Morning Report: 08.45 London
• This morning there is a mild pick up in risk taking with the US dollar retreating against most currencies.
• Last night stock markets managed to reverse the opening plunge with the S&P 500 making its highest close in two years.
• While stock markets appear to have made their mind up about the chances of a global recovery, there is still a fair amount of indecision on forex markets. This indecision centres around the Euro with the EUR/USD unchanged today and rangebound for the last three days.
• Other forex pairs are making more progress though with the AUD/USD up 0.2% and the USD/CHF down by 0.2%. The pound is travelling well with the GBP/USD and GBP/JPY the morning’s top gainers.
Trade Idea.
• Recently the Swiss franc has been hit by its close association to the euro, but has still managed to hold its ground against the US dollar.
• Last week there was a concerted effort to push the USD/CHF above the 1.0000 level but it would not budge and the pair is now trading well below this level. This could hint at strong underlying interest in the pair. However, the downside is not so clear cut either with the problems across Europe still looming large.
• Therefore, the USD/CHF’s upside could be limited to the 1.0000 while the downside may be limited to something near current levels.
• A good way to play this might be an IN/OUT trade predicting that the USD/CHF will end the day's trading between a high of 1.0000 and a low of 0.9750 at the close on the 30th of December. If successful, this could return 116%.
• You can find this trade by selecting the USD/CHF pair then go to the IN/OUT trade menu.
Summary as of 09.00 London:
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