Currency markets have been jolted by one event this week. After months of speculations and vague threats, there finally was a direct intervention in the markets by a central bank. Surprisingly, though, it didn't come from Japan. It was Swiss National Bank which acted by selling Franc on the open market. The SNB said the Swiss Franc's strength represented an inappropriate tightening of monetary conditions as it battled against a sharp deterioration in Switzerland's economy.
"In view of this development, the SNB has decided to purchase foreign currency on the foreign exchange market to prevent any further appreciation of the Swiss franc against the euro," the central bank said. Some market observers see this move as setting a precedent and expect other central banks to follow, namely Bank of Japan. Those who doubt that these kinds of market action can be successful should take note. The speed and magnitude with which the Franc responded, dropping 3 per cent against the euro in a matter of minutes, also shows that if a central bank wants its currency to fall, it can deliver.
Intervention or not, our systematic trading goes on, with services entering orders every day. Last week produced mixed results, with one system flat, the other one showing good gains. Results are posted below, and a link is provided to see details. Also, we updated our complete results pages, including performance graphs.
(Sunday 03.15.2009)
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Here are the results for last week:
- Daily Pound made 304 pips ;
- Daily Euro gained 2 pips;
Follow the link on the right to view details.
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Last week's results.
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Our trade of the week from last update was a buy in GBP-USD. Set up was to go long at 1.4130. Order was filled early in the week, but the price turned against us, which resulted in a 100 pips loss. Couple days later we entered into a long trade again at 1.3804. This time our objective was reached for a 200 pips gain.
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For this week we will stay with trade involving British Pound. Ironically it is not because we expect it to be making news. We think Swiss Franc will remain in the spotlight enveloping the Euro. If efforts to weaken CHF continue, EUR is likely to follow. We don't know that, of course, so our trade is chosen on its own merit. Fore mentioned scenario would only be a bonus.
We are placing a sell order in EUR-GBP. After couple of week of bullish move, correction is very possible. We want to enter at 0.9160, target being 0.9060, or 100 pips.
We wish everybody great trading week!
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Once again we must stress that the trades highlighted here are only a small sample of our trades. If you have any comments or would like to obtain more information please contact us at info@spectrumforex.com .
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Risk disclaimer:
Substantial risk is involved. Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex markets. Don't trade with money you can't afford to lose. Nothing in our website shall be deemed a solicitation or an offer to Buy/Sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our site. Also, the past performance of any trading methodology is not necessarily indicative of futures results. Trading involves high risks and you can lose a lot of money.
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