Let's talk about Friday.
1. Friday, October 31st, 2008 (8:30 a.m. New York Time) USA
At 8:30 a.m. we will have Personal Income m/m and Personal Spending m/m. In order to trade it, you need to have +/- 1.0 deviation on at least one of them, and the other one cannot be conflicting. If one of them deviates by +1.0 and the other one is not conflicting, USD/JPY should go up by 30 pips. If one of them deviates by -1.0 and the other one is not conflicting, USD/JPY should go down by 30 pips. Because two reports need to be analyzed, I will personally skip them since it would be too tricky to set it up on SNW but if you want to take a risk, this may actually work pretty well.
2. Friday, October 31st, 2008 (9:42 a.m. New York Time) USA
Then at 9:42 a.m. we will have Chicago PMI. This is tradable only if you can get the number at 9:42, not 9:45, and since this report cannot be traded from SNW, I will not trade it. Due to current market conditions, this report can be traded if there is a big surprise so minimum trigger here would be +/- 5.0. A deviation of +5.0 or more should send USD/JPY up a bit, and a deviation of -5.0 or more negative should send USD/JPY down a bit.
That would be all for this week.
Friday, October 31, 2008
Events Today
THEMES TO WATCH – UPCOMING SESSION
Events Today:
* EuroZone Oct. CPI Estimate (1000)
* EuroZone Sep. Unemployment Rate (1000)
* Switzerland Oct. KOF Swiss Leading Indicator (1030)
* Canada Aug. GDP (1230)
* US Sep. Personal Income and Spending (1230)
* US Sep. PCE Core (1230)
* US Oct. Chicago PMI (1345)
* US Oct. Final University of Michigan Confidence (1400)
Events Today:
* EuroZone Oct. CPI Estimate (1000)
* EuroZone Sep. Unemployment Rate (1000)
* Switzerland Oct. KOF Swiss Leading Indicator (1030)
* Canada Aug. GDP (1230)
* US Sep. Personal Income and Spending (1230)
* US Sep. PCE Core (1230)
* US Oct. Chicago PMI (1345)
* US Oct. Final University of Michigan Confidence (1400)
Thursday, October 30, 2008
Events Today
THEMES TO WATCH – UPCOMING SESSION
Events Today:
* Germany Oct. Unemployment Rate and Change (0855)
* Norway Oct. Unemployment Rate (0900)
* Norway Sep. Retail Sales (0900)
* EuroZone Oct. Confidence Surveys (1000)
* Canada Sep. Industrial Product Price and Raw Materials Prices (1230)
* US Q3 Preliminary GDP estimate (1230)
* US Weekly Initial Jobless Claims (1230)
* US Fed's Kroszner to Speak (1230)
* US Fed's Yellen to Speak (1915)
* Japan Oct. Nomura/JMMA Manufacturing PMI (2315)
* Japan Sep. Jobless Rate (2330)
* Japan Sep. Household Spending (2330)
* Japan Oct. CPI (2330)
* UK Oct. GfK Consumer Confidence (0001)
* Australia RBA's Debelle to Speak (0030)
* Australia Sep. HIA New Home Sales (0100)
* Japan BoJ Target Rate (no time given)
* Japan Sep. Housing Starts (0500)
Events Today:
* Germany Oct. Unemployment Rate and Change (0855)
* Norway Oct. Unemployment Rate (0900)
* Norway Sep. Retail Sales (0900)
* EuroZone Oct. Confidence Surveys (1000)
* Canada Sep. Industrial Product Price and Raw Materials Prices (1230)
* US Q3 Preliminary GDP estimate (1230)
* US Weekly Initial Jobless Claims (1230)
* US Fed's Kroszner to Speak (1230)
* US Fed's Yellen to Speak (1915)
* Japan Oct. Nomura/JMMA Manufacturing PMI (2315)
* Japan Sep. Jobless Rate (2330)
* Japan Sep. Household Spending (2330)
* Japan Oct. CPI (2330)
* UK Oct. GfK Consumer Confidence (0001)
* Australia RBA's Debelle to Speak (0030)
* Australia Sep. HIA New Home Sales (0100)
* Japan BoJ Target Rate (no time given)
* Japan Sep. Housing Starts (0500)
Wednesday, October 29, 2008
October 29th
. Wednesday, October 29th, 2008 (8:30 a.m. New York Time) USA
At 8:30 a.m. we will have U.S. Durable Goods Orders m/m which is expected to come out at -1.5%. Last month it came out 2.5 below expectations and we saw 40 pips move on USD/JPY. However, we this time will also have Interest Rate decision so the price action might be a bit weird. Nevertheless, if it comes out at 0.1% or higher, I would probably give a try and buy USD/JPY and look for 30 to 40 pips. If it comes out at -3.3% or lower, I would sell USD/JPY and look for 30 to 40 pips as well. It would be good if the headline number is not conflicting.
