Ireland’s Woes Hit The Euro

The Euro took another pasting as Moodys joined Standard & Poors in putting Ireland’s AAA credit rating on negative watch. The rating agency also warned that the credit quality of other European countries had continued to decline.

My trading tactics did a 180 degree turn yesterday (Thursday). I deliberately sold GBP/JPY to run the bet overnight (I usually prefer the sleep-easy option). I don’t follow this one closely enough, and rarely trade it, but it felt like the recent rally was running out of steam. The recovery from the previous night’s sell-off wasn’t convincing and I reckoned the collapse in equity markets ought to see the price lower.

The price broke support at Y128 then popped back up, obligingly, to let me sell at Y128.07. I ignored the quick 30-pip profit and set a limit order to close at Y127.10, a not unreasonable expectation. The market tested my resolve, bouncing to Y128.54 just as I was leaving to shoot some pool with the boys, but I was happy enough with the logic of the trade.

This morning I fired up my screens to find no open position, but an extra £95 in my account; that’s the way to start the day! I’m not sure where this one goes next; the trend is down, but it’s had one helluva slippery slide already. A sell at around Y129 looks good, but with a stop just above the recent highs; if this one did take off it could be very bloody.

I added to my FTSE (^FTSE) short this morning, but closed out for a 22-point profit ahead of the US GDP data. I also made a few quid shorting EUR/GBP, again closing the trade ahead of the lunchtime numbers. Not huge gains, but profits all the same.

One thing’s for sure; the S&P 500 (^GSPC) is going to struggle to end January on a high note. I mentioned on Wednesday (Bad Bank Gives Shares A Boost) that American folklore has it that the direction of the S&P 500 is determined by whether it’s up or down at the end of January. As things stand the S&P is at 840 and it really needs to hit the turbo-charge button to break the 894 level from the start of the month.

And another thing, yesterday’s fall’s in the FTSE and US markets (but not the Dax) wiped out the previous day’s gains. In Candlestick charting this is called a bearish engulfing pattern and is enough to give chartists wet dreams. So, I’m short of FTSE, HSBC (HBC) and Lloyds (LLOY.L) and wondering what headlines the weekend press will throw at us this time.

Have a good weekend.

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