For all the talk about Chinese government relaxing its exchange rates policy over last year or so, nothing happened so far. And it doesn’t look it is going to happen any time soon, either. China’s central bank governor said today that current scheme is necessary to cope with the global economic crisis and said China will be cautious about retreating from the policy. Mr. Zhou Xiaochuan that “unconventional policies” should remain in place for as long as global outlook remains uncertain. Well, this opens the door for the Renminbi to remain pegged to the USD forever, because, lat time I checked, “outlook” for anything is never certain.

Every now and then we’ve been hearing about some changes from Beijing, but all this seems to be just an elaborate plot of prolonging current status quo. There are clearly no intentions to play the ball. By some estimates, Chinese currency is overvalued about 40% in relation to USD and perhaps even more against other currencies. It doesn’t help that governments of other countries sit on their hands and not really pushing for changes. Sure, there is a lot of talk, but mostly in the media, not from from officials. If I recall correctly, during his campaign, our sitting president was promising left and Right to “get tough with China”. Guess he forgot about it.

It looks like Chinese Yuan will become real trading instrument for some time. That is from the perspective of average Forex trader. While CNY is available on some trading platforms, what is the point of trading it, or trying, if it doesn’t move? We’ll have to wait longer. Thankfully, we have other currencies available, and s0me of them move a lot. Like the British Pound, which have been selling off badly lately, pretty much across the board. However last couple of days, and Friday in particular, brought improvement. Buyers finally stepped in, if briefly. I was one of them.

I have been sitting on this GBP-CHF since very early in the week. Entry was at at 1.6125, with 1.6330 target. market moved in couple of phases and by the end of the week ran up to just under 1.6300. I decided to close it late on Friday, short of objective. Few reasons. It was close enough to the target and it is always good to pocket some profits before weekend. Who knows how currencies will open Sunday? GBP-CHF might gap down and it could another interminable wait before 1.6330 is finally reached. But most importantly, I simple had too many Pound trades and pocketing some profits limits the risks. So I closed it for 158 pips gain.

EUR-GBP broke, too, only here it was much smaller move. My entry happened at 0.9010 and this trade is still under way. Target is 0.8950, at least for this move. Trade is still live, but hopefully will come to a quick resolution after the weekend.

One that probably will not end very fast is a buy in GBP-AUD. This pair sold off before rebounding to just under break even. I manged to sit it out and now just have to wait for next move. Given the size of my target here, it could easily be a week, maybe longer.

When I started to buy Pound pairs, beast didn’t look too good. Yen was still very strong, and the possible bottom here just didn’t have the shape I look for. It changed by Friday, and trade was taken on a breakout above this minor high at 134.92. This trade was also closed very late on Friday, for quick 180 pips. Another GBP pair discussed here was GBP-CAD. This was triggered late on Friday. So, right now I have three trades live, and three others closed, including GBP-NZD from few days ago. Coming week will decide if Pound is really turning, or simply correcting a little before going down again.

Mike K.