FX Trading - Nothing Else Matters

Quick! While the markets' not watching! Who else wants a bailout?! Traders are so focused today, there's really nothing that can cause even a ripple of concern, is there? 

So, let me present to you King & Trichet, stars for the day:

MPC Chairman King (L), and ECB Prez Trichet (R)

And unless you've been meditating up there in the mountains, you would know by now what markets are expecting and such, and positioned yourself accordingly, or not. We've been stopped out of all remaining positions yesterday and so enter this day of reckoning with no concern. 

While we think EURUSD's risk lies to the downside, with traders pricing in and expecting just about all the ECB can deliver (short of a 50bps hike), it makes no sense to sell into such strength with no signs of a reversal.

And we would like to point out that unlike the ECB, the BOE has surprised markets before, most recently in '07 with a rate hike (of course, circumstances were very different back then). Also, while everyone's focused on interest rates, can they not tweak their Asset Purchase Target, currently at GBP 200 bn? They could hold rates steady in order not to rattle the fragile economy but still begin to normalise monetary policy with a bit of unwinding, don't you think?

So there, everyone stay safe and don't be a hero.

Peace