Lately, I’ve been talking about the dollar’s decline...and so far, I’ve been right. However, the last few days in the market has gotten some traders to question their positions and its even scared others out of their positions. Not me! Here’s why...
I find that many people come over from the stock market, particularly the U.S. stock market, over into the forex market.
They initially think they don't know a thing about forex. However, if you know some things about stocks and if you have an opinion on where they are headed, then you also likely have an opinion on where the GBP/USD pair is going and didn't know it.
Today, UBS reported that the Swiss National Bank, their central bank, may have spent as much as 35 billion francs ($32 billion) since March to stop their currency from appreciating.
SNB Governing Board Member Thomas Jordan, was quoted as saying that the SNB will continue to intervene and halt any gains by the Swiss currency. And so far, they’ve been highly successful. They’ve driven the franc down 2.9% vs. the euro since the start of their interventions!
Well Bernanke may be voted (as Beaver Cleaver would have said) a “swell guy”, but not in my mind. Oh sure, he’s done what every other “head of the Fed” would do: print money and lower rates exorbitantly!
Remember how everyone raked Greenspan over the coals for taking interest rates down to the absurdly low level of 1% and how they said it was a mistake to take rates down that low and hold them low for so long? They blamed those actions as being one of the biggest contributors to the latest bubble!
Today, I want to share with you, four crucial reasons why I believe that the British pound is about to soar once again vs. the U.S. dollar.
Even though the pound (GBP) has been stuck in a range bound pattern for a month and a half now, things are about to change.
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Have you ever found yourself on the “wrong side of the trade”? Many traders experience this quite a bit. One problem that they have is in determining the trend’s direction properly.
There are many dynamics working against the dollar and for the Canadian dollar. I don’t claim that these are the ONLY reasons but I do believe that they are very important dynamics that are all collectively working at the same time to bring down the USD/CAD currency pair.
So let’s take a moment to discuss each of these briefly:
Oh the Swiss Central Bank (Swiss National Bank - SNB) is at it again! They are intervening in the currency market by selling their currency (furiously, I might add)!
Early this morning, the Swiss intervened in the EUR/CHF pair, driving it up about 280 pips so far. That’s a huge move for this currency pair.
Back on March 12th, the SNB warned that they would intervene and that “policy makers will act to curb any irrational appreciation” (in the Swiss franc).
Many traders got “spooked” this past week as the dollar rallied (since they had a bearish view overall). Others, think this is a new sign of a re-emergence of the dollar rally.
So what’s the “real deal”? The dollar is in a bear market now. However, ALL bear markets do have rallies higher. This one is no exception.
Just when the U.S. and Europe can’t seem to give away cars...China can’t get enough of them in lately! In many cases, there’s a three week to TWO MONTH waiting list!
Auto manufacturers like Hyundai and Honda are getting a huge boost as they hold some of the most popular cars in China (the Elantra and CR-V, respectively).
