Dear All,

 

Just a novice question. I keep hearing/reading the word 'intervene' by apex banks to control their currencies. When BoJ says it would intervene to maintain a strong USD, will there be any impact on EURUSD pair to maintain the correlation?

Helloo needinfo,central bank intervention is the buying and selling of currency, foreign or domestic, by central banks in order to influence market conditions or exchange rate movement for fiscal or monetary policy purposes.

Why should the Bank of Japan intervene for a strong dollar? Because it is to their best interests. Japan, as we all know, is an export driven economy and if the Japanese yen is stronger than the dollar, it hurt their exports and consequently their economy. Why import 15000 dollar cars from Japan when you can get it cheaper right there in America? Why import expensive electronics, computers,due to a strong yen, when you can get it cheaper from America itself, or even China or India?

But wait..Japan is also a savings oriented economy, in which, majority of the US international papers or debt are held by it...So the Japanese are not thrilled to watch the value of their investments in the US bond,Treasuries and Capital markets go down the drain as the US dollar weakens..

The USDJPY monthly chart below shows the decline of the currency pair..

http://i72.servimg.com/u/f72/11/82/15/01/dollar10.gif

Compared to EURUSD(eurodollar), which is on an uptrend,a strong dollar would have a weakening impact on the euro, popularly known in international financial circles, as the ''antidollar''.. Even Trichet, the President of the EU Central Bank(ECB) might likely welcome the gesture of the Japanese with open arms, because a strong dollar would weaken the euro and save them the unsavoury task of slashing interest rates in the nearest future..You could do more research if it affects your personal finance or business objectives, need

info..Did I hear someone say ''Don ichiban''?

http://i72.servimg.com/u/f72/11/82/15/01/eurdol10.gif

[11:53:40 30/12/08] Stalion : no need to be confused....we put a buy stop on gbpusd @

 

14550...1st target @ 14575..2nd target @ 14615..3rd target @ 14655

 

[11:53:44 30/12/08] Stalion : sl 50 pip away

Let me whisk you away to the forex charts on the DISSECTION OF A TRADE GONE WRONG. Remember the loss was also important though the LESSONS LEARNT from the loss are MORE IMPORTANT.

Now we are going into the reasons why we took a buy stop at that point..

A 123 bottom formation was observed prior to the alert given out, along with an inverted head and shoulder pattern forming at the bottom...Both are reversal pattern telling us that price is about to reverse from its downtrend to an uptrend.

MACD also made a positive convergence to price which was a buy signal..For the our fib fans out there, a la moneyadd, price made a turnaround on the 30% window, instead of the 60% sell window..which is not that unusual given the strong trend downward in price..

So it was more of a matter of TIMING, rather than STRATEGY. We might be right in taking a trade based on what our strategy is telling us, but if the timing is off bat,we take the loss...In this instance, we lost 50 pips yesterday..the market is always right..quite an humbling experience, isnt it?

http://i72.servimg.com/u/f72/11/82/15/01/tanks10.gif

So for today, wednesday, price finally came around and rocketed past our 3 targets like a valkyrie..technical analysiswise, our strategy was sound but the timing was off...price then compensated us with more than 105 pips..$105 minilot,$1050 standard lot on GBPUSD.

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HAPPY NEW YEAR FOLKS and we give thanks to God for seeing us through a bumpy 2008..WELCOME

2009.