A strong week for the euro has taken this pair into yearly high territory. In the European session there was a break down to 1.4648, but the market has since rallied back to 1.4724. Considering the magnitude of the run up over the past two weeks, a larger break would seem likely, but exceptionally strong markets usually stay strong. Perhaps next week's G 20 meeting will give us a pull back.
One of the objectives of the G20 meeting is said to be tighter regulations of banks and bankers compensation. Yes regulators do like to regulate, intruding into the private sector, at will if given the opportunity. Are there not more pressing issues than bankers compensation?
Beneath the veneer of camaraderie, as the central bankers reconvene, there is one issue as big as the invisible living room elephant. What can be done about the declining dollar? Vigorous expansion of the dollar and pound money supply have been viewed as prime inputs for weaker currencies. The rapid expansion of debt, as a percentage of the GNP and the US is alarming. After several days of meetings, good wine and great food, do you think our guests will thank us for all of this, and then accuse us of spending too much money?
The market remains in a strong uptrend and we are looking for a little pull back to establish longs, or alternatively long euro and short the pound.