Currencies had a surge of activity today. Both Asian and European sessions were relatively robust, with decent size moves during both and direction change after London open for most currency pairs. With one notable exception- US Dollar continued its plunge to ever lower levels until about couple of hours ago. It is recovering slightly, but any moves from now on are likely to get less and less dynamic, as is typical for day before Thanksgiving. USD reached parity with Swiss Franc, level not seen in a year and a half and only for the second time ever. I might devote entire post to USD-CHF in near future, given my history with this pair.

Minutes of most recent FED policy meeting were released today. They contradict with recent statements from officials. For example, recently chairman Bernanke expressed concern with falling Dollar. After all, he also “supports strong Dollar”. According to minutes, however, dollar decline is seen as “orderly” and nothing to worry about. Fed policymakers  pledged to hold rates at such depressed levels for an “extended period”, maybe another year or longer.  Minutes revealed that  record-low interest rates “could lead to excessive risk-taking in financial markets”, otherwise creating new “bubbles”. Something FED has publicly denied. Can anybody make sense of it?

Russian Central Bank announced it plans to invest some of its foreign exchange reserves in the Canadian currency. Move is designed to diversify their FX holdings and lessen dependence on the Dollar. This means that they already have done it. Why would anybody try bid any asset up before buying it? Whatever the reason behind the announcement, it played right into my hands, with perfect timing. I had a short AUD-CAD trade from yesterday, which was not doing too well.

My order at 0.9700 was reached yesterday, if just, and price immediately reversed. Very trying situation. Around 100SMA price stalled and developed possible reversal pattern. I sold it again, same size, at 0.9771. Shortly after price fell on BoR news, but didn’t go through previous support. I closed both trades at 0.9710 for an aggregate gain of 51 pips. Courtesy of Bank Rosii. I still expect farther price deterioration here, so another sell order is placed at 0.9692, but it’s doubtful it will be filled today.

Another cross covered yesterday was GBP-CHF. Couple of possible long entries were indicated. Price had retraced after establishing new minor high and went long at 1.6721 and rode it to 1.6785 for 64 pips gain. After that things became complicated: resistance at 1.6800 and 100SMA combined with London open, time when trends often reverse, made me wait with farther buys. I placed a buy order at 1.6817, but price fell again. One more long trade was attempted at 1.6714. It was stopped out couple of minutes ago for -32 pips which is not included on the chart. It just happened.

Right now I’m done and getting ready for Thanksgiving. No trading tomorrow, no post. If I’m awake on Thursday night a simple straddle trade in USD-CHF might be attempted, like it was done last year on Thanksgiving night. And years before that. Can’t provide details right now, because it will depend on the ranges and highs/lows at the time, but examples from previous years are good guides. I’d like to wish everybody peaceful and enjoyable holiday. Happy Thanksgiving!

Mike K.