2. Wednesday, October 29th, 2008 (9:00 a.m. New York Time) NORWAY
At 9:00 a.m. we will have Interest Rate out of Norway. Be careful - very high spreads may happen! If they cut by 0.50% from 5.25% to 4.75%, there is not much you can do as it is widely expected. If they cut only to 5.00% or hold the rates unchanged at 5.25%, you may try to sell USD/NOK or EUR/NOK, looking for 400 or more pips. If they cut the rates by 0.75% or more, I would buy EUR/NOK or USD/NOK and expect 400 pips (or more) move as well.
3. Wednesday, October 29th, 2008 (2:15 p.m. New York Time) USA
At 2:15 p.m. we will have U.S. Interest Rate statement, and over half of economists expected them to cut the rates by 0.50% from 1.50% to 1.00%. About 25% of economists expect them to cut the rates by 0.25% from 1.50% to 1.25%, and around 20% of them are expecting them to keep the rates unchanged. A small number of economists expect them to cut the rates by 0.75%. If they cut the rates to 1.00%, it would be a no trade. If they cut the rates by 0.25% from 1.50% to 1.25%, I would sell EUR/JPY, looking for 100 to 300 pips move. If they don't cut the rates, it should be a very good sell trade on EUR/JPY. If they cut the rates by 0.75% from 1.50% to 0.75%, I would buy EUR/JPY and expect a nice move. Please watch the video for more, VERY IMPORTANT details.
At 8:30 a.m. we will have U.S. Durable Goods Orders m/m which is expected to come out at -1.5%. Last month it came out 2.5 below expectations and we saw 40 pips move on USD/JPY. However, we this time will also have Interest Rate decision so the price action might be a bit weird. Nevertheless, if it comes out at 0.1% or higher, I would probably give a try and buy USD/JPY and look for 30 to 40 pips. If it comes out at -3.3% or lower, I would sell USD/JPY and look for 30 to 40 pips as well. It would be good if the headline number is not conflicting.
2. Wednesday, October 29th, 2008 (9:00 a.m. New York Time) NORWAY
At 9:00 a.m. we will have Interest Rate out of Norway. Be careful - very high spreads may happen! If they cut by 0.50% from 5.25% to 4.75%, there is not much you can do as it is widely expected. If they cut only to 5.00% or hold the rates unchanged at 5.25%, you may try to sell USD/NOK or EUR/NOK, looking for 400 or more pips. If they cut the rates by 0.75% or more, I would buy EUR/NOK or USD/NOK and expect 400 pips (or more) move as well.
3. Wednesday, October 29th, 2008 (2:15 p.m. New York Time) USA
At 2:15 p.m. we will have U.S. Interest Rate statement, and over half of economists expected them to cut the rates by 0.50% from 1.50% to 1.00%. About 25% of economists expect them to cut the rates by 0.25% from 1.50% to 1.25%, and around 20% of them are expecting them to keep the rates unchanged. A small number of economists expect them to cut the rates by 0.75%. If they cut the rates to 1.00%, it would be a no trade. If they cut the rates by 0.25% from 1.50% to 1.25%, I would sell EUR/JPY, looking for 100 to 300 pips move. If they don't cut the rates, it should be a very good sell trade on EUR/JPY. If they cut the rates by 0.75% from 1.50% to 0.75%, I would buy EUR/JPY and expect a nice move. Please watch the video for more, VERY IMPORTANT details.
