Taking stock

Though I had spent the last two weeks in Reservist, I hadn't been totally out of touch with the markets. I had my little handphone that could access Reuters via GPRS and the occasional sneaking into the camp's Recreation Room (meant for instructors) for net surfing.

Did I mention - I was trained in Reconnaissance, and I was just applying the principles of being stealthy.

Also, I managed to meet a client for dinner on one of the nights and my colleague told me the FX markets had been in a range. I noticed.

Even though the stock markets crashed and bounced up, FX surprisingly traded more cooly. The major piece of news in my mind is that the big US banks like BOA, Citi reported that the first 2 months in 2009 were profitable, reflecting that the financial sector still functions. That helped stocks (Dow) to rebound back into the 7,000 region.

But, I doubt we will see a recovery in the stock markets now. We'll have to pay attention to what the government will do to the banks' commercial real estate and sub prime assets going forward. As long as these toxic assets are around, the banks are still being prevented from lubricating the US economy.

I also noticed that GBPUSD had been pressing downwards a little more now, pushing rather strongly into sub 1.4 territory. Looks like the markets are already pricing in the effects of Quantitative Easing on part of the UK government's effort to pump up the money supply.

I'd be looking for areas of strengths to sell the pair.

Take note that the GBP has already lost close to 30% against the safer haven of the CHF this year. This would tell you how much investors want to flee from the currency.

EURUSD ended the week close to the 1.3000 mark. I guess EUR buying on part of corporations to repatriate profits drove the move.

Sell on strength.