The Grand Old Duke of York…and When They Were Up They Were Up, and When They Were Down They Were Down.

 Volatile. I think that’s how we could describe the forex markets at the moment. EURUSD in particular is going up and down like the proverbial’s knickers. And when the markets are like this, it’s very difficult to spot any kind of trend even in the short term (there isn’t one). You are basically at the mercy of rumours and events.

Sure, you can try and trade the news. But is it priced in? It it priced in enough? Too much? You get the picture. If you want to play around with Fibonnaci you can also do it on the roulette table- I hear there are a few systems that use the famous number progression too.

So what’s your best policy when the markets are choppy like this? Well, you can sit on your hands of course. Another alternative to have a look around at some of the less well know crosses. Which brings me neatly on to AUD/NZD.

Since the 19th September it’s been steadily ticking up from the 1.236s and now looks to be heading into the 1.29s (there’s been a few dips along the way of course). It’s easy to spot in hindsight, of course, but the point is that when you are heading through choppy water in the middle of the rapids, there might be some calmer pools off to the side somewhere where you can trade without putting your pacemaker on.

Of course, there’s less liquidity in some of the smaller crosses, which means……..more volatility (!). Don’t be afraid to explore some of the more exotic currency pairs. There’s also the small matter of the Rugby World Cup final next Sunday. This isn’t going to affect EUR/USD, but AUD/NZD and NZD/USD?

Put it this way, if New Zealand lose to France (their bogey team) in the final, when the French are playing so badly, the NZ economy will probably take a nose dive, they’ll sack John Key the Prime Minister, and the last one out will switch the lights off.

So I’m not making any forex predictions today, other than the prices will go up and down a bit. But if you fancy a punt on the rugby, I’d say New Zealand to win by 17 points. 

[ Merde! Au Secours! ]

Wednesday Update.. Equities sell off but forex markets still generally quiet

A sell off in equity markets overnight has done little to forex markets as the US dollar is just a whisker stronger.EUR/USD traded between 1.3745 and 1.3810 hardly the stuff to get pulses racing. Fed Chairman Bernanke said little to stir markets and believes recent moves in commodities will not have a permanent effect on inflation.
Gold has hit a new record and oil edged up again as the situation in Libya looks unlikely to end any time soon.However, as yet no volatility injection in to currency markets.
On the fringes the New Zealand dollar hit a 2 month low as the Prime Minister called for lower interest rates. Their currency the least of their worries at the moment.
It remains very difficult to make any call on forex markets at the moment and I continue to believe the EU summit later in the month will offer the most for markets to establish something in the way of a new trend