A little out of the box today. It turns out, that the US government is not only wasteful when it comes to spending, but it also losses money in the process of … making money. Some of the coins in circulation cost more to produce than their face value. For example, it costs 1.8 cents to make the penny and about 9.4 cents to produce the 5c coin, the nickel.
It seems not much can be done in case of the penny, so it is entirely possible this coin will not be manufactured much longer. The US Mint will advise congress later this later, which will have the final say. However, the nickel could be changed to different metal composition, making it lighter and similar in color to the penny. The objective is to try to preserve it current dimensions, so it can work in existing vending machines. The government is expected to make a decision later this year. If the changes take place, we will surely experience shortages of current coins as people start hoarding them. After all, based on its composition, the 5c piece will almost double in value overnight. Stashing a bag of nickels might just be one of the better investment decisions most people will ever make;).
In the last post, I mentioned shorting the GBP-JPY again, as the price rebounded from its recent low of 168.30. The entry took place at 171.23, as the advance stalled just under the 100 SMA on the 4 H chart. This created a low risk opportunity for a trade on the short side.
Things became choppy after that, with the GBP-JPY unable to find direction. I got out at 170.55 for 68 pips gain, mostly because I could not follow the markets on Friday. Had no idea this pair would rebound strongly in response to positive fundamental data from the UK. All other Yen crosses declined significantly last week and I will look for more trades here in coming days.
Somewhat more disappointing was my trade in the AUD-CHF. This pair had a decent bullish breakout at 0.8140, climbing to 0.8200. I was targeting 100 pips, which, in retrospect, was overly ambitious. In the end, I had to get out with 113 pips loss.
Tomorrow I will take a look at some charts, but for now, opening gaps are of interest to me. There is no guarantee they will form, but if they do, trading opportunities could arise. Have a great trading week!
Mike K.