G-7 INTERVENTION

In an emergency conferce call today, the G-7 Finance Ministers agreed to intervene in the currency market to stabalize the Japanese YEN.
As the Asia market opened, the YEN fell across the board 3% sending the USD/JPY to 81.45 in 15 minutes. According to Japanese officials, as each major market opens, they will intervene to sell YEN.
“In response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the U.S., the U.K., Canada, and the European Central Bank will join with Japan, on March 18, 2011, in concerted intervention in exchange markets,” the G-7 said today in a statement.

YEN SOARS

As fears of a nuclear meltdown gripped markets, and as the US market was just about to close, an explosion occurred in the currency market. The Japanese Yen broke through the 80 YEN level like a hot knife though butter. Twenty minutes later, the YEN had appreciated 5%, soaring to an all time high against the US Dollar, registering 76.30.

BOE holds rates steady. Pound falls hard

Today the Bank of England refused to raise the overnight lending rate above the 0.5% level that it has held since March 2009. Markets were looking for the possibility of a hike as inflation continues to grow in the island nation reaching 4.0% last month.
The bank “officially” targets 2.0% as the acceptable rate, however Govenor King insists that the increase in prices are mainly due to petroleum and will be only temporary.
However, recent Mideast unrest may force the Govenor’s hand as oil and most all commodities continue to push higher on a daily basis.
Traders will be eagerly watching the UK inflation numbers, and any signifigant rise above 4.0% will lead to a sharp rise in the value of the Pound in anticipation of a future rate hike.

US LAbor Market Grows 197K

The US Deptartment of Labor reported that the US economy grew 197K jobs last month. Also revisions to the two prior months saw an additional 52K added.
The Dollar has seen some benefits from this figure and is likely to get a boost into early next week. Still, with the ECB bombshell yesterday, the Dollar’s party may be limited and traders may just use this as an opportunity to reset positions against the Greenback vs. the EURO.
The Aussie Dollar broke below the 1.01 level on the back of the NFP and Dovish comments from the RBA holding rates steady earlier this week.
All in all, this is great news for the world economy as the largest participant seems healthy and chugging along, Europe, led by Germany, is growing. And of course, China continues to roar forward at amazing 8% plus rate.

US economy set for large job gains

For the first time since 2008, and after nearly 8 million Americans lost their jobs, the US economy is poised to show strong job growth for the calendar month February. We have been watching this upcoming event for several weeks noting the weekly jobless claims are falling below the critical 400K threshold and holding.
A figure north of 300K would be no surprise but certainly a figure over 200K is in the cards.
Look for the Swissy and the YEN to give up the most ground against the Dollar if indeed a strong number is registered.

Trichet drops bombshell

Nuance is the norm for Central Bankers but that was abandoned today for an unusually clear and bold statemnt from the ECB.
The President of the ECB, John Claude Trichet, in his monthly press conference stated :”An increase in the interest rate at the next meeting is possible”. This direct comment sent the EURO sailing against alll the currencies and saw the Dollar give an immediate 125 pips.
These types of statements come rarely, if at all, and should be seen as golden opportunities for traders to get in on a likely new trend higher in the EURO.
Against the Dollar, we could easily see the 2010 barrier of 1.43 broken in the coming month. Remember, markets price in these things well before the actual event, so now is the time to go long the EURO.

Dollar looks vulnerable to major breakout

Its Monday 5:00pm EST and the Dollar is barley holding onto several important levels.
First, the EURO is trading just above 1.38, only 40 pips from a new 2011 high against the Greenback.
Next, the Pound is just 20 pips below the 2011 high of 1.6279 set the third day of this month.
Aussie is 60 pips from a new 2011 high.
The list goes on….
The important point here is that several majors are lining up at the same time to do the same thing against the world’s reserve currency. If the Dollar breaks tomorrow, it will likely signal a fresh new leg of weakness across the board. These are the times we traders love when all signs point one way. So get your best breakout strategy ready as it may be needed tomorrow. Happy trading!

2008 again?

Crude Oil slams through $100 a barrel and keeps surging each day now. Oil rich countries in the Middle East are fearing local uprising and the unseating of long term leadears, the latest of which is Libya. Markets are fearing a dissruption of oil and sending the price paid now through the roof. Sound famailiar? Think summer of 2008.
Then we saw oil nearly hit $150 and the next thing we knew, we had a global recession.
Keep an eye out for this potential (although let’s all hope it does not happen), as it will surely give the US Dollar a huge inflow of safehaven money looking for safetly in the face of a collapse.
It may be a good time to study charts from 2008-2009 just to be prepared

USD/CHF nearing range support

The Swissy is approaching the .93 barrier that has been support since 12/31/2010. Each bounce off this well defined area has given at least 400 pips. An entry order to go long around .9310 and a stop at .9250 and a limit of .9490 gives a great opportunity to trade this pair. MACD is showing divergence on the Daily chart also.
The flip side is that the Swissy acts as a safehaven currency during geopolitical unrest which is what we have now with the recent Egypyt unheviel and now Libya in the balance, so that should be considered.
If this trade executes and turns positive, look to keep a tight stop and a eye on the news out of Libya

USD/YEN Trading Opportunity

As the USD/YEN makes its way to test the recent range top of 84.50, I see an opportunity to trade with the two week trend established with the February 4th low of 81.09.

Also Fundametals are against the YEN currently and the range may indeed give way to a much larger move up to the 88.00 level.

Finally seasonal trends tend to see the YEN weaken in the first half of the year.

So to start this trade, here is a 2 to 1 risk to reward trade that may develop into something much more

BUY USD/YEN 83.35 STOP 82.80 LIMIT 84.40