I told you so....
Dear Friends/Fellow Traders,
As I noted before, the price action in the past 2 days was all overhyped market activity from participants who pay WAY too much attention to certain news leaks (without verification of its validity) and certain announcements. Today, we all witnessed a less-hawkish-than-expected FOMC statement brought the Dollar back down to where it started, with a slightly bearish sentiment on the Dollar. We will have to watch the Durable Goods and Jobless Claims data early in the morning tomorrow 8:30 ET to get an even clearer picture of where the Dollar is headed medium-term, but my bet is that it's down. In short, those who had Dollar Long positions were again in for a nasty surprise as most stops were run and fresh Dollar Short positions were taken throughout the market. Looking at the fundamentals of the US economy, I wouldn't bet anything on the Dollar staying strong in the immediate-term with the massive and growing trade-deficit slowing housing market.
Conversely, the British Pound looks very good, with a strong housing market and balanced inflation numbers, it's no wonder the Pound has always done so well against the other currencies even through volatile times. The pound has been a good buy lately, even more so than the Swiss Franc in my opinion. Don't get me wrong, the Swiss Franc is one of the most stable currencies in the world at the moment, with nearly a quarter of its currency backed by gold, it's one of the best long-term holding currencies in times of geopolitical uncertainty. For short-term and medium-term trading, however, you would probably benefit more from the British Pound.
As I write this, the GBP/JPY is trying to break out of its nearly one-month consolidation, just dying for a trending move towards 224 highs. I've had GBP/JPY long positions open for nearly two months now, down from 219's, enjoying capital gains and LOTS of carry trade interest. If it breaks through historical resistance at 223.84, then we can expect to see another move up good for at least 100 pips before stalling, and then I'll be enjoying even MORE capital gains. However optimistic the scenario is at the moment, however, I always plan for the worst and I have my stops in place somewhere near the mid 222's to protect my profits from a huge potential reversal move (It's entirely possible with the Japanese Yen so undervalued at the moment).
For now, the FOMC risk is behind us and we have a pretty good picture of where the US interest rates are headed in the near-term. The only market-movers in the next two days would be the Durable Goods, Jobless Claims, New Home Sales, GDP numbers, PCE numbers, and the U of Michigan Confidence numbers. Weak numbers for the majority of these would definitely put the ball back in the Dollar Bears' court.
Trade small, and trade safe!
Stay tuned!
To successful trading,
Dickens
As I noted before, the price action in the past 2 days was all overhyped market activity from participants who pay WAY too much attention to certain news leaks (without verification of its validity) and certain announcements. Today, we all witnessed a less-hawkish-than-expected FOMC statement brought the Dollar back down to where it started, with a slightly bearish sentiment on the Dollar. We will have to watch the Durable Goods and Jobless Claims data early in the morning tomorrow 8:30 ET to get an even clearer picture of where the Dollar is headed medium-term, but my bet is that it's down. In short, those who had Dollar Long positions were again in for a nasty surprise as most stops were run and fresh Dollar Short positions were taken throughout the market. Looking at the fundamentals of the US economy, I wouldn't bet anything on the Dollar staying strong in the immediate-term with the massive and growing trade-deficit slowing housing market.
Conversely, the British Pound looks very good, with a strong housing market and balanced inflation numbers, it's no wonder the Pound has always done so well against the other currencies even through volatile times. The pound has been a good buy lately, even more so than the Swiss Franc in my opinion. Don't get me wrong, the Swiss Franc is one of the most stable currencies in the world at the moment, with nearly a quarter of its currency backed by gold, it's one of the best long-term holding currencies in times of geopolitical uncertainty. For short-term and medium-term trading, however, you would probably benefit more from the British Pound.
As I write this, the GBP/JPY is trying to break out of its nearly one-month consolidation, just dying for a trending move towards 224 highs. I've had GBP/JPY long positions open for nearly two months now, down from 219's, enjoying capital gains and LOTS of carry trade interest. If it breaks through historical resistance at 223.84, then we can expect to see another move up good for at least 100 pips before stalling, and then I'll be enjoying even MORE capital gains. However optimistic the scenario is at the moment, however, I always plan for the worst and I have my stops in place somewhere near the mid 222's to protect my profits from a huge potential reversal move (It's entirely possible with the Japanese Yen so undervalued at the moment).
For now, the FOMC risk is behind us and we have a pretty good picture of where the US interest rates are headed in the near-term. The only market-movers in the next two days would be the Durable Goods, Jobless Claims, New Home Sales, GDP numbers, PCE numbers, and the U of Michigan Confidence numbers. Weak numbers for the majority of these would definitely put the ball back in the Dollar Bears' court.
Trade small, and trade safe!
Stay tuned!
To successful trading,
Dickens
posted by ForexDragon at 10:09 PM
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