My EURUSD and other things

[anon46773462]

The idea for this thread has been growing in my mind for some time now. We talk a lot about the Euro currency pairs and the EU, but I would like to put some flesh on those dreary bones and also talk about Europe as a region.

As an ex-pat I have a country of birth and a country of residence but as a nationality I only feel I am a European. Having said that, the more I read about Europe the more I realise how little I really know about it as a region.

So this is a kind of blog where I want to freely wander around the European region looking at various nations, economies, geography, history, and anything else that comes along.

I am also going to take a personal look at the Euro against the US Dollar in one direction and the Yen in the other. I am also waiting for the end of the Brexit negotiations and the UK departure from the EU in order to begin also following the EURGBP as two distinct currencies, freed from their EU bonds and the distortions of the current interim stages, starting their new directions with greater, or lesser, separation of their ways.

Europe is a strange place. It stretches from the Arctic Ocean in the north to the Mediterranean Sea in the south. It comprises some 50 different sovereign states as well as a handful of unrecognised nations, autonomous or semi-autonomous regions and various other territorial areas. It covers a land mass exceeding 10 mill sq km and has a population exceeding 740 million people.

It is vastly diversified in terms of cultures, climates, languages, histories, economies and currencies and yet in various ways also closely and willingly partially interwoven via various entities such the European Union, the Euro, and Nato.

This is a trip through my Europe and how its main currency, the Euro interacts with the main currencies of the other major economic and geographic regions. This thread has no core theme and is not a continuous trading blog even though I am looking at currency issues and directions.

And if anyone wants to, feel free to contribute, whenever…

Source: By Rob984 - Derived from File:Europe orthographic Caucasus Urals boundary.svg and File:Europe on the globe (red).svg., CC BY-SA 4.0, File:Europe orthographic Caucasus Urals boundary (with borders).svg - Wikimedia Commons

[FOREX.com]

I am also waiting for the end of the Brexit negotiations and the UK departure from the EU in order to begin also following the EURGBP as two distinct currencies, freed from their EU bonds and the distortions of the current interim stages, starting their new directions with greater, or lesser, separation of their ways.

Interesting topic, @anon46773462!

EUR/CHF is another one to consider when looking at Europe, the EU and the euro. The pair tends to range, but as we saw in 2015, it can be volatile when central banks change policies.

[anon46773462]

@FOREX.com

The pair tends to range, but as we saw in 2015, it can be volatile when central banks change policies.

I guess “volatile” is one way to describe that so-called black swan!

Hopefully that was a one-off move in the European theatre, or anywhere else come to that!

Ah yes! Switzerland! Now that you mention it, that would be a very central place to start! During my Business Studies student years I spent 3 mths one summer working in a Swiss chocolate factory (every kid’s dream, even the more adult kids! ).

I will start with that tomorrow… (thanks for the tip!)

By the way, can’t you give us a more intimate unofficial username to call you by? Its a bit wierd just calling you @FOREX.com.

[anon46773462]

To whet the appetite for things Swiss here is the rear of a quite rare Swiss franc banknote from their 1954 series. Quite macabre, but quite beautiful.

One day I would like to own one of these… this one is from E-Bay where they are offered usually for USD 1000+ depending on their condiion.

[anon46773462]

Interesting day for EUR against USD. FInished up with a pretty so-called Doji candle (although against the JPY and CHF it was not so optimistic). And we have seen some follow-though on the upside overnight. But is this significant?

The Euro has been weak against all these currencies since the start of the summer and especially when matched again the strength of the USD. Maybe the initial recent concerns about the impact of Turkey problems on the risk exposures of Europe have waned a little (e.g. financial support from Qatar) and now built into current pricing, but the trade wars rage on and that is not the only issue behind Euro weakness.

The EURGBP has had a see-saw year to date and is currently not much different to where it started the year around 0.8900 level.

Personally, I am not looking for much upside on the Euro, but waiting for a new sell signal before re-entering. My trading timeframes are Daily - 4H -1H - and, obviously, at present it is only the 1H that has moved to neutral whilst the longer TFs are still in the same negative state.

The Euro against all these currencies is now trading between the last Friday’s close and yesterday’s daily pivot level - that, for me, that spells neutral, lack of fresh news, mild consolidation, sit on hands…

EURGBP daily 2018:

EURUSD daily 2018:

[anon46773462]

Country Spotlight - Switzerland

Switzerland is a small, central European, federal state comprising 26 cantons, 4 official languages, over 8 million inhabitants and covers an area of just over 41,000 sq km. It is perhaps best known generally for its banking industry, scenic beauty and the alps, as well as its cheeses, watchmaking, chocolate, Swiss army knives, and cuckoo clocks.

