Interesting couple of days in financial markets, including currencies. After the early part of the week, when things were, well, boring, markets sprang to life on Thursday. The catalyst this time was the Initial Jobless Claims, which is a little strange. While this report always creates a lot fuss and lip service, it rarely creates the kind of response like yesterday. After all, the NFP is normally more important, probably because of its monthly schedule, as opposed to weekly frequency of initial claims. But this illustrates how important the employment data has become, a true driver of the markets.

The numbers of initial claims were above forecasts, at 500K, a level last reached in November 2009. Later on discussions erupted whether this data is  not skewed by the laid off census workers or people whose benefits had previously expired, but now were able to refile. However, by this time the damage was done. Once again money flowed into the “safe havens” at the expense of the Euro and the commodity currencies. The real test of these of these numbers will come at the next NFP report, which perhaps will clarify things a bit. Perhaps, because unfortunately, with frequent revisions of older data it is hard to trust these figures as they are released.

My last post discussed possible trades in GBP-AUD and the EUR-CAD. The Pound-Aussie trade was updated in the brief post on Tuesday. It was essentially a straddle set up, looking for a breakout either way out of range on 4H chart of this pair. In a slightly surprising move, the price plummeted on the strength of AUD.

Just like mentioned in the brief, the trade was closed late on Tuesday, once things settled down for the day. My objective was not reached and I simply decided to pocket the gains, which came to 53 pips. Since then the GBP-AUD rebounded sharply, coming close to the upper range of the congestion zone, or 1.75 area, before settling lower for the weekend. The buy order for an upside breakout is still valid.

Another trade from the same postdid not materialize. The EUR-CAD touche the previous high, but failed to break it and trigger the buy order. What followed was a steep drop. Even though I was still looking for weakness in the Loonie, no action was taken here when it eventually came. Did not like the entries on this chart and let it go, focusing on CAD-JPY instead.

This trade was taken using hourly chart but the objective is better visible on the intermediate term graph. Once the trade was intiated on the break through a minor low (entry at 82.45), target was just above the low of 81.06, or 81.15 to precise. Price indeed came to 81.15, but on the bid, thus filling my take profit, so the trade was closed when the CAD-JPY started to rebound, at 81.37. Some bad luck, but 108 pips in profit is respectable, too. Have a great weekend! 

Mike K.