For all that
there was a surge in the EURUSD on the eventual turnout of the ECB monetary
policy statement and press conference last week, when the president, Mario
Draghi “failed to produce the big bazooka” that the market had promised itself,
and given that a large part of said market was seriously wrong-footed and was
forced to buy the Single Currency at almost any price in order to close out massive
short positions, the tendency for this pair is still to the downside.
The gap down
at the start of this week’s Asian session, at 10:00 GMT last evening (see
chart), is a technical indicator of this. The gap will no doubt be filled
(price will go back up to the top of the gap) at some stage today, but the medium-to-long
term move is still down, and parity is still in prospect.
Last week,
though, was a perfect example of the desirability of having a market neutral
trading system, such as the one based on the Mandelbrot algorithmic trading routine
is, where one can be indifferent as to the direction that the market will take
on any given day.
U.S. Non-Farm Payrolls put the last
brick in place for rate rises
The last
brick in the wall of persuasion for the Federal Reserve to start raising
interest rates at its December meeting (18th) has been slotted into
place with the plus-200k (211,000) result in last Friday’s Non-Farm Payrolls
report. There will no doubt be more excitement when it is announced, even
though it has been so well telegraphed, but that is the Forex market.
Attention
now will inevitably turn to the possible frequency and size of interest rate
increases in the U.S., and to speculation about how long it will take the Bank
of England to follow its counterpart on the other side of the Atlantic.
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