Buying EURUSD; Betting on a Victim

• Euro was a victim of a better than expected Retail Sales in UK, which was highest in almost two decades. Before that, Swiss National Bank cast shadow on possibility of interest rate rise in Switzerland as well as euro area, caused that demand for sterling increased so fast that makes liquidity problem in pound crosses, especially for GBPCHF and EURGBP, which finally translated in selling Euro against dollar.


• In addition, China announced that it is going to raise the price of gasoline, makes the oil price to drop more than 4 dollar; and it was not only another hit to euro but also the reason behind recent rise in US indexes.
  
• Today data from US was mixed. Philly Fed. Index dropped more than estimates when leading indicators increased 0.1 percent.


• I think all of them have priced so far and the market would start thinking about tomorrow German Producer Prices, which is expected to reinforce concerns on inflationary pressures in ECB's calculations.

In less than 30 minutes to the market close, I decided to buy EURUSD at 1.5496; as always I would increase the size if I see improvement in technical data.

Pound and tomorrow Retail Sales; How, When, What?

US indexes fell when dropping profit in financials firms replaced fears of inflation. The story doesn’t end at least for the British pound; Retail Sales is ahead and it is expected to show another decline in May.

How: Minutes of MPC in addition to CPI are sufficient to expect that the market has fully priced recent data and the upcoming data could be seen as a force against the current balance. When consideration of rate rise, as reflected in the BoE minutes, seems unable to support sterling, I think that another decrease in Retail Sales is just likely to add more concerns.

What: So, if the profit is in selling pound then the problem is to find something to buy. Morgan Stanley's today report just revived concerns on continuation of credit crunch, shaked market sentiment, and weakened dollar position; making a scene for buying Yen or Swiss Frank.

When: Swiss national bank is to set the rate in the next 12 hours, and selling GBPCHF would be more easy if technical conditions was somewhat better. Selling GBPJPY is another option; however any decision highly depends on improvement in Technical aspect.