Bullish on British Pound.

Have a look to the picture above. It is 12 years chart of currency pair EUR/GBP. You can see that the worst recession in UK history since Second World War sent British Pound to 0.97 against EUR.

But with the signs of bottoming currency pair is traded now around 0.90 with declining triangle pattern. If support level for EUR (0.88) will be crossed the pair is heading to support range 0.80-0.77.

Another stop would be 0.72.

Bullish signs for Pound based on technical recovery. On the other hand any downside correction for equities will push Pound lower.

Don't generalize CEE emerging markets.

I am fed up with generalization of emerging markets in Central and Eastern Europe. You can listen everyday on CNBC or read at Financial Times how bad thins are in CEE markets.
Completely wrong. Bad things are with CEE countries with high debt (Baltic countries, Hungary). It is not concerning Czech Republic or Poland.

It seems that many people understand that it is impossible to throw all countries into one bag. There is an indication that the forint depreciated significantly in the middle. On the market, according to the spreading fears that Hungary will need additional help from the International Monetary Fund.

You can see below that Czech crown appreciated against all currencies but mostly against Hungarian forint.


Exchange Rates 04.03.2009
EMU EUR 27.710 -0.876%
U.S. USD 22.076 -0.402%
Hungary HUF 8.935 -1.910%
Poland PLN 5.878 -0.424%
Romania RON 6.461 -0.646%

Alternative investing - Looking for Climax.

Aside usual investing into the equities I am looking for investment which are at "Climax". My last pick was crude oil which I have mentioned in my last post Bullish on crude oil price. My long entry $36 became very successful trade. It is not about bottom fishing but searching investments where increase or decrease have accelerated.

My next item in watch-list is currency pair EUR/GBP. In terms of interest rates policy in 2008 ECB had been the least aggressive bank by cutting rates only 150 bp to 2,5%. Bank of England had slashed the rates by 350 bp. In 2009 I expect ECB to be more aggressive with interest rates policy.


Currency pair EUR/GBP has accelerated especially in the beginning of November almost to equal value. Last 12 months track shows appreciation of EUR around 30%.

Related tickers: (FXB), (FXE),

How to trade USD.

US dollar index (NYBOT: DX) has broken 7 years lasting downtrend. Key drivers were released macroeconomic reports which show still expanding economy of US with better than expected GDP for the last quarter. Contrary some European or Asian economies already contract.

Please have a look to Adam Hewison's video. See how Adam is analysing US dollar index with Fibonacci tool.

Japanese Yen: Hedging against falling stock markets.

Global stock markets are falling and most of them are in "bear" trend. But there is something new with commodity and currency prices. We can see sinking crude oil price and rebound for US dollar. Currency turnaround has started 1 month ago. Strengthening US dollar sent all currency ETFs to negative.

name	ticker	monthly
PowerShares DB US Dollar Index Bullish Fund	(UUP)	5.8%
CurrencyShares Japanese Yen Trust ETF	(FXY)	-2.5%
CurrencyShares Canadian Dollar Trust ETF	(FXC)	-3.7%
PowerShares DB G10 Currency Harvest Fund	(DBV)	-4.0%
CurrencyShares Swedish Krona Trust ETF	(FXS)	-5.2%
CurrencyShares Euro Trust ETF	(FXE)	-6.1%
CurrencyShares Swiss Franc Trust ETF	(FXF)	-6.2%
CurrencyShares British Pound Trust ETF	(FXB)	-6.7%
CurrencyShares Australian Dollar Trust ETF	(FXA)	-10.3%

As you can see US dollar ETF has gained almost 6% in last month. The most averse currency against dollar strength seems to be Japanese Yen which lost only 2.5%. This slight drop is due to positive monthly trend with broad stock markets indices. During the same time Dow Jones Industrial Average increased by 0.3% and Nasdaq Composite by 4.8%. Yen is generally called is as a hedging tool against broad stock market trend with inverse correlation. Based on empirical data the highest correlation is with broad US indices (S&P500, Nasdaq Comp. and Dow Jones Ind.) which is -0.95.




Related tickers: (UUP), (FXY), (FXC), (DBV), (FXS), (FXE), (FXF), (FXB), (FXA), (DJIA), (SPY), (QQQQ)

Currency pair analysis for EUR/USD.

FED stopped dramatic rate cuts and possible next change action to be rather rate increase than again decrease. Next week Q2 GDP numbers showed that big EU economies already contracts where US economy is still positive. This makes different picture for currency pair EUR/USD and we could see interesting move in last weeks.

