European Central Banks held its regularly scheduled policy meeting today. With no surprise to any body, interest rates were left unchanged at the record low 1%. This “record low” starts to lose meaning now, being at this level for so long. At this point it old news, a status quo of sorts.  ECB President Jean-Claude Trichet claims interest rates are “appropriate”.  More intriguing were remarks about reintroduction of stricter collateral rules for bank lending. Market observers speculated that current, less stringent rules would remain in place for longer, in order to accommodate Greece, which suffered downgrade of its credit rating. Today’s remarks indicate that no exceptions would be made for anybody. We shall see.

Australian Dollar kept on pushing higher after jobs numbers were released early in the trading day. Figures indicated creation of over 30K jobs, about three times of what was expected. that pushed unemployment down to 5.5% from 5.7%. Good news for Australian economy and the AUD, which staged a rally against most other currencies, regaining its losses from few days ago. Very impressive, even though it seems that this move has about run out of steam. More about it later.

Euro has had another day of weakness. It could linked to ECB and the dark clod of Greece, but the fact is that it had been drifting lower all day long, before central bank meeting. This worked very well for my EUR-GBP trade outlined just yesterday in the Bad news for Euro post. Short entry happened at 0.8913, with an objective of 50 pips. Market rebounded at first, but eventually resumed its down momentum. I just closed it at 0.8870, for 43 gain. Want to be done for the day and holding out for last few pips just isn’t that important.

This concludes string of short EUR-GBP trades. They worked great. Market is running into major support, best seen on daily charts, which was mentioned yesterday and described in more detail in JPY watch update. From now on bounce from this general area is very possible. I don’t want to be short this cross until price drops through this level, so the order indicated there is valid . Should it rebound, I’ll look for more sell setups at better price.

I put an end to my EUR-NZD long trade that started earlier this week. This is clearly going nowhere. Every time price pokes through resistance, it gets pushed right back into consolidation zone. But the icing on the cake was the Australian employment report. NZD also responded strongly to it, even if it ultimately didn’t get as aggressive as AUD. We can see this hourly candle of great indecision, after which I closed the trade for -34 pips. EUR-NZD will be revisited soon, but using 4H chart.

The other Kiwi trade, GBP-NZD from yesterday was also closed then, few minutes earlier. It produced a minor gain of 43 pips. While I’m still bullish this pair, didn’t want to find myself  200-300 pips in the red before uptrend resumed. Out for now, but subject to additional buys in days to come.

Tomorrow I’ll take a look at short term trading, using 5M-15M charts of Yen pairs. I’ll be looking for breakouts both up and down in GBP-JPY, CAD-JPY, EUR-JPY and AUD-JPY and post results in next update. Also, possible bearish MACD divergence is emerging on 4H chart of AUD-CHF.  It is not completed yet, so I’ll discuss it in next update and see in there is a trade worth taking there.

Mike K.