After much delay, the Treasury Department has finally released its report on world currencies. It was originally scheduled for disclosure to congress on April 15, but secretary Geithner decided to withhold it, until after number of high level talks with Chinese officials. Many w0ndered what explosive findings were in it, since it was handled with such secrecy. Well, the cat is out of the bag and the big news is… Chinese Yuan is undervalued. Wow, Mr. Geithner, what a find! This earth shaking discovery should be compared to splitting the atom. My guess is that the report was not even ready in April, hence the delay. And China was not labeled as a currency manipulator. Some members of congress are already screaming for the Senate Banking Committee to hold a hearing on the matter. Before this thing is sorted out, the Treasury will be releasing next currency report, unless, of course it is delayed again.

The European Central bank and the Bank of England held their monetary policy meetings today. Not much to comment on either one, really. No changes in interest rates. And that’s that. Perhaps the most interesting event of the day took place early on Thursday, when employment numbers for June were released in Australia. The estimate for 15K new jobs created, but was eclipsed by almost 50K jobs created. As it seems to be the norm this year, announcement produced strong response from the markets, pushing the Aussie higher once more.

Earlier in the week I had been looking for trades on the short side, with a sell order remaining 0.8310. It didn’t happen and once the AUD-USD reached the previous resistance at 0.8565 it was clearly time to buy on a breakout. Unfortunately, it happened relatively shortly before the jobs report and I passed on all Aussie pairs. This turned to be a mistake, but there will be other trades so no big deal.

It was not just the AUD, but other pairs, especially the Yen crosses, also built these easily discernible reversal patterns. I decided to try the CAD-JPY with an entry at 83.60. Very straightforward trade, simple breakout with 100 pips target, which was reached, even if without much room for error. The AUD-USD is still on watch for possible short trades.

Right now the intermediate term chart of CAD-CHF is also painting a reversal pattern. If a breakout happens, I want to be in at 1.0130, with 110 pips objective. If the breakout fails immediately, within 1-2 candles, it will be time to ditch the trade. Most other CHF pairs are also on a buy list on Swissy weakness. Outside of that, short term trades in EUR-JPY, using 5-15M charts, depending on how the action unfolds.

Mike K.