Another round of rate cuts took place around the world last week. FED slashed rate on USD to 1%, China' dropped to 6.66%. These actions followed long list of other central banks doing the same. On Thursday Bank of Japan also lowered its benchmark by 0.2% to 0.3%. The decision by the central bank highlights the way growth prospects have deteriorated sharply for the world's second largest economy in just the past few weeks as the yen touched 13-year highs against the US dollar and Japanese shares plunged to a 26-year low. The BoJ had been holding off from reducing rates in spite of coordinated and successive cuts by other central banks this month, saying Japan's rates were low enough.
All these rate cuts failed to cause any movements in currencies. Since they were widely expected, there was no noticeable reaction in either JPY or USD. First part of the week swings were still wild, but volatility diminished on last 2 days. This might indicate more orderly movements ahead.
Our services finished October with losses. "Daily Pound" had the worst month in a long time, but performance graph seems to stabilize and we are optimistic that the rest of the year will be much better.
(Sunday 11.02.2008)
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Here are the results for last week:
- Daily Pound made 19 pips ;
- Daily Euro gained 139 pips;
Follow the link on the right to view details.
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Last week's results.
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Last week we suggested a trade in GBP-CHF. The entry was set for 1.8800, with a 300 pips target or 1.9100. Price drifted sideways and to the downside for a few days, but eventually order was filled. We continue to hold this trade.
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Japanese Yen has enjoyed fantastic run over last few weeks. Imbalance corrected by years of shorting JPY and buying other currencies for the carry trade was finally corrected. It happened in very dramatic fashion. All Yen pairs fell to multi year low. One of the most dramatic plunges happened in AUD-JPY which fell to an all time low.
Early this week all JPY crosses recovered some ground, but then they stalled for last couple of days, as if waiting for more news to come out and decide which way to go.
We are using this small congestion area to place a straddle trade.
Buy order is placed at 68.20, with a target of 71.20.
Sell order is placed at 63.00, with a target of 60.00.
Now that the price movement has slowed down, it is possible the this congestion area will hold for some day so we expect this set up to take 1-2 weeks to complete.
Have a 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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