This week alot of questions were raised about financial stability of some countries. Fitch Ratings lowered grade for Greece to BBB+. While not a junk status, it is also not the sterling status every government seek. It puts a question mark on stability and responsibility of that countries fiscal policies. One shouldn’t have been surprised by the move, because the proverbial writing was on the wall, but it increases likelihood of the same happening to other countries. Most often mentioned candidates to see their ratings downgraded are the Baltic states, Romania, Dubai and others. But frankly everybody wants to know if their is any danger to bigger, more established economies.

Today Moody’s Investors Service provided some answers. Company said it has no current plans to lower its top debt ratings on the U.S. and the U.K. The outlook is stable even if public finances in the U.S. and the U.K. are worsening in the wake of the global financial crisis and they  may test the Aaa boundaries. Apparently these two countries have a “resilient” triple A ratings. By comparison Canada and Germany have “resistant” triple A ratings. Moody’s considers the later better than former, without creating new grade level. Interesting. They managed to single out both U.K. and U.S. for increased risk, but without fear of political fallout and pressure, which surely would follow official change in ratings. On a personal note, I’d like to come across opinion on Japan, the most heavily indebted country in the world, after Zimbabwe (in relation to GDP). What should the grade be for Japanese bonds? Or is it a taboo subject? Seems to me different rules apply to different countries.

Speaking of Japan, a trade involving the Yen was planned in the Day for central Banks post. I was looking for JPY to get weaker, using the Beast as an instrument of choice. Some Yen pairs had made a move day before and GBP-JPY was lagging behind. So were other European currencies. Chances were high they would catch up, if certain prerequisites were met. Like proper completion of reversal pattern including the breakout that I was looking for.

Yesterday two separate buy orders were placed using hourly chart of GBP-JPY. One was looking for a pull back within reversal formation, at 142.70. Price failed to dip this low, so order was not filled and is no longer valid. Second one was trying to get on board at 144.50, a move out of congestion zone. This order was executed as planned. Original objective had been 146.00, which is still achievable, but I decided to get out earlier. Trade was closed few minutes ago at 145.50, for 100 pips gain. I don’t want to stay with this trade into the weekend and consider 100 pips good result for the effort, especially since price movement lacks the authority (strength) anticipated and moves in smaller swings. Regardless, it is a good trade and I’m happy with it.

As mentioned yesterday, here is the last of my Kiwi trades from last few days. One that was featured in the Hot topic post. This trade was looking for a drop in AUD-NZD, if 1.266o level was crossed. Another one of those trades that can seriously test your patience and resolve. It took a while before move finally happened. But when it did, objective was reached very fast, for 70 pips gain.
This turned out to be a very good trading week, with most of my activities producing desired results. One or two orders have not been filled yet. I’ll try to cover them in next couple of updates. For now I wish everybody great weekend and productive shopping, if you must.

Mike K.