But perhaps one of the most outstanding achievements of Switzerland is maintaining its neutral status despite having been surrounded on all sides by the main opposing forces during both World Wars. In fact, Switzerland has not apparently participated in any foreign war since its neutrality was established back in 1815.

Its currency is the Swiss Franc which is also used in Lichtenstein. The Swiss Franc was declared the official monetary unit of Switzerland by the Federal Coinage Act, passed by the Federal Assembly on 7 May 1850. It was linked at that time at par value with the French franc. But prior to this, Switzerland had a huge range of various coinage originating from both its own cantons, cities, abbeys, principalities or lordships, and even some private banks, as well as from foreign trade. It has been calculated that during the 1800’s there was a total of no less than 8,000 distinct coins in current circulation in Switzerland.

Banking, and perhaps especially its banking secrecy, is maybe the most globally recognised Swiss characteristic. Its origins arose from its merchant trade in the early 1800’s and it has nurtured its policy of banking secrecy and client confidentiality ever since. Its secrecy has been the subject of great controversy over the years - for example, concerning the protection of foreign accounts and assets during World War II. In 2018, the Swiss Bankers Association (SBA) estimated that Swiss banks held US$6.5 trillion in assets or 25% of all global cross-border assets. But despite many attempts to remove banking secrecy laws in the country, their impact has continued to be minimal.

During its history, the Swiss Franc has been variously pegged to the value of the franc, gold ( Latin Monetary Union), and the U.S. dollar (Bretton Woods system) . Then, on 6 September 2011, the SNB set a minimum exchange rate of 1.20 francs to the Euro on the grounds that value of the franc was a threat to their economy, and that it was “prepared to buy foreign currency in unlimited quantities”. As a result, the franc fell against the euro from 1.12 francs to 1.22 francs and lost 9% of its value against the U.S. dollar within fifteen minutes.

As if this were not enough upheaval in financial markets, a few years later, on 15 January 2015, the SNB responded to the then declining value of the Euro with a move that was not announced in advance at all. It suddenly abandoned the existing ceiling against the Euro and provoked an almost instantaneous 30% increase in value compared with the euro, resulting in chaos in stock and currency markets. By the close of trading that day, the franc was up 23% against the euro and 21% against the US dollar. It is calculated that the full daily range of the franc was equal to $31,000 per single futures contract. This large and totally unexpected jump caused major losses (and gains) amongst currency traders and also later led to some acquisitions and bankruptcies amongst various companies in the financial sector.

The Swiss have one of the most advanced economies globally and, apart from the service sector is also very strong in industrial fields such as high-end watch making, food-processing, chemicals and pharmaceuticals. In addition, tourism is a major industry and its agricultural sector is heavily protected producing some 60% of its own food consumption.

So there we have Switzerland: a wealthy, diverse, land-locked, non-Nato, non-EU, non-Euro, neutral country sitting right in the middle of the European continent surrounded by the EU giants of Germany, France, Italy and Austria.

[anon46773462]

A revealing article from “Finance Magnates” drawing on the data provided by brokers under the new European EMSA regulations:

https://www.financemagnates.com/forex/brokers/which-brokers-house-the-most-winning-clients-post-esma/?utm_source=FM_analysis&utm_medium=email&utm_campaign=16.8.2018&utm_source=Finance+Magnates+Newsletter&utm_campaign=2585874287-EMAIL_CAMPAIGN_2018_08_16_11_30&utm_medium=email&utm_term=0_686f8f22ac-2585874287-284217549

"We certainly don’t want to single out any brokers for not having enough profitable clients. What we can say is that 70 to 80 percent losing clients appears to be the norm. "

And the evidence is apparently really quite consistent across the industry according to this table:

[anon46773462]

@anon46773462

The Euro against all these currencies is now trading between the last Friday’s close and yesterday’s daily pivot level - that, for me, that spells neutral, lack of fresh news, mild consolidation, sit on hands…

Seems we are continuing in the same scenario into the weekend! The Euro against the USD on its “left” and the YEN on its “right”, as well as against its own European brothers, GBP and CHF, is sailing without a following wind. Drifting up to the previous Friday close and off again. My hands are going numb with sitting on them. It is sometimes so hard to not to look for a trade when there is nothing there to see (except maybe on a scalping or very short-term, 15m-5m TFs).

These charts are NOT trading charts, they are just visual representations of verbal descriptions. These are the week’s 4H visuals showing a flat consolidatory performance capped by last week’s close and floored by a lack of fresh news and some alleviation in negative issues, mainly on the trade war front. The horizontal green line is the previous Fri close and the dashed green line is the 200 SMA:

I guess it is not overly surprising to see such indecisive action when all the significant economic powers in the world seem to be locked in trade wars and/or trade negotiations.

