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| Return of the carry trade.
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Does anybody remember the "carry trade"? About a year ago even those who don't follow currencies heard about it, as it became one of the favorite headlines during the height of financial panic. So called "unwinding" of the carry trades involving Japanese Yen was blamed for the staggering swings in Forex.
In 2009 most central banks have been aggressively cutting interest rates, giving people little reason to seek the differential- driving principle behind the carry trade. Times are changing, though and rates seem to have bottomed out and money appears to be flowing towards higher paying currencies. With a twist. This time around it is not the Japanese Yen being borrowed for speculative purchases. It is the US Dollar, which became about the cheapest currency to borrow. Three months dollar LIBOR has 0.29% interest, while Yen based LIBOR has a rate of 0.35%. Even some of the central banks started to acknowledge the fact, which was recognizable from the statement by Reserve Bank of New Zealand. It is too early to speculate, but will USD fuel next great speculative binge? With what consequences to the Dollar? We strongly suspect that is a real threat and should be recognized soon by financial authorities.
Our systems had positive week, though not equally weighted. One had a sizeable gain, while the other only made a few pips. However, both of them are handsomely profitable for the month of September.
Please see the results below and follow link for details.
(Sunday 09.20.2009.)
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Here are the results for last week:
- Daily Pound made 117 pips ;
- Daily Euro gained 20 pips;
Follow the link on the right to view details.
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Last week's results.
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Our latest trade was a buy in GBP-USD. Entry level was 1.6390, with a target of 1.6500. After some delaying sideways movement, price eventually went up and our objective of 110 pips achieved. Good trade
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Last few weeks brought seemingly never ending drop in US Dollar. Green back has been getting weaker against most of the major currencies. News and outlook are negative, with no improvement in sight. We think this might be changing, at least on short term bases.
Japanese yean has been very strong in relation to USD. Price behavior last indicates a reversal. We will be trying to buy USD-JPY an a move 91.72, seeking 100 pips gain.
Have a great trading week!
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Once again we must stress that the trades highlighted here are only a small sample of our trades. If you have any comments or would like to obtain more information please contact us at info@spectrumforex.com .
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Risk disclaimer:
Substantial risk is involved. Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex markets. Don't trade with money you can't afford to lose. Nothing in our website shall be deemed a solicitation or an offer to Buy/Sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our site. Also, the past performance of any trading methodology is not necessarily indicative of futures results. Trading involves high risks and you can lose a lot of money.
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