Thursday, April 24, 2008

Euro is being Abandoned! - IFCN Wk 20 -Thu- Equity: $780.67

The Euro is getting sold.  

The Euro took out the last two weeks trading action versus the dollar after a German IFO survey showed corporations' sentiment wasn't as positive as expected in April.

It made many of the holders of Euros less certain it would maintain its strength against all comers.

The weakening IFO data could open the possibility for cuts in the European interest rates, something that hasn't happened yet because they thought it might prove inflationary.

The big deal is this-- the bulk of Fed rate cuts have already been accomplished and the majority of ECB cuts are directly ahead.

And, with the Fed moving to a relatively neutral stance and a drop in jobless claims, the dollar is showing that the economy has hit a strength that it can sustain.

We likely just saw "the top" in the Euro for a while.

I've mentioned over previous weeks that too much negative news on the dollar has not resulted in new lows on the entire basket of currencies. Yes, the Euro has held up the best in recent times, but unrealistically so, likely due to biased reporting of business news.

The Eur/Usd, Usd/Chf, and Usd/Jpy FirstStrike trades have bit the dust. I didn't have much hope for them anyway, but taking the trades is what we do here.

The short Gbp/Usd and Gbp/Jpy are working nicely.

The following were our 5 weekly FirstStrike entries:
  • Eur/Usd: long @ 1.5883, stopped out @ 1.5823.
  • Gbp/Jpy: short @ 206.91, trade still in progress....
  • Gbp/Usd: short @ 1.9958, trade still in progress....
  • Usd/Chf: short @ 1.0120, stopped out @ 1.0180.
  • Usd/Jpy: short @ 103.31, stopped out @ 103.91.

Current equity level is $780.67.

Joel Rensink

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