Turned out that the emergency interest rates cut by the Swiss National was not the only big news of the week. The very next day, the Bank of Japan intervened to weaken the Yen. Results were about the same as during initial intervention in March - the USD-JPY rallied about 300 pips, form 77.00 or so to above 80.00, but then gradually lost ground and closed the week at 78.41. We could call it a failure, however, in March the real advance did not start until a week or so after the intervention, so we will have to watch the 80.20 level carefully.
Then late on Friday, hours after markets closed, the S&P downgraded US debt. The agency cut the rating from AAA to AA+ is a first for the United States since it was granted an AAA rating in 1917. S&P warned about a downgrade as far back as April, but the decision came four days after debate over raising the nation’s debt ceiling ended in a compromise. According to S&P, the cuts mentioned in the agreement did not go far enough. The other main rating agencies only gave the US a negative outlook, but retain their respective top grades. More about the downgrade and its possible implications in the next post.
I was very busy with other things keeping trading to minimum. In principle I focused only on couple of currency pair. One of them did what I expected, the other one did not. Good news first. The NZD-USD started to drop from its all time high, and after a short early in the week I looked for more selling opportunities. With entry at 0.8570, I caught the bulk of the sell off, closing half position for 88 pips and then closing the balance at 0.8329. Now we have to wait for the dust to settle, before a decision of the further course of action, but I would not be surprised if there is more downside here, maybe much more.
The bad news was the USD-CHF. My buy order at 0.7791 was triggered, but the price turned south immediately. I got out for 76 pips loss and left it alone for now. This subject will resurface next week when I am significantly more active. Have a great weekend!
Mike K.
[...] fxmadness.com [...]
[...] as markets are getting ready to open after the weekend. Following volatility of last week and the S&P downgrade of US debt rating, many are bracing for extreme conditions, perhaps even a repeat of 2008 panic. Trying to prevent [...]
[...] as markets are getting ready to open after the weekend. Following volatility of last week and the S&P downgrade of US debt rating, many are bracing for extreme conditions, perhaps even a repeat of 2008 panic. Trying to prevent [...]
[...] as markets are getting ready to open after the weekend. Following volatility of last week and the S&P downgrade of US debt rating, many are bracing for extreme conditions, perhaps even a repeat of 2008 panic. Trying to prevent [...]
[...] Standard & Poor’s cut its credit rating on the United States to AA-plus from AAA back in August, the agency was vilified and the decision called “absurd” among other names. Now [...]