Forex Investment and Currency Trading

• A very negative consensus has now formed around Hank Paulson, Ben Bernanke and TARP (Troubled Asset Relief Program)
• So the first ‘pain’ trade, if that term can still apply in these cursedly illiquid times, is a risk rally
• Consensus has also formed that any knee-jerk stock rally will fizzle as quickly as last Friday’s rally did. So the second pain trade is the rally lasts more than one day.
• How? The surprise this time will probably be some element of international co-ordination to this US announcement. Could be (non US) rate cuts, it could be something else. But Europe and others will say/do something that looks co-ordinated and deeply fraternal vis-a-vis US efforts.
• FX isn’t the obvious or lead asset class to play this story. But a very negative consensus has formed around the dollar as well. Buy it today.
• Against what? Sterling: UK rate cut coming soon, perhaps very soon. Perhaps very, very soon

HOURLY GBP USD chart below - Support levels 1.8520,1.8455, 1.8385, 1.8260