Seems to me that the US president is engaged in the initial “roughing up the opposition” stages of upcoming trade negotiations - i.e. the advantage of negotiating from a position of strength rather than just a level playing field. Undoing existing agreements but not so many concluded new ones…

Similarly, The UK is having to break new ground by being the first country to negotiate an exit from the EU and its future mutual trading terms - and trying to do it with a weak government minority. Even with the slim majority gained through the alliance with the Democratic Unionist Party, the problem seems to be that there is no current proposal that will satisfy sufficient MPs to gain a majority in parliament…and time is running out and even the BofE Governor seems to feel that a “no-deal” exit is a real possibility…and no-one knows what that will mean to either the GBP or the Euro.

As I understand it, the US and China will be returning to trade talks soon. Iran and Turkey remain big issues…

In technology the world is getting smaller and smaller, in trade it just seems to be falling to pieces. The good news is, those pieces are not going anywhere, it is just a question of where, when, how and in what form they will all fit together again - just some minor issues!

[ria_rose]

Wow. I’m very excited about this thread @anon46773462 ! I’ll be closely reading the updates.

I demo trade with EURUSD and apart from what the signals are telling me, I don’t know much about the EUR. (Oh! Also apart from what the school mentioned. ) Tbh, I feel like I’ve already learned so much, just reading the first post. Thanks for sharing this Manxx1

[peterma]

Banking, and perhaps especially its banking secrecy, is maybe the most globally recognised Swiss characteristic

Aye, the numbered Swiss bank account was the place to hide from tax authorities, that is until the advent of automatic exchange of information on financial accounts (AEOI).

Nowadays the information doesn’t even need to be asked for, the banks automatically disclose the info on respective countries’ citizens (those countries who have signed up, it’s a long list).

The only good news for tax cheats is that the data must not be published.

[anon46773462]

I’ll be closely reading the updates.

Good to see you here, @ria_rose I’ll try not to post too much mundane waffle knowing you might be reading it!

As I mentioned, this is not a trading blog as such but I will try to post how I am seeing things.

It is really quite fascinating to think that there is an infinite amount of information out there about the Euro, and any other currency,and yet as traders we often try to reduce all that down to just a couple of lines on a PC screen!

But as I see it, TA joins up all the dots and makes a recognisable shape whereas all the background info can make it much more interesting by colouring in all the spaces…

[anon46773462]

Aye, the numbered Swiss bank account was the place to hide from tax authorities, that is until the advent of automatic exchange of information on financial accounts (AEOI).

Good point, @peterma! Thanks for that

For anyone interested here is more info on AEOI in general and the Swiss banking system:

https://www.swissbanking.org/en/topics/current-issues/the-automatic-exchange-of-information

Note the statement that:

“The Swiss banks will be implementing the automatic exchange of information (AEOI) with countries abroad from 2017 onwards.”

ALso, see the OECD info:

http://www.oecd.org/tax/transparency/automaticexchangeofinformation.htm

[peterma]

@anon46773462

But as I see it, TA joins up all the dots and makes a recognisable shape whereas all the background info can make it much more interesting by colouring in all the spaces…

Very true on Eur/Gbp

That cross is still very much a Brexit play. Lately the news on same has been GBP negative, so up it goes in stages. Those levels become predictable so long as the news remains as is.

I’ve been mentioning those levels over this past few months, last time was back some weeks the new red line was 89.00

Trading The News

The old red line is history I mentioned on another thread 10 days ago about a new one, 60 years later, the beginning of the new EU - post 143 The Brexit news has remained pretty much as was since, so the TA came to the fore. The bottom line is 88.20 - buy orders sitting there, was previously 87.20 as mentioned up above. This is news trading on a news trend - steps to levels: [image]

Week before last price meandered around that line, gathering buys, no change in news.

Last week price took off from there, reached as high as 90.00 then slowly back to the red line - supposedly on a rumour of movement from the EU.

This week, the rumour having been discounted - well it’s possible to see.

There was no change in the news Tuesday, so no sells below 89.00, next day still no change on Brexit so when price was worked back down - surprise surprise no sells waiting.

[anon46773462]

So yesterday was indeed another directionless day for the Euro. Most of the day we were hovering around the previous Friday close like the proverbial bees around the honeypot. But in the closing hours of this week we did finally see a break through that level and a sudden blip to the upside which in thin, TA-based trading, managed to reach the 200 SMA on the 1H chart - well, except for the EURJPY which appeared to spend the day trying really hard in both directions and getting nowhere.

