What goes up…………
It is looking a little like the Euro is a castle built on sand!
The goal of 1.3080 was touched on Friday following better than expected employment data from the United States. Conspiracy theorists among you may have already concluded that the numbers could have been “massaged” somewhat to ad President Obama’s flagging campaign. Revisions over the next couple of months will be studied closely!
Be that as it may, it is what it is (and other clichés!), the data gave a boost to the Euro and satisfied a number of technical studies.
Now we will maybe be treated to a dash of reality. With holidays today in Japan and The United States volumes will be low and liquidity a possible problem particularly as the day wears on. It looks a lot like a setup for weak bulls to be stopped out on a quick move below 1.2950.
Talking of conspiracy theory I have heard and read some amazing stuff about the interbank market over the past few days. I have heard interbank practitioners called criminals, idiots, liars cheats and worse.
Without wanting to open a further can of worms I can say (hand on heart) that having spent the past fifteen years advising clients, I never put the banks position or strategy ahead of my clients. Firstly there are the ethics of the market and its participants (I can hear the guffaws from here) and my own integrity.
Furthermore this is a very “individual” market where everyone has an opinion and the right to trade it.
My philosophy is to present my ideas, backed up with solid reasoning, and reach a conclusion about where the market is headed over whatever timeframe I am asked to comment.
It is interesting to note that I have never heard a bank client complain that a bank pushed him into a position against his wishes for their own gain. I am not saying it has never happened just not in my experience.
If a big bank chooses to trade in such a way that it takes out all the stops at a certain level whether they hold the stops or not, it would be impossible to legislate or regulate against such an action and in any event, unfortunately, that is the market we operate in.
Getting back to today we have a European Finance Ministers Conference.
If you study such things, it is interesting to note that when there is a scheduled speech from a “senior figure” the news tends to be good for the currency as that is the purpose of the speech.
However “off the cuff” or “ad hoc” remarks tend to have the opposite effect as they are often in response to a direct question and therefore do not necessarily confirm to what is good for the Eurozone as a whole but become “political sound-bites” designed to be popular at home.
The momentum is there to take the Euro back to 1.3080 and beyond but beware of any pullbacks today which could be both ugly and sharp.