves are over. For now that is.
In spite of general strength in Pound, it was not that easy to squeeze pips from every pair. The beast, for example, was not playful today. My long term trade is OK, but short term breakouts were shaky.

Price didn’t move much above breakout levels, no follow up. Two small gains, nothing to brag about.
While I’m bullish British Pound, here is something that may indicate a pull back.

GBP-CAD could be heading down. For right now things are still good, price just bounced of 100 SMA, but if it falls under it, deeper sell off is likely. I’m looking at 1.7715 area to sell, with 250 pips objective. Hope it doesn’t happen and Pound continues higher. Just a small hedge if…
Kiwi has been getting rather strong, even at the expense of AUD.

This move down maybe over. Hourly chart is building potential reversal pattern. My intentions are to test it with a buy on a breakout above 1.2700. Current price level would be a likely stop area, while objective is about 110 pips. Soon, I hope.

Mike K.