Chairman Bernanke finds himself in hot water.  Congress is investigating claims by Bank of America’s CEO Kenneth Lewis, that he, and his company, was forced into acquiring Merrill Lynch. According to earlier testimony by Lewis, Bernanke and former Treasury chief, Paulson, threatened him and BoA’s board of directors with ouster, should they not agree to the deal.
The Fed is accused of having deliberately kept other regulators in the dark regarding the negotiations with Bank of America. Supposedly there was a cover up by the Federal Reserve of important information. Also FED purposefully excluded key regulatory partners such as the Securities and Exchange Commission and the Office of the Comptroller of the Currency. In principle, it looks that they didn’t have complete authority to make this deal.
At the moment this seems secondary to the “threats”, which are the gist of testimony. Bernanke denies to ever said anything of this nature, as well as instructing subordinates to convey such message. Interesting. Whatever the truth, this must be a very uncomfortable spot for FED chairman. I think there will be more of such investigations as congress is looking for scapegoats to current financial crisis. After all it must be somebody’s fault, right?
As mentioned yesterday, here is a chart of the long term GBP-CHF trade. This pair showed a very sharp price run yesterday and I took partial profits.

I closed half of my trade for 600 pips. The balance still waits for the original target- 1.8500. I can only hope it will be reached before my vacation.
Yesterday I waited for FED rate announcement before getting into any more trades. No major surprises from the statement, no major moves following it, no trades on my part. Didn’t do anything.
For the last trading day of the week I stay with NZD-JPY. Price seems to be at a point where it is going to decide which way to go, out of hourly congestion area. I’m placing one more sell order.

I don’t have any exceedingly strong convictions at this point, and don’t expect much excitement tomorrow. Must be tired. This sell order is placed at 60.90, with a 120 pips objective. My farther yen outlook will be reviewed over the weekend.
Canadian Dollar has not been in the news much, but its charts are very noticable- it fell like a rock against just about everything else.

At this point price has not reversed yet, but given the magnitude of preceding move, one might be coming soon. I chose EUR-CAD for a trailing sell order. Currently it is set at 1.5996. I don’t expect it to be filled tomorrow, most likely order will have to be moved if price makes new high, but this process starts somewhere. Should this order be executed, target would be 250 pips.   Now the waiting game.

Mike K.