Quote of the day: “Lack of money is no obstacle. Lack of an idea is an obstacle.” ~ Ken Hakuta
Good morning. The euro pulled back yesterday against the US dollar and some of its major counterparts such as the Japanese yen after Sarkozy – Merkel talk. Equity markets also fell after Sarkozy said that increasing the euro-zone fund’s size to bail out weaker countries wasn’t planned. However, they recovered later and the futures indices are nearing yesterday’s open at time of writing, so the whole downward move is likely corrective in nature. All eyes are still on the Swiss franc after the SNB took action recently to stop the CHF from appreciating further and so far it worked, due to speculation that the SNB may soon be setting a peg to the euro. The market is waiting for the Swiss government meeting today. Another news coming from Switzerland this morning is that the government will unveil a 1.5 billion Swiss franc package to help tourism and export sectors, that have been hurt by the Swiss franc’s strength. Well, one should wonder what’s next in case SNB and the Swiss government do not set a peg – in that case, expect the CHF pairs to switch direction in a violent manner – EURCHF probably targeting 1.08-1.11 where short-term support is now formed. Let’s take a look at some charts:
EURCHF
I am bullish on EURCHF and other crosses (against CHF) but am currently waiting for the market reaction to SNB and government’s decisions/announcements
Euro Vs Swiss franc Weekly Chart 8-17-2011
and the lower time frame chart (240-min)
Euro Vs Swiss franc 4hrs Chart 8-17-2011
CHFJPY
The trendline support highlighted in my report yesterday was breached, therefore the reversal candle was a false signal and it was best to sell on the break below support. Next support stands around 94
Swiss franc Vs Japanese yen Daily Chart 8-17-2011
GBPUSD
Cable is performing very well these days and managed to climb back into recent top side, after the fake break below the consolidation range. Keep an eye on this level as there could be a breakout soon
British Pound Vs US Dollar Daily Chart 8-17-2011
EURAUD
All recovery attempts in the last few days, since breaking below 1.38, have been short-lived. We’re probably going to see more downside action towards 1.35 in the coming days.
Euro Vs Australian Dollar Daily Chart 8-17-2011
EURUSD
We are still into the consolidation range and there are several resistance layers starting at 1.4450. It’s probably best to wait some more – personally I don’t see any trade opportunity right now.
Euro Vs US Dollar Daily Chart 8-17-2011
This is all for now, have a great day
"Swiss government do not set a peg"
I am amazed that anybody actually believed (and it seems many did) that the Swiss are pegging their currency to the EUR. There is so much scared money denominated in EUR and USD looking desperately for a way out. Where else to go than CHF Gold and perhaps JPY.
If you (anybody) were down to your last 1000 Dollars who would you give it to: Euroland, Obamaland, Switzerland, Goldland? (Singapore/Rogers is also an option)?
Cerberus
PS your website/blog: really like what you, thanks for sharing your ideas, knowledge and wisdom
Hi Cerberus and thanks for your comment
I was just thinking today, after scrolling through feeds, that more and more articles are debating the safe haven topic, now that CHF and JPY are quite fragile due to interventions on the tables
In my opinion, Gold is still the best bet for now…