Monday, October 27, 2008
October 27th signal
Let's talk about Monday.
1. Monday, October 27th, 2008 (5:00 a.m. New York Time) GERMANY, EURO ZONE
At 5:00 a.m. we will have German Ifo Business Climate and it is expected to come out at 91.0 or 91.2 although there is quite wide range of expectations but most people expect lower number. Therefore, we need to use bigger lower trigger and we can try to use smaller upper trigger. Last month this report failed but chances are good this month it may work quite OK. I would strongly recommend to be very careful but I will be trading it myself. If it comes out at 88.9, I would sell EUR/USD and try to make some pips on the spike. If it comes out at 92.5 or higher, I would buy EUR/USD. I would rush to take profits on this because the market is weird and it is hard to predict how the market is going to react on it. Because there are still 5 hours to this report, it is hard to say how exactly approach this report because the price level right before will matter a lot. Also, if it comes out slightly lower than expected, it is very possible the price will spike down a bit and then go the other way so trading against the number also may work.
2. Monday, October 27th, 2008 (10:00 a.m. New York Time) USA
At 10:00 a.m. we will have U.S. New Home Sales. I cannot give triggers for this now because current price level will matter a lot. If you are new to Forex, I would skip this report.
That would be all for Monday.
1. Monday, October 27th, 2008 (5:00 a.m. New York Time) GERMANY, EURO ZONE
At 5:00 a.m. we will have German Ifo Business Climate and it is expected to come out at 91.0 or 91.2 although there is quite wide range of expectations but most people expect lower number. Therefore, we need to use bigger lower trigger and we can try to use smaller upper trigger. Last month this report failed but chances are good this month it may work quite OK. I would strongly recommend to be very careful but I will be trading it myself. If it comes out at 88.9, I would sell EUR/USD and try to make some pips on the spike. If it comes out at 92.5 or higher, I would buy EUR/USD. I would rush to take profits on this because the market is weird and it is hard to predict how the market is going to react on it. Because there are still 5 hours to this report, it is hard to say how exactly approach this report because the price level right before will matter a lot. Also, if it comes out slightly lower than expected, it is very possible the price will spike down a bit and then go the other way so trading against the number also may work.
2. Monday, October 27th, 2008 (10:00 a.m. New York Time) USA
At 10:00 a.m. we will have U.S. New Home Sales. I cannot give triggers for this now because current price level will matter a lot. If you are new to Forex, I would skip this report.
That would be all for Monday.
Friday, October 24, 2008
Friday October 24th
1. Friday, October 24th, 2008 (4:30 a.m. New York Time) UK
At 4:30 a.m. we will have UK GDP q/q. It is expected to come out at -0.2%. Because GBP/USD is on such strong down trend, probably you can just short GBP/USD and make money. Therefore, if it comes out at -0.3% or lower, I would sell GBP/USD. If it comes out at -0.1% or 0.0%, I would also sell but on the spike up (if any). That it, I would wait for the spike up, and try to short at better price. I think because of such strong down trend we will see a very short living spike up should GDP comes out at -0.1 or 0.0. If it is positive, I would be more careful, perhaps stay away.
2. Friday, October 24th, 2008 (7:00 a.m. New York Time) CANADA
At 7:00 a.m. we will have Canadian CPI Core m/m which is expected to come out at 0.3%. I still think it is better to trade against the spike on higher CPI here. If it comes out at 0.4% or higher and other numbers are not conflicting, I would buy USD/CAD right after USD/CAD spikes down. If it comes out at 0.1% or lower, I would enter long on USD/CAD on a spike and I would not trade against it.
