European Central Bank held its policy making meeting today. The governing council left official Eurozone interest rates unchanged at 1%, much as expected. Short term later ECB announced it will start withdrawing excess liquidity from the system over next 12 months, something they have been talking about for some time now. No surprise there, and neither were later remarks by ECB President, Jean- Claude Trichet, who said that a strong dollar is “very important” for the euro-area economy.
Seems like everybody wants that, stronger dollar, that is. China has been very vocal about, as well as the remaining BRIC countries. Oil exporting states have long been complaining about USD. Canada is unhappy with current level of USD-CAD. Doesn’t matter where you look, strong Dollar is desired. Let’s not forget our own financial authorities. FED chairman Ben Bernanke believes in the strong USD, and so does Treasury Secretary Timothy Geithner. Now with Trichet on board, this should be a done deal, right? I mean, these guys have great influence over the markets and could decide direction with few comments and similar policies. Or could they? Or are the markets simply too big and not even central banks can make meaningful trend changes? For now we know that everybody wants strong Dollar.
Central bankers are learning that you don’t always get what you want in the markets, something that individual traders have known forever. For example, over last few days I’ve been looking for the Pound to get stronger. It remains illusive.
Few days ago I featured possible long trade in GBP-CHF. Was looking for a breakout at 1.6637, with about 110 pips objective. Move eventually came and pushed the price to about 1.6700. but no higher. Last night price has reversed, building this small, but easily identifiable top. This allowed me to get out at break even, when market broke to the downside.
Intermediate term chart of GBP-CHF still offers possibility for a buy. Price established strong resistance at 1.6700, before dropping to current level. I think that if we see a reversal pattern form before new lows are reached, chances are good for retesting of 1.6700. This makes 4H chart the graph of interest to me. I’m looking for a strong reversal candlestick pattern in the area indicated, preferably in the lower part of it, in order to make risk reward as favorable as possible. But this part is up to the market.
Mike K.
Mike, how is pound-swissy trade coming? Are you in it yet?
I’m over it. I’ll just watch you. I can’t watch my TV as the receiver broke yesterday.
There’s something about the franc I’m beginning not to like. It seems like I can never get a feel for it. Or like it’s fickle.
Heather, not yet. As of this writting, about 22:20 PST, I’m not convinced. Will decide at a close of next candle.
All currencies are fickle. Or all markets for that matter. Sometimes you get into a stretch, when it seems you can do no wrong, just to be followed by a period when nothing makes sense. Part of the game.
[...] Trichet wants strong Dollar, too | fxmadness.com fxmadness.com/2009/12/03/general/trichet-wants-strong-dollar-too – view page – cached European Central Bank held its policy making meeting today. The governing council left official Eurozone interest rates unchanged at 1%, much as expected. Short [...]
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[...] comes at time when other central banks are starting to put an end to excessive liquidity policies. European Central Bank has a plan in place, while others, like RBA, started to increase rates already. This new [...]