British Pound Rebound!

This mornings biggest gainer so far is the British pound (GBP), trading up 1.15% vs. the Japanese yen (JPY) and .80% vs. the US dollar (USD). There’s also some Japanese yen weakness, as its down across the board, most notably against the commodity currencies (Aussie, Kiwi, & Loonie).

So what does all of this mean for the year end? Not much. Because volumes are light, I am seeing the continuation of trend where there is a fundamental story– Japanese yen for example– and seeing some short covering and technical bounces in currencies where the fundamentals are less clear. The gains in the Euro and GBP are examples of this.

And lastly, some bounces in the commodity currencies (Aussie, Kiwi, and Loonie) are taking place after the recent dollar strength. It appears as though the market is in the mood for risk taking and is seeking out higher-yielding currencies. This comes on the heels of the “Santa Claus” rally in stocks so the market is anticipating gains for the beginning of the New Year.

As I mentioned yesterday, much of this appears to be “mean reversion” trades, as the currency pairs move away from extremes and back toward the middle of their recent ranges. This could mean we will see some sideways action for the start of 2010, as the macro themes begin to play out.

The major themes for the 2010 will be inflation, GDP growth, interest rates, possible debt defaults, and budget deficits. In other words, basic economics LOL!

I’ll discuss these themes in greater depth in 2010 but for now I’m going to keep my trading short-term and will not be carrying any positions into the New Year.

So make this year’s New Year’s Resolution to get educated about the forex market!!!! There are numerous opportunities to profit from this market just by watching the news and knowing what action to take!

Don’t waste another year trying to analyze stocks only to find out that the company has been cooking the books or providing false information or paying their executives GINORMOUS bonuses!

Get involved in the forex market!!! It’s as simple as reward the countries that are in good financial conditions, and “punishing” those that aren’t.