Daily Market Outlook-Feb 18th ‘09

We have seen ranging markets for the last few days and it hasn’t presented much of a clear cut opportunities. It is best you stay out of these markets rather than trying to catch the price as it could be like a dog chasing its own tail. Every time you try you will only get more tired and end up losing more money as well. So take it easy, and be patient. The market is always there, just whether you are around (with capital) to take advantage.

Technically, i don’t have any highlights or major breakpoints in this ranging market. Of the Eur/Usd, after a major down in asian session yesterday, the price is almost back to Pre-UK price level as of yesterday. The Gbp/Usd, fairing much worse, is almost at the same point it had started on monday afternoon, right after the big weekend gap.

Fundamentally, we have some news today that can stir the market. What are we watching;

1) Gbp MPC minutes – There is almost an unanimous decision that the members will have the rates further reduced and this will be highlighted with the last BOE rate reduction. There is bound to be more selling with the sterling if this decision holds in the long run, but with the short term momentum an expected delivery with forecast of 0-9-0 will cause a stalemate. I still expect gbp/usd to weaken as both currencies are headed in the opposite direction. But i am not keen on taking an immediate momentum trade as it might be a slower mid term trade setup.

2) USD Building permits – We saw some good numbers coming out of the US yesterday, sparking fresh speculation that USD indeed might be the safest currency as yet. This caused immediate weakening of the Yen with  Usd/Jpy increasing and all yen pairs rising as well, though the USD based pairs stayed somewhat in a tighter range. I expect this to be positive to further bolster the slow but steady bull climb.

3) FOMC Minutes-This i will be closely watching. I don’t expect any major news to come in on this event, but once again, comments, minutes and decisions can all cause major whipsawing with this event. This can cause some movements but i don’t have a clear direction. I still expect USD strength and that all USD based pairs will go down, but i am not confident that it could be as positive as that of last month. I will wait and see.

Once again, should anything change or if i ahve sentiment trades, i will let you know.

Happy trading,
Seeni

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