Situation in Europe is becoming more interesting with every passing day. One would have thought, that assistance granted to Greece by European Union should calm the markets. Exact opposite is taking place. In an unusual move Standard and Poor cut rating for that country’s debt by three steps in one move, from BBB+ to BB+. In the world of sovereign debt, this is junk status. To make everything even more interesting, S&P also lowered grade for Portuguese bonds, by two levels this time, from A+ to A-. From now on focus will likely shift to Portugal, Ireland, Italy and Spain, since dark clouds are gathering there.
Now that rating companies are finally getting more serious with sovereign debt, eventually attention of financial world will zoom in USA, as well. After all, our balance sheet is not much better that one of Greece and everybody knows it is not about to get better any time soon. Not just yet, though. First problems of smaller countries will have to be played out, so Dollar is likely to remain a safe haven. But for how much longer? Hard to say. First we have more immediate matters here, like FED rate decision tomorrow. I expect to see more and more polemics, correct or not, about how current actions by Federal Reserve put os closer, or farther, from the path Greece took. We should have interesting months, even years, of currency trading ahead of us.
Just like today. Big, directional moves with Dollar and Yen leading the pack. Of course this type of market action is only welcome if one happens to be on the correct side. I was fortunate enough to go with JPY against other currencies, as mentioned yesterday. Unfortunately, I didn’t anticipate extent of the move, so came short of realizing the potential here. That, however, is a marginal problem.
I fumbled the entry a little bit here and eventually opened trade manually. My objective was small, 50 pips, but very much in line with preceding market swings. It also happened happened to be at 100 SMA , which is often used as resistance/support by me. Trades in other pairs were a little more complecated.
In CHF-JPY price moved under the minor support, but it was so closed to 100 SMA that I decided to wait until it fell below. That meant late entry at 87.07 and failry small target. Once again, objective seems small now, after the move, but at the time felt right, maybe even too big. At any rate, good trade. Next one was almost identical
Just like previous chart, decided to wait to see 100 SMA fail. This time, however, objective was bigger, 100 pips, which was met. Highlight of my day. For Wednesday, I expect less activity, mostly due to pending FED decision. Surprises could happen, of course, if for example, rating agencies decide to downgrade another European country. Otherwise rate announcement should it tomorrow. While nobody expects changes it will be interesting to see how markets react to the Dollar in wake of today’s moves. I will not trade before the news release, nor shortly after. Going to wait until close of that hourly bar and see if trends have legs. Something like last time, getting in on confirmation of trend (if there is one). If Dollar moves, Yen will probably jump also, such has been pattern over several last FED releases.
Mike K.
Good trades, Mike. Nothing to complain about. I wish my results were close to yours. So you are not doing much today? no countertrend trades? Don’t you think we should have corrections?
I still have bunch of other trades on, but other than that, I’ll try short term trading, 5M or so. Nothing serious, though. Taking it easy and using this time to catch up with some work. Countertrends? Always possible, but since i don’t a plan, won’t try it outside something very short term, if that. waiting for the FED
Thank you.
Do you still have the short in EUR-GBP pending?
Yes, Andy. Order is still valid, even if it doesn’t happen right away.
[...] In CHF-JPY price moved under the minor support, but it was so closed to 100 SMA that I decided to wait until it fell below. That meant late entry at 87.07 and failry small target. Once again, objective seems small now, after the move, … View full post on CHF/JPY – Google Blog Search [...]
[...] decision today, expectation was for a relatively quiet day in currencies. Exception would have been farther deterioration of situation in Europe. And that’s what happened. Standard & Poor’s cut the debt rating of Spain, lowering it [...]
[...] [...]
[...] In CHF-JPY price moved under the minor support, but it was so closed to 100 SMA that I decided to wait until it fell below. That meant late entry at 87.07 and failry small target. Once again, objective seems small now, after the move, … View full post on CHF/JPY – Google Blog Search [...]
[...] $1.56 trillion, many times over that of Greece, Spain and Portugal combined. Which begs a question- will rating agencies start downgrading US debt, too? For all practical purposes it is not repayable already and only going to get worse. [...]
[...] fall from grace of the Euro, can be directly attributed to budget deficits of some member states. Credit rating agencies downgraded sovereign debt of few countries, citing risks in ability to repay it. So, currently, budgetary shortages appear [...]
[...] the Euro, can be directly attributed to budget deficits of some member states. Credit rating agencies downgraded sovereign debt of few countries, citing risks in ability to repay it. So, currently, budgetary [...]
[...] of 1.2150 in EUR-USD. Some could say that the Spanish downgrade was expected, simply a formality following actions against all other countries. Others claim that we had seen the worst for the Euro and that’s why it didn’t plunge [...]
[...] block. The agency cut that country’s rating by two grades at once, to A1, something that S&P did almost three months ago. Interesting that the two decisions are so far apart. One would expect rating agencies to come to [...]
[...] chopping block. The agency cut that country’s rating by two grades at once, to A1, something that S&P did almost three months ago. Interesting that the two decisions are so far apart. One would expect rating agencies to come to [...]
[...] The agency cut that country’s rating by two grades at once, to A1, something that S&P did almost three months ago. Interesting that the two decisions are so far apart. One would expect rating [...]