Great name – Samurai Bonds. Never heard it before, so it caught my attention. Samurai Bonds are Yen denominated debt instruments (notes, bonds) sold by foreign borrowers to Japanese investors. This arrangement is attractive for yield seekers in Japan, as it offers higher interest than comparable domestic investment, even though this spread has fallen to lowest level in over a year. But that is what must be appealing to entities issuing debt- still cheaper than at home. Currently these are governments Columbia and Mexico that plan to sell Samurai Bonds. If more large borrowers go down this road, Japanese Yen could have another reason to appreciate.

In the last post I touched on  Kamikaze Currency, the Pound, which is jumping like a yo-yo, with contradicting data, seemingly emerging daily. Today was no exception. Yesterday I joked about Bank of England minutes being another reason for GBP to change direction. Unfortunately, that’s what happened. Pound is under pressure today, with the weakness attributed to details of last policy meeting by BoE. On personal level, I think that GBP is simply taking  a “breather”, pull back after healthy increase, typical of currencies lately. No move seems to be sustained for any length of time, and this one is no exception.

As I pointed it out yesterday, EUR-GBP trade was not progressing fast enough, well, as I wanted it to. After farther analysis, and inspired by one of the readers , I decided to close it just before London open. This meant 29 pips gain, far short of anticipated move. That can still happen, only not very soon. In the meantime EUR-GBP appreciated and I’m trying to short it again. It was just sold at 0.8930, looking for the price to return to recent low, which is about 100 pips away. Risk is about 30-40 pips, if that, with 100 SMA  acting as resistance not far above, and previous high just a little higher. Hopefully this combination will provide for strong resistance. In reality, I should wait for a bearish reversal pattern to form here, but since this is 4H chart, I’ll be asleep when next 2 candles are formed, so I’m taking my chances now.

Euro-Canadian Dollar crosshas been discussed on these pages form last couple of days. Yesterday I suggested another long entry if bullish candle emerged around 1.5700 level. However, after the post was published, price simply fell through it as well as 100 SMA. It didn’t slow down untill it reached low 1.56′s at around 15 EST, time when moves normally are done for the day and I go to sleep. I entered long trade here at 1.5621. Risks were small, 30 pips and target twice that.

This trade was also closed just before London open, as soon as it entered my general objective zone, for 55 pips. I’m leaving this pair alone now. It is locked in 1.56-1.58 range and can easily stay there for days. At this point I don’t even have a directional bias any more, although shorting it if price moves under 1.56 would be very tempting (as I’m writing this pair is heading higher, still well within congestion area). Untill then, using smaller time frame charts, like 15M, could be more productive.  Depending on what happens, I think it will be time to look at crosses like GBP-JPY and NZD pairs in next post. Are they ready to move yet? Probably soon.

Mike K.