Euro charts - 1H:

So why the spike up towards the close?

I would suggest it was due to speculative traders with near-term shorts with little profit, if any, closing out for the weekend ahead of some potentially market-moving events over the weekend. In particular we have current, extremely important and high-profile, negotiations between the EU and the UK, which could produce comments and events at any time. Then we have President Putin’s weekend meeting with Germany’s Chancellor Merkel. Whilst there is nothing specific on their agenda that is particularly and specifically sensitive from the Euro perspective, issues such as the NordStream 2 gas line and various sanctions and trade war issues, as well as Iran, where Europe is in disagreement with the US, could have some impact on where we open on Monday and what the sentiment is likely to be.

Another issue starting to fester is rising out of the ruins of the Morandi bridge in Genoa in Italy. I am sure all our condolences go out to all the families, friends and relatives of the victims of this tragedy as well as to the entire Italian population. But even as the dust is still settling on the rubble and Italy holds its day of mourning, so the fallout is gathering pace and spreading fast. Everyone wants to know why this happened and who is accountable for such a tragedy.There is a saying that the best form of defence is attack, and we are seeing some rapid political finger-pointing going on. But beyond the political self-defence there are huge issues here which are spreading throughout the European countries like the summer forest fires around the globe. Issues which will inevitably impact on national budgets in a significant way. Issues such as:

How many other bridges are suffering from such structural weaknesses?
How do these bridges cope with today’s traffic volumes and commercial vehicles which they were not built to withstand?
Were the bridges built according to specifications or was there corner-cutting (such as weak concrete) to save costs and increase profits?
Are the safety checks carried out properly and are they sufficient in both scope and frequency?

And then that leads to the inevitable wider concern: what other areas of infrastructure from that same era are also now at risk of collapse?

There is already talk in my country of residence concerning bridge safety, structural checks, and how much money needs to be spent, and hasn’t been spent, on infrastructure. It is so easy for authorities with cost-saving needs to postpone renovations and renewals year after year, until finally something breaks, bursts or collapses. How much money has not been spent on these projects in the past, and how much will now have to be found in the aftermath of the Morandi bridge to catch up?

But bridges can often be beautiful things, architecturally challenging, economically essential and aesthetically pleasing:

The Vasco da Gama Bridge spans the Tagus River in Lisbon, Portugal. It is the longest bridge in Europe with a total length of 17.2 km:

[ria_rose]

Good to see you here, @ria_rose I’ll try not to post too much mundane waffle knowing you might be reading it!

I really appreciate it Manxx! I’m not super smart so I’m afraid I wouldn’t understand really technical stuff. Haha. I understand that it’s not really a trading thread, but I still feel like it might give me a better understanding of the factors that affect the EU’s moves.

[anon46773462]

I am not around much at the moment @ria_rose . I am taking a summer “maintenance break” recharging the batteries with some of nature’s peace! and doing some of those things around the home that one otherwise never seems to get round to doing…

[anon46773462]

Oh no! My laptop has been struck by the dreaded BSOD otherwise known as the Blue Screen Of Death.

Some kind of “critical process died” it says. No way of opening it, not even in Safe Mode…black clouds!

Oh well, looks like next week will go on trying to revive it or replace it…

[alphahavoc]

[ria_rose]

Aww! I’m happy to hear that you’ve had time to really relax and breathe in the nature. I’ve also been away for awhile since I celebrated with my friends and family! Haha. But I’m so excited to be back again, and I look forward to your updates here. Take care always Manxx! The view’s really pretty btw!

[anon46773462]

@anon46773462

Oh no! My laptop has been struck by the dreaded BSOD otherwise known as the Blue Screen Of Death.

Some kind of “critical process died” it says. No way of opening it, not even in Safe Mode…black clouds!

Oh well, looks like next week will go on trying to revive it or replace it…

Not such a major disaster afterall. But it did mean a clean startup with Windows 10, which overwrites just about everything. But fortunately, I have learned the lesson about regularly backing up work many years back and it has become a weekly habit so the damage is minimal. It just means a lot of time finding and re-installing what matters.

Some apps and programs have disappeared into some “black hole” somewhere and some were installed so long ago with different e-mail addresses and phone nos etc that I cannot confirm my original acquisition - but these are all peripheral items and no lost sleep.

Actually, it is quite a positive thing to have gone through this cleansing process!

So if you don’t already regularly back up your work, files and programs - do it!!

Now to get back to business…

At least the EU is still looking positive and continuing the upmove started last Friday (1H chart):