FX Trading - Wake Up

We sold off our GBPUSD position at breakeven and change, and our EURUSD short was taken out for a small loss. While we're still in the range as observed in this earlier post, we were uncomfortable with our entry levels and decided not to stay in this uncertain market.

AUDUSD reached a new high on Wednesday , negating what could have been a shooting star formation on the dailies, and we still have not mentioned the star performer this week - USDJPY! This one deserves a chart:

USDJPY - The Business

No doubt the main contributor to the rise in the $index so far this week, USDJPY has climbed comfortably up to pre-disaster ranges (amidst all those radiation fears), and we may just consider longs if the support level holds. But trading wise, we're staying cautious with NFP's due out on Friday.

As we reach month/quarter end, it seems like all and sundry are 'stocking' up on equities, not to be left out in the race to the top. Looks like if it weren't for the fundamental crosswinds in the EU and UK keeping those guys in check, the whole market would have become one big monument to risk.

After a few Fed presidents and ECB's Trichet revealed their hawkish beaks, today it's been the turn of BOE officials. These guys all sound pretty one-sided. Don't you miss the days of Greenspan when you realise you're not quite sure just what he was saying? He's talking again today, but with so much more clarity. I'll end with an excerpt from an old classic, a speech by David Miles in October 2010, when we were all recovering from the Grecian shock. A member of the BOE's Monetary Policy Committee, he gave everyone a lesson on hedging. Brilliant.

"It is a near certainty that four or five years from now the monetary policy that is set over the next year will, with the benefit of hindsight , look very likely to have been set too loose or too tight...If we tighten too quickly it will be the story of “myopic MPC learnt nothing from events of 2008”; if growth and inflation look stronger than I now think is the most likely outcome it will be “MPC completely failed to see what was obvious to nearly everyone – that inflation was out of control”. But the only sensible thing to do is to look at all the evidence we have today, and balance the risks.”

...and balance he did.....

Peace