One can not help but to be amused that AIG is making headlines again. Amused, if you are like me and largely detached from this issue. For most other people “angry” would be more fitting. Company announced payment of $100 million dollars in bonuses to executives in financial products division. At the same time, they still have not repayed the bailout money provided by the government in early days of financial crisis. It is not my place to say that these people don’t deserve the money, or if they do. Don’t know the particulars well enough to even offer an opinion. But what I find amazing is that it is the same company over and over again at the center of this controversy. CEO was even a subject of congressional hearing some time ago. One would think that they would be more discreet about it. Unfortunately, this kind of behavior only provides the government with more ammunition to create more laws, rules and restrictions under the names of “fairness” and “regulations”. I’m sure we’ll hear more about AIG soon.

While the likes of AIG dominate the news, more important issues are overlooked. Statutory government debt ceiling will be hit by the end of the month. Current “limit” is $12.4 trillion. Congress must approve an increase to $14.3 trillion, which was already rubber stamped by the Senate. By the look of things another “ceiling” will have to be established next year and maybe the year after. And after that, too….

Trading is very choppy, with currencies moving erratically, trying to find direction. Most pairs are contained within ranges, or congestion zones, established last week. Great environment for very short term traders, with frequent and fairly fast trend changes. But no decisive moves are taking place, at least not on the intermediate term charts, the ones I use for trading here. In itself there is nothing unusual about, one of the normal phases of markets. Problem is that the longer it lasts, the harder it gets to have conviction in trades as they don’t go straight to targets. Or stops, for that matter. This is something one has to get used to, which is always easier said than done.

Yesterday I discussed a trade in CAD-CHF. Entry was made at 0.9973 looking for larger move down. Shortly after price made minor low at 0.9930 and rebounded. Later on another attempt at the low was made, but it held. I got out at this point, for a minor gain, but I like what I see on hourly chart. Promising support was formed, the kind I like to see, so another sell order is placed just below it. If the price breaks through this level, objective would be 100 pips.

Another cross of Canadian Dollar is lining up for a potential trade, GBP-CAD. While pound has its own problems, it looks like it wants to move higher in relation to CAD. Set up is not of the highest quality and probability, but if the price moves to 1.6970 it has decent chance of moving another 130-150 pips. With any luck, sometime soon.

Mike K.