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Currencies Waiting For More Developments.

 September 10, 2012 09:46 PM

(By Mike Kulej) After increased volatility last Friday, one would expect some of it to carry over the weekend. Surprisingly, that did not happen, not even at the start of the session. More often than not, the activity does not simply dry out from the start, but that was the case on Monday. All day long currencies stayed within relatively small ranges, at least when compared to Friday, clearly waiting for a catalyst of some sort. According to analysts, decision of German Constitutional Court on legality of that country's contribution to the ESM could be such event. Realistically, though, that will only be news if the court blocks the fund. As things stand right now, everybody expects to see approval, perhaps with some legal twists, so it is likely already "priced in". Whatever the reason, Monday was very quiet, with small corrections to previous trends.

[Related -Euro Bearish Ahead Of Minimum Bid Rate]

These small moves, though, were enough to pocket some profits. I was looking for a short in the EUR-USD, with objective of 40-50 pips. Expectations were for a quick trade, few hours of holding time. Instead, it took all day for the 40 pips to materialize. However, given that this distance covered almost the entire daily range, this is not a bad result.

[Related -U.S. News Expected to Create Market Volatility Today]

The other trade discussed yesterday did not work out that good. My plan was to sell the AUD-JPY at 80.97, targeting 80.60 relatively quickly. While in general, the market moved in that direction, the progress was painfully slow. By the end of the day, I closed the trade at 80.84, for a marginal gain. It is likely for the AUD-JPY to continue lower, but I did not want to hold it for longer than one day and will look for other opportunities somewhere else.

Mike K.

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