OK, it was Martin Luther King’s
birthday yesterday. The NY and Chicago sessions were non-existent and most
others would have taken their lead from them, making for thin trading
throughout the day. But the EURUSD pair moved to the upside.
We were not participating in the live
market because of the MLK holiday, but we did run the Mandelbrot algorithmic
routine on our “sandbox” system, which we use for research and development. The
routine took on a long trade (expecting the pair to rise) in the Single Currency,
which was a successful one (see chart above).
The pair has, however, fallen back
overnight to start the current session at a level that is pretty much where it
was at the start of the trade illustrated. All await the words of Senor Mario
Draghi on this coming Thursday.
Is
the SNB back in the Forex market?
After causing mayhem in the global Foreign
Exchange markets by announcing the abandonment of the peg to the Euro that it
had established for the Swiss franc, one could be forgiven for thinking that
the Swiss National Bank had made something of a miscalculation in terms of its
projections for the outcome of its actions. Its governors seemed to have placed
an overreliance on the new negative deposit rates to maintain stability in the
value of the Swiss unit against the Euro, the currency of its biggest trading
partner. If 1.20 to the Euro was bad for exports, then near parity, where it
has hovered for the last couple of trading days, must be an awful lot worse.
And there is some evidence to suggest
that even that level of close to parity is somewhat contrived. The SNB never
said it was going to stop intervening in the Forex markets. Some observers are
of the opinion that the SNB is still the only real counterparty for the sale of
Euros against the Swissie, and that it is this fact that keeps the pair from
falling even further (a fall in EURCHF means a stronger franc). That leaves
exactly the same risks in place for anyone who contemplates a position in
EURCHF, as were there prior to last Thursday.
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