FX Trading - Never A Dull Moment

We're out of EURUSD, after the pair turned around just shy of 1.4250 and headed lower. We've had a good ride and now wait to see what's coming next. Today we have the Portuguese parliament voting on their austerity measures, with the Prime Minister threatening to quit if it does not go through, which is what punters are expecting. So all the old European debt fears are coming into fore again just ahead of the EU summit on Thursday. Yippee.

We're long GBPUSD after Tuesday's strong UK CPI numbers, but today the UK budget comes into focus, ahead of which we have the BOE minutes. An interesting day expected, and we may adjust our 1.6285 stop before all the excitement. Here's a weekly chart to show why we expect a higher GBP:

GBPUSD looking strong

Our EURGBP position comes under threat as the pair closes below trendline support on Tuesday. Nevertheless, we maintain our stop under last week's low; after which we will re-assess the market.

Failed break higher in EURGBP

USDJPY is starting to look heavy as the effect of intervention fades, and even a close above 81.00 is looking increasingly difficult. We are watching closely for any opportunities here.

USDJPY, heavy

A glance at positions on a couple of online brokers' sites show traders heavily short EUR and GBP against USD, which increases the likelihood of a squeeze. But who said retail's mostly wrong? Well, be careful out there, keep your stops in place and think before you pull the trigger.

Other Interesting Market Related News

Remember the strong recovery in the Nikkei after the huge fall last Tuesday? Here's a chart to jog your memory:

BOJ to the Rescue!

Well, guess what? It's the amazing BOJ propping up the market! Apparently the iShares MSCI Japan Index Fund traded on the NYSE was home to US$692 million in inflows on Tuesday, mostly believed to be from the BOJ. Well, if you pumped money into the ETF, the fund would have to buy shares in Japan when trading began the next day, and the MSCI and Nikkei indices share many of the same component stocks. 

Support for the Japanese stock market is especially important after the earthquake. Japan's top 3 lenders reportedly hold over US$ 1trillion worth of Japanese shares, and a huge plunge in the market would erode their capital base and cause them to tighten their lending. Well, the government would hate to see that as money is desperately needed to fund the upcoming reconstruction efforts.

In other news, Libya's Gaddafi * gives another one of his brilliant speeches, unrest escalates in Syria, Yemen, and...wait...why's there so little news out of Bahrain, full of protesters and Saudi troops battling each other? Makes you wonder, doesn't it.

Ok, let's see how the trading day turns out.

Peace

* “In the short term, we’ll beat them, in the long term, we’ll beat them,” Gaddafi said. Well, isn't that what we  all try to do in the market :)