The seemingly never ending Greek saga reached a  milestone today, when government outlined new fiscal measures required to meet conditions of bailout by EU and IMF. All kinds of spending cuts are proposed, many of them sure to anger already irate unions and civil service sector. In return, Greece would receive as much as $160 billion over next three years. All of this is still conditional, since Germany is yet to approve its share of the money. Right now general view is that all details will be worked out this week. Question is, will it calm the markets?

In the mean time, Swiss National bank decided to rattle a sabre again. After softening its stance on strong Franc few months ago, SNB is once again unhappy with levels of the currency. Philipp Hildebrand warned about CHF role as a safe haven in wake of European crisis, citing deflationary risks to Swiss economy. He promised decisive action to combat excessive Franc appreciation. Timing of this is a little strange, considering most recent rate of EUR-CHF. For last couple of weeks this pair has been locked within 40 pips range, hardly anything extraordinary. Regardless, threat of the intervention is on the table once again.

SNB is not the only central bank making news. Bank of Canada surprised many market observers with comments on interest rates. Not that long ago BoC indicated readiness to start increasing interest rates. This resulted in a good size appreciation of Canadian Dollar. Few days ago officials suggested that rate hike is not set in stone, causing considerable confusion. Once again BoC policy is uncertain, at best, and CAD started to lose ground. As far as I’m concerned, this was welcome news, given my trade in GBP-CAD.

Trade was initiated at 1.5565, on a breakout using 4H chart. It had taken place few days before BoC policy meeting so from the start I anticipated wild swings, including adverse movement. Trade was given plenty of “breathing room”. As a matter of fact additional buy order was set at 1.5250. Unfortunately, market missed that entry, twice. It is still valid. Original trade is close to break even and target of 1.6000 stands. I might even double up on it above 1.5650. There is a small problem here- the longer price moves in sideways fashion, the higher probability of trend resuming original direction, down in this case. So, I’d like to see decisive upside push within next 1-2 weeks. Otherwise trade will be closed.

On Friday many currency crosses closed at or near daily extremes. This might bring Sunday evening set up, as I call it. Virtually all Canadian Dollar pairs, as well as most of Yen crosses should be watched. Also, gaps are always possible, something to look for. Probably too early just yet, but all commodity dollars look ready to be sold. They will likely dominate this blog over next few days, just a matter of finding good entries. Should be a busy Forex trading week.

Mike K.