EUR crossed below its long term technical support against USD and further weakens. Adam Hewisons made analysis and has started to short EUR on 29th July at 1.5611. See his full video with currency analysis.

The strongest is Czech currency Koruna.

Czech Koruna already passed psychological resistance level 27 CZK for 1EUR. Against USD rate is 18,72. Currency is gaining from good sentiment in region of Central and Eastern Europe. Those countries are seen as resistant against slowing US economy and credit markets turmoils. The positive things I see are postponing Czech interest rates hike and cheaper oil for Czech companies.

Polish polls pushing CEE currencies.

This weekend in Poland preliminary elections are held. Polish Zloty has lifted to PLN/EUR 3,7. Also Czech Koruna has been dragged to new all-time-high CZK/EUR 27,38. Centre-right parties are expected to win which could support Zloty even more.

Czech Koruna the strongest against EUR and USD.

Today CZK up against both major currencies. Current currency rates are: CZK/EUR 27,44 and CZK/USD 19,32. USD was sent down due to slowing US housing market plus report from IMF (International Monetary Fund) that subprime issue has significant impact on US economy.

I am happy to be Czech investor keeping Czech Koruna ...

British Pound dropped after credit turmoil spreads to UK.

Today I was looking for investment to diversify my portfolio. Last week majority of world currencies were bullish against USD. GBP improved significantly less than others and lost a lot against EUR after credit turmoil spreads to UK. Have a look to chart comparing 3M x-rates GBP/EUR and USD/EUR. Currency pair EUR/GBP is now 0.6977 with low volatility but crossing below support 0.6995-0.6980. Therefore there could be bullish pressure on GBP.

I found few put turbo investment certificates underlaying EUR/GBP with reasonable spread (up to 1%). DE000SDL74T3 (spread 0.79%, leverage 13.1), DE000TB8P9V4 (0.59%, 9.9).
And too turbo certificates with very strong leverage. DE000SDL1B21 (1.86%, 31.1), DE000SDL15Y6 (1.86%, 31.0),
All are listed on EUWAX.

CZK the weakest in 9 months against EUR

Czech currency koruna (CZK) reached today 9 months low against EUR at 28.56 CZK for 1 EUR. It is mainly because of differences between higher euro interest rates and czech rates which making more attractive EUR investments. Next is rising yield of US bonds which has impact on outflow of capital from emerging markets like Czech Republic. But also obscure economic reforms in Czech Republic doesn't help CZK to gain.

Altough all those factors are important I see good time to entry with CZK and speculate on strenghtening czech currency below 27CZK for 1 EUR. Just look at the czech economic growth and compare with western european countries.

Put warrant XXL on EUR/CZK

I've just opened long position with PUT warrant speculating on growth czech koruna against EUR. Issuer is Deutsche Bank, ISIN DE000DB75662, spread is 0.58%.

I do long position in CZK against EUR.

Czech currency koruna is traded at 28.4 against EUR. This year is traded almost w/o appreciation. Czech interest rates are still growing following economic growth. Czech economic growth for Q1 announcement is scheduled for this friday. Expected is 6.1%. Seasonaly it is beginning of support for czech koruna. At picture you can see average seasonal appreciation of CZK within last 6 years.

China eases Exchange rate control. Let Yuan rise.

Beijing revalued the yuan against the dollar by 2.1 percent in July 2005 and has let it rise another 5.3 percent since then in tightly controlled trading.

In the latest change, the yuan will be allowed to fluctuate against the dollar by 0.5 percent a day, up from 0.3 percent, the central bank announced last week.

As I am going to trade Yuan from long side I will come back to you with financial derivates after my selection.

EUR is gaining against USD

PPI and CPI is undere control which lowers possibility of hiking interest rate by FED. I am trading call USD/EUR.

Waves with EUR/USD

Yesterday USD strenghtened agaist EUR to 1,352. The main reason I see coming FOMC meeting which takes place today. Rate 5.25% should stay unchanged. Day after we can see probably ECB hiking rate or at least with hawkish comments.

I am going to open call warrant EUR/USD after FOMC and close after ECB.

EUR/USD and GDP drop

GDP unexpected growth sent USD to lowest level agaist EUR. I bought call warrant with 10times leverage and closed position before closing. My expectations are that USD will gain a little bit in following days. Friday's Unemployment rate could strengthen USD.

However, if unemployment rate will rise investors community will see as potential FED lowering interest rate. If labour market remains strong it is also quite positive for Friday's trading outlook.