Licking My Wounds

Today I was fairly confident that the cable was going to continue its upward trajectory and with a swing here and there we should have gotten closer to the 2.0000 level. Unfortunately for my still standing open bullish position at 2.0009 (Ouch) the cable plunged and lost it boost. Instead of the pair moving upward it zipped back to earth at an amazing speed losing just about 200 pips.

As we know that average movement of the GBP-USD is about 150 pips on a good day. Today was above average and there had to be a reason for the amazing sell off. It appears that the sell off was as a consequence of the bidding taking place across in Europe as many 63 financial institutions were aggressively bidding to get greenbacks to replenish their reserves.

Well it all happen that 63 financial institutions bid for more than the quadruple the amount of dollar on offer. The 63 financial institutions bid over $101 billion for the $25 billion auction which without a doubt, caused the dollar to rally and the cable to plummet.

For more information regarding the bidding auction please click here:

Real Time Economics : The Buck Stops Where?

Perhaps in the future we should consider days the dollar auction is taking place as it may cause the dollar to either rally or plummet.

However, we must realize that the reason that so many institutions are aggressively bidding to stash dollar in their vaults, is because they see the financial markets getting worse and not better. They are hoarding additional powder in the form of dollars which they see as a must have to be able to survive the more severe and more shoes drop financial crisis in the American continent. Unfortunately this hoarding of USD should not translate to long term strengthening of the dollar, but to the contrary it should weaken the buck therefore the bullish sentiment should return in surpass the 2.100 levels.

Happy trading