Russian president Medvedev would like to the Ruble as a… world reserve currency. In a speech given yesterday he suggested that the world needs as many as five or six reserve currencies and the Russian Ruble should be one of them. Russia and China are discussing how to develop more options in this area. He would also like to see Moscow becoming a global financial hub. “Only three, five years ago it seemed like a fantasy”, Medvedev said “Now we are seriously discussing it.”

Well, it was a lunacy five years ago, a fantasy now and will be at best questionable ten years from now. A country which defaulted on its debt just 12 years ago, can not seriously entertain a thought of its currency playing a role of global reserve option. The size of Russian financial markets would have to grow by at least 10 times before the necessary liquidity will only start to emerge. Let’s no forget the political stability factor, which in Russia simply can not be trusted. Not yet at least. While there is no question about a need for another legitimate option to the Dollar, the Ruble is not and will not be one any time soon.

As suggested yesterday, no big moves happened so it was more short term trading. In the EUR-JPY 15M chart was used. With my bias to the downside, I was looking only for short trades, unless this cross was to break outside the support/resistance discussed in last post. That didn’t happen and only one sell took place. With entry at 112.36 and target at 112.00, this trade brought 36 pips. At least it worked.

One loose end left to tie up from the trades covered here this week. I wanted to buy GBP-CAD on a move above previous high. It finally happened yesterday, barely, at 1.5277. Early today price moved sharply in my direction, but reversed even faster, creating bearish engulfing line. It was time to get out, especially before the weekend. I still gave it another 20 minutes or so, but closed it for a loss of 81 pips. Have a great weekend!

Mike K.