Friday, 28 October 2011

FOREX market, why u so mean ?

Trading on the Foreign exchange market has been a bumpy ride, and the highest possibility is that it will get even bumpier. Most of the currency pairs surprised investors some way or the other: the EUR/CHF Swiss Bank intervention, the EUR/USD sharp drop then rebound on  EFSF news, the USD/JPY fat finger and the expected Japanese easing, the USD/HUF breakout of its channel and imminent retest of channel resistance, etc. It's been a looong month.

Swissie goes wild

On the historical day of 6 September 2011, the Swiss National Bank has unleashed its ultimate weapon against "currency speculators". It announced that the Swiss Franc (CHF) would be pegged against the Euro at the rate of 1.2 .The move triggered a wave of stop losses for the ones long CHF (most of the smart money), which previously traded at 1.1026. Reportedly the biggest loser was the trading desk of the biggest Swiss bank: UBS, which lost $1.1 billion dollar on this trade. Of course it was reported as rouge trading and the culprit shall be swiftly prosecuted.

I wouldn't really suggest going short on this currency pair, as there may be more bold moves coming from the SNB, but a sell limit placed at 1.198 would be very well in place. Remember you are not Soros to have the firepower and the leverage to fight a national bank (we're trying here to scratch the surface).

The ever-appreciating Yen

The Japanese currency has been increasing in price with or without the frequent market interventions of the BOJ. The Yen is trading now at 75.83 and is looking to break-out the 75.7 support level as Japanese officials have declared that they would like to refrain themselves from Yen market operations to keep their options open. From Bloomberg:

Japanese Finance Minister Jun Azumi reiterated today that he will take “bold” action against the strong yen if needed.  The U.S. currency was set for a five-day loss against all its major peers amid the prospect of further monetary easing.
“We can see the Japanese authorities would like to refrain from intervention as long as possible to keep their options open,” said Koji Takeuchi, a senior economist at Mizuho Research Institute Ltd. in Tokyo. “Timing is important.”
BOJ is probably waiting for a better level to chip in and flood the markets with some more cheap Yen.

The Forint - risk off 

The USD/HUF has been trading quietly in slightly upward channel for quite a few months before gaining momentum and breaking the upper boundary. During the next few days it will try to push lower than the 209 level, and if successful it will retest the 195-196 area.

1 comment:

  1. Good work…unique site and interesting too… keep it up…looking forward for more updates.