3. Friday, October 24th, 2008 (10:0 a.m. New York Time) USA
At 10:00 a.m. we will have U.S. Existing Home Sales m/m. Because of all the other problems, I don't think people would care about this report. However, if it comes out much better, and you are around your trading station, you may to sell EUR/USD or GBP/USD as an excuse to enter a short trade. Unfortunately, it is hard to say what USD will do in the next few hours so such decision must be made right before the report.
At 4:30 a.m. we will have UK GDP q/q. It is expected to come out at -0.2%. Because GBP/USD is on such strong down trend, probably you can just short GBP/USD and make money. Therefore, if it comes out at -0.3% or lower, I would sell GBP/USD. If it comes out at -0.1% or 0.0%, I would also sell but on the spike up (if any). That it, I would wait for the spike up, and try to short at better price. I think because of such strong down trend we will see a very short living spike up should GDP comes out at -0.1 or 0.0. If it is positive, I would be more careful, perhaps stay away.
2. Friday, October 24th, 2008 (7:00 a.m. New York Time) CANADA
At 7:00 a.m. we will have Canadian CPI Core m/m which is expected to come out at 0.3%. I still think it is better to trade against the spike on higher CPI here. If it comes out at 0.4% or higher and other numbers are not conflicting, I would buy USD/CAD right after USD/CAD spikes down. If it comes out at 0.1% or lower, I would enter long on USD/CAD on a spike and I would not trade against it.
3. Friday, October 24th, 2008 (10:0 a.m. New York Time) USA
At 10:00 a.m. we will have U.S. Existing Home Sales m/m. Because of all the other problems, I don't think people would care about this report. However, if it comes out much better, and you are around your trading station, you may to sell EUR/USD or GBP/USD as an excuse to enter a short trade. Unfortunately, it is hard to say what USD will do in the next few hours so such decision must be made right before the report.
Thursday, October 23, 2008
Thursday October 23rd
Thursday, October 23rd, 2008 (4:30 a.m. New York Time) UK
On Thursday at 4:30 a.m. we are going to have UK Retail Sales m/m. It is hard to say if this is going to give a reliable move, and based on recent past experience I would be very careful with it. If you look at chart from August, we had 60 pips spike up on 1.0 deviation, but it was a very short living move and it retraced by 100%. Because GBP/USD is on extremely strong selling trend, perhaps buying at the spike might be extremely risky because traders may take advantage of the better price to sell again. It will also depend on where the price is right before the report. I think +/- 0.8 deviation should be enough to enter a spike trade if you have SNW but you must exit within seconds, regardless if you are on profit or loss. If it deviates by +0.8, I think selling at the top of the spike on GBP/USD may work well. If it deviates by -0.8, selling on the spike may work OK but I would be careful with buying against the spike. Perhaps small position would be OK to give a try and make a lunch money, but I really mean a small position because I don't feel like I want to buy GBP/USD, even at the discounted price. Obviously if the deviation is crazy, trading against the spike would be too risky and it is better to make some money on the spike and stay away from trading against the spike. Again, I will personally check the price level right before the report and then determinate what is the best strategy. Also, watch out for possible leaks - recently U.K. reports tend to move before the official announcement.
That's all for Thursday.
On Thursday at 4:30 a.m. we are going to have UK Retail Sales m/m. It is hard to say if this is going to give a reliable move, and based on recent past experience I would be very careful with it. If you look at chart from August, we had 60 pips spike up on 1.0 deviation, but it was a very short living move and it retraced by 100%. Because GBP/USD is on extremely strong selling trend, perhaps buying at the spike might be extremely risky because traders may take advantage of the better price to sell again. It will also depend on where the price is right before the report. I think +/- 0.8 deviation should be enough to enter a spike trade if you have SNW but you must exit within seconds, regardless if you are on profit or loss. If it deviates by +0.8, I think selling at the top of the spike on GBP/USD may work well. If it deviates by -0.8, selling on the spike may work OK but I would be careful with buying against the spike. Perhaps small position would be OK to give a try and make a lunch money, but I really mean a small position because I don't feel like I want to buy GBP/USD, even at the discounted price. Obviously if the deviation is crazy, trading against the spike would be too risky and it is better to make some money on the spike and stay away from trading against the spike. Again, I will personally check the price level right before the report and then determinate what is the best strategy. Also, watch out for possible leaks - recently U.K. reports tend to move before the official announcement.
