Today Forex news were dominated by central banks, and that’s what drove currency trading. Swiss National Bank said it will stop purchases of corporate bonds as it joins other countries in starting to withdraw emergency measures. At the same time SNB left its benchmark 3-month target rate unchanged at 0.25%. Chairman Roth said the Swiss Franc has stayed “stable” against the euro since the SNB began intervening and that the central bank’s monetary policy since March “has been effective.” That’s debatable, the effectiveness part, but a matter for other time. At any rate, this was largely expected, no surprises.

Bank of England held its own policy meeting today. British officials also kept interest rates at record low of  o.50%. But in contrast to their Swiss colleagues, they left other quantitative easing policies in place. Most recent bond repurchase program was left unchanged at 200 Billion Pounds. It is inconclusive when BoE will start its own liquidity withdrawal program. Signals are mixed with weak economy on one hand and some inflationary signs on the other. For now status qua is maintained, in line with pre-decision expectations.

While I don’t try to predict what central banks will do, after rather subdued Wednesday, I expected response to these announcements to be more robust. That didn’t happen, European currencies remained confined to ranges set earlier in the week. But big moves did come on the last central bank decision. Or rather first, since Reserve Bank of New Zealand opened the business day. While rates were held steady at 2.5%, bank officials said they may begin removing policy stimulus by the middle of 2010. That was a shift from its earlier rhetoric that rates will stay at record low into the second half of the year. Much like Australian Dollar few weeks ago, Kiwi responded by solid rally in anticipation of higher yields.

NZD has been building bullish patterns on intermediate term charts all over the place. Some kind of catalyst was needed to set the ball rolling, like the RBNZ announcement. Kiwi-Franc buy order has been active for a few days. When NZD moved after news release, price climbed fast and target of 0.7410 was reached for a gain of 101 pips.

NZD-JPY has been featured here very often during last few weeks, and this particular 1H chart was discussed just yesterday. After establishing trading range price pushed through resistance. I had a buy order at 62.95, with a moderate objective of 63.65, or 70 pips. Best kind of trade. Why? Well, I was asleep at the time. When I got up it had been done and over with. So, the New Zealand Dollar, after some time of tracking it, finally delivered. There was one more trade, in AUD-NZD, but I’ll discuss it in the next post.

Unlike NZD, British Pound has been illusive this week. Couple of smaller trades in GBP-JPY trades yesterday, but main charts of interest are in consolidation. Hourly Beast above should be clear enough. Looks to me that a bullish reversal is being built and I’d like to be in when, or if, price breakout to the upside at 144.50. Should lower bounds be tested first, 142.70 is a good risk/reward spot to get in with a long position. First trade would have objective of 146.00, while second one will target 144.25 or so. Let’s see what happens.

Mike K.