Later part of the week was dominated by talk about Greek election. All kinds of fear mongering scenarios were presented. However, risk currencies held steady partly due to report that big central banks across the world are preparing a coordinated action to provide liquidity after Greek elections. While the European Central Bank refused to comment on the issue, it seems that financial authorities fear a win by Syriza party. This faction is strongly anti-austerity and their win could lead to annulment of previous agreements with Greece, and ultimately an exit from the Euro zone. In this context, “liquidity” means intervention in the Euro, in case the common currency is dumped by traders in wholesale quantities.

We shall see what happens on this account tomorrow and beyond, but currencies showed resilience in spite of the implied doom and gloom scenario. The New Zealand Dollar in particular has been getting stronger. New Zealand Finance Minister Bill English expressed concerns about rising NZD. While the Kiwi is off its recent highs, it has been recovering faster than other currencies. Mr. English blamed demand from Asian central banks for NZ government bonds on this strength, which would push the currency into overvalued territory. He expects this trend to continue for the near future, with the figure of 0.80 marking the “overvalued” territory.

Earlier in the week, I was looking at the NZD-JPY, with intentions of going long. Things did not work out as planned, even though that pair built a good breakout base at around 0.62. However, possible trades had to be abandoned on the account of central bank meeting from both New Zealand and Japan. The NZD-USD also tried to move higher, with strong resistance at 0.7785. Here the first breakout came few hours before the RBNZ rate decision, but the next one did not have such complications. With entry at 0.7812, a long trade brought 40 pips, safely out before the weekend.

Another currency pair on my watch list for an upside breakout was the GBP-CHF. Entry was planned for 1.4920, with objective of 100 pips. Once the breakout came, the price quickly ran up to 1.4986, before pulling back to 1.4946. That level looked like a minor low for several hours, but it did not hold and the uptrend was over. I closed the trade for a small gain of 21 pips. The GBP-CHF became significantly more volatile later in the week, but I stayed away from it. Have a great weekend!

Mike K.