EUR.USD

[Steve]

I do wonder if I was too hasty in closing my short at 15450, instead perhaps should have put a lower stop in as a better option?

When do the FX markets re-open, with easter moving around the world?

[arco]

LONDON - The euro showed no sign of cracking under the global macroeconomic pressure on Wednesday, with unexpectedly healthy German business climate data boosting the currency against the beleaguered U.S. dollar and the British pound. And with the European Central Bank predicting above-target inflation for most of 2008, the euro's rise could be a fixture for months to come.

The German Ifo business climate index showed a largely unexpected rise to 104.8 in March on Wednesday, up from 104.1, in February. The president of the Ifo institute said that companies were more optimistic about exports, despite the strong euro, and had clear plans to hire more workers. The Ifo index is a monthly index compiled by the Ifo Institute for Economic Research at the University of Munich.

Wednesday's bullish data pushed the euro up to $1.58, from $1.56, at the end of trading in Europe. The euro also gained against the pound sterling, up to 0.788 pounds, from 0.787 pounds. The pound was hurt by comments reportedly made by the Bank of England's chief economist, Charles Bean, who said that the British currency suffered downside risks from the size of Britain's current account deficit.




www.forbes.com

[Steve]

Trying to decide whether to go short again (with a stop just above the record-high) with the expectation that it is not going to make a newer high this time around.

[dumbass]

hi steve

i have a short on at the moment 5810 with stop loss set at 59 and a few

there is a nice wave count on hourly and a nice upper channel that has been hit

its certainly rallied up pretty strong but i expected as much

great low risk trade if this is a significant move but also a possibilty of being taken out with a new high

[dumbass]

stops to break even on this one bounced off lower channel line with a hammer

but ill still give it a chance

[peat]

Economic comment

IFOoled again
Dario Perkins (ABN Amro)

On Tuesday, I saw a strategist on CNBC confidently assert 'if the euro rises above US$1.60, the ECB is certain to cut interest rates'. Strangely, I can remember the same strategist claiming, some time ago, that a euro above US$1.40 would trigger rate cuts. Since then, the threshold for a rate reduction has increased incrementally, usually by US$0.05 at a time
(everyone prefers round numbers). US$1.40 became US$1.45, then US$1.50, then US$1.55, and now US$1.60. Yet, weirdly, the euro-area economy hasn't imploded (yet). In fact, yesterday's IFO survey unexpectedly strengthened again, disappointing those who
have been predicting a crash every month for the past six months. Equally distressing for some, French business-confidence also rose, returning to previous cyclical highs. This wasn't supposed to happen. So why is the strong euro apparently having so little impact on the European economy?
Obviously, we shouldn't exaggerate the importance of these two surveys. Other indicators,notably the PMIs, which have historically been be\tter correlated with GDP growth, suggest the economy has slowed more sharply. But equally, some caution is warranted in interpreting these data. The weakness in financial markets seems to be distorting the PMIs,
with the services survey deteriorating sharply every time equities have a bad month (particularly if the weakness occurs at the end of the month, when many of the responses are collected). So while the IFO/INSEE surveys are probably overstating growth, the PMIs might be understating it. As always, the truth probably lies somewhere in the middle: the
euro-area economy has slowed, but not dramatically. This is still remarkable given the US economy is probably now in recession (there, I've finally said it) and the euro continues to reach new highs. The euro isn't killing the economy because, in real trade-weighted terms, it isn't hugely
overvalued. The dollar's broad-based decline has limited its impact on the euro's TWI. The ECB prefers to focus on this broad measure of the currency, rather than simple bilateral exchange rates. Yet, there are important differences within the euro area because costs and
prices have diverged sharply in recent years. German companies have kept inflation low and, as a result, their real exchange rate is probably still a little undervalued. In this context, the booming IFO isn't so surprising. Germany is also benefiting from its favourable export
composition; it exports higher value-added goods to rapidly growing markets (notably Asia and eastern Europe). In contrast, Italy, Ireland and Spain have significantly overvalued real exchange rates and are struggling. France is also an interesting case; despite the complaints from politicians, the economy's real exchange rate is probably close to fair value.
It seems people just don't want to buy French-made goods anymore.
The ECB can do nothing to prevent these dynamics within the euro area. In fact, it probably feels it can do little about the strong euro per se. The ECB does not target the exchange rate. It has one target (inflation) and one instrument (interest rates). Given the recent surge in inflation and the likelihood inflation stays above its objective in 2009, some ECB members
(coincidently, those with a German accent) probably feel the rising euro is helpful. It should limit the pass-through from rapidly rising commodity prices. Of course, if the euro increases far enough to lower the ECB's inflation forecast sufficiently, then rate cuts would then become an option. But we'll need to watch the economic data, not the euro-dollar rate, to judge this point. Is currency intervention possible? If the euro rises rapidly, Mr Trichet et al will probably resort to verbal intervention. But they are unlikely to go beyond that. Europe has an embarrassing history of failed currency interventions and given the lack of support
from the Americans, they are unlikely to attempt such action again.

[peat]

evil stop hunt last night before the down move....

[Steve]

evil stop hunt last night before the down move....

Hope that you are not suggesting that it was the market, or even your FX broker?!

Do you think that the top is locked in for now? I'm thinking so, but that could give it the kiss of death and go higher to prove me wrong!

[peat]

Just saying that a fair few shorts would have been gobbled. Not mine tho. I've been range trading both directions but had closed for the night.
I personally still give credence to Max's notion of 1.7 but it doesnt fit easily with EW counts.
But given its gone up 1200 pips in a couple of months its reasonable to assume a decent sized correction.

Ichimoku cloud support is way down at 1.5 but being a lagging average thats climbing rapidly day by day and the cloud size expands a lot during mid April spreading between 1.52 and 1.55. So if it goes below those levels it will probably be attracted back to them even if only as resistance.

[GeorgeW]

European Banks Move To Ease Money Mkts
Leading European central banks again swooped into money markets to ease liquidity fears as banks wrapped up their first-quarter accounts.

Interest rates in euro-zone money market, in which banks lend to each other for short-term financing needs, have shot up as banks scrambled for funds to balance their books.

The European Central early Monday pumped extra funds into the banking system, allocating EUR15 billion in one-day funds via a liquidity-providing quick tender. In response, Euro-zone interbank overnight rates eased back to 4.04%-4.19%.