That's all for Thursday.
Friday, October 17, 2008
Friday, October 17th,
Let's talk about Friday.
1. Friday, October 17th, 2008 (8:30 a.m. New York Time) USA
At 8:30 a.m. we will have U.S. Housing Starts. This may move the market a bit but I would not put a lot of hopes on it. I want to see a nice move on it before I start recommending trading it.
2. Friday, October 17th, 2008 (9:55 a.m. New York Time) USA
At 9:55 a.m. we will have U.S. Consumer Sentiment coming out. This might bring 20 pips if the trigger is hit although this might be a slow mover either. If this comes out at 59 or lower, you may sell USD/JPY. On the other hand, if it comes out at 71 or higher, you may buy USD/JPY.
1. Friday, October 17th, 2008 (8:30 a.m. New York Time) USA
At 8:30 a.m. we will have U.S. Housing Starts. This may move the market a bit but I would not put a lot of hopes on it. I want to see a nice move on it before I start recommending trading it.
2. Friday, October 17th, 2008 (9:55 a.m. New York Time) USA
At 9:55 a.m. we will have U.S. Consumer Sentiment coming out. This might bring 20 pips if the trigger is hit although this might be a slow mover either. If this comes out at 59 or lower, you may sell USD/JPY. On the other hand, if it comes out at 71 or higher, you may buy USD/JPY.
Thursday, October 16, 2008
Signal for 16th October
Let's talk about Thursday.
1. Thursday, October 16th, 2008 (8:30 a.m. New York Time) USA
At 8:30 a.m. we will have U.S. CPI Core m/m coming out. I would trade USD/JPY on this. If it comes out at 0.3 or higher, and the other numbers are as expected or higher, I would sell USD/JPY SHORTLY AFTER the release. If it comes out at 0.1% or lower, and the other numbers are as expected or lower, I would buy USD/JPY SHORTLY AFTER the release. If the trigger is hit, I would expect 30 to 40 pips move.
The other reports such as US TIC, Industrial Production or Philadelphia Fed may move the market a bit but currently I would not trade them
1. Thursday, October 16th, 2008 (8:30 a.m. New York Time) USA
At 8:30 a.m. we will have U.S. CPI Core m/m coming out. I would trade USD/JPY on this. If it comes out at 0.3 or higher, and the other numbers are as expected or higher, I would sell USD/JPY SHORTLY AFTER the release. If it comes out at 0.1% or lower, and the other numbers are as expected or lower, I would buy USD/JPY SHORTLY AFTER the release. If the trigger is hit, I would expect 30 to 40 pips move.
The other reports such as US TIC, Industrial Production or Philadelphia Fed may move the market a bit but currently I would not trade them
Friday, October 3, 2008
Signal for 3rd Oct. 2008
Key Risk Events (All times in GMT)
* Norway Sep. PMI (0700)
* Germany Final Sep. Services PMI (0755)
* EuroZone Final Sep. Services PMI (0800)
* UK Sep. Services PMI (0830)
* EuroZone Aug. Retail Sales (0900)
* US Sep. Change in Nonfarm Payrolls (1230)
* US Sep. Unemployment Rate (1230)
* US Sep. ISM Non-manufacturing (1400)
Market Comments
EURUSD plummeted to a new 12-month low yesterday as Trichet brought absolutely nothing new to the table and essentially highlighted what everyone is already worrying about: that Europe is incapable of the kind of unified US response to a systemic banking crisis. The clear message after the expected "no change" decision on rates at Trichet's press conference was that the ECB is looking to ease rates at the next meeting. We think they will have eased at least 50 basis points by the end of the year. Mr. Trichet changed his language on perceived inflation risks and had a more dour view on growth in line with what is now painfully obvious in the rear-view mirror for the EuroZone economy. In the background, IG Metall is looking for an 8% pay increase just as Germany is performing a spectacular crash landing...it will be interesting to see what kind of agreement emerges for these workers on the other side of negotiations.
It was almost humorous to see the plunge in EURUSD accelerating most when it crossed the wires that a "rate cut had been discussed". Shock! Awe! Really, folks - if Trichet and company hadn't at least discussed a rate cut, then you would have to wonder if they lived on the same planet as the rest of us. While EURUSD did post new lows on the day, the action later in the day quieted and overnight EURUSD was even rallying up toward the first key resistance area at 1.3885, the old low and the approximate spot where the huge rising trendline from 2002 was broken.
The market fear level remains very high as evidenced by the various credit spreads and other indicators that simply aren't coming down yet. It's rather scary to be headed to another weekend of uncertainty with the TARP vote today (we assume it will be passed - big question is of course the reaction) and a probably very ugly US employment report. Unfortunately, the US employment indicator is a terribly lagging one - with the accelerating weakness already in the pipeline, we fear US unemployment could reach toward 8% next year - which would be the worst since the early 1980's, when the US was still emerging from stagflation. Research report after research report discusses the self-reinforcing aspects of the enormous web of credit dependencies in this situation, including everything from consumer financing to especially local government funding. The basic message is that the latest tightness will cause cutbacks, cutbacks, cutbacks. And every day that credit markets remain so dysfunctional, the belt tightens another notch.
The FX market will likely move along the axis of fear as it has consistently been doing lately. More fear and credit tightness likely equates to a stronger USD and JPY and any dramatic easing in fear levels means that we should all buy EURJPY. Those looking for a lottery ticket might look for a Monday expiry low-delta EURJPY or AUDJPY call if fear spikes even higher after the US employment report...more as an expression of hope that things won't simply continue to get worse in an unmitigated straight line than anything else....we find little reason to hope for positive outcomes here in the short term - but sometimes it's best to fade the fear. Of course, you can also embrace the fear with Monday low-delta EURJPY/AUDJPY puts on any rallies in risk appetite this morning. The spot market should be played with low leverage. Our basic ATR indicator shows that EURUSD is more than 3 x more volatile than it was in July of last year just before the Bear Stearns funds blowup kicked this whole credit crisis in motion.
As always, be careful out there...
Chart: EURGBP
The EUR weakness has become so pronounced that it is now even moving decisively lower versus the British pound, where so much pain had already been priced in. The relative strength in GBP is most likely a result of a deleveraging environment (taking off existing GBP shorts and EUR longs broadly speaking) rather than an expression of confidence in the UK economy, which is a study in slowly unfolding train wrecks. Nonetheless, if the support area just below 0.7800 gives way (this is the flatline support - the 200-day moving average comes in already close to current levels), we wonder if this could open up for a significant test lower toward 0.7600.
* Norway Sep. PMI (0700)
* Germany Final Sep. Services PMI (0755)
* EuroZone Final Sep. Services PMI (0800)
* UK Sep. Services PMI (0830)
* EuroZone Aug. Retail Sales (0900)
* US Sep. Change in Nonfarm Payrolls (1230)
* US Sep. Unemployment Rate (1230)
* US Sep. ISM Non-manufacturing (1400)
Market Comments
EURUSD plummeted to a new 12-month low yesterday as Trichet brought absolutely nothing new to the table and essentially highlighted what everyone is already worrying about: that Europe is incapable of the kind of unified US response to a systemic banking crisis. The clear message after the expected "no change" decision on rates at Trichet's press conference was that the ECB is looking to ease rates at the next meeting. We think they will have eased at least 50 basis points by the end of the year. Mr. Trichet changed his language on perceived inflation risks and had a more dour view on growth in line with what is now painfully obvious in the rear-view mirror for the EuroZone economy. In the background, IG Metall is looking for an 8% pay increase just as Germany is performing a spectacular crash landing...it will be interesting to see what kind of agreement emerges for these workers on the other side of negotiations.
It was almost humorous to see the plunