Thursday, June 14, 2007

Where Is The Strength?



When analyzing the currencies I always like to compare the 4 major currencies to see which is the strongest and which is the weakest. For this discussion I'm not going to talk about the Japanese Yen because it's obvious that the Yen is the weakest out of the 4 major currencies.

Above is a chart of the B-Pound, Euro and the Swiss Franc. As you can see the Swiss is the weakest of the 3 currencies while the British Pound is the strongest. The pound is sitting right at last month's lows while the Swiss franc and Euro are clearly below last month's low.

Over the past few days as the Euro and Swiss franc move lower, the British Pound is making a higher low. This to me is a sign of relative strength. I think if the currencies rally, the British pound should be the leader on the upside.

3 comments:

Marc Eckelberry said...

The Swiss franc, like the Yen, is a carry trade. When that unwinds, they will both bid rather substantially. Follow US equities and you will get the reversal, if it is to occur (equities down, JPY and CHF back up, equities up, JPY and CHF further downside).

chiu said...

Kevin,

You seems to be a swing position trader on currency. How do you trade the 4 currency ? Do you do the spot, future or other contract ? How about the dollar itself ?

Kevin said...

I'm a swing trader in most markets..


I used to trade the futures but now I trade the spot..

I wish these ETF's for the currencies were liquid because I would love to trade them. Maybe one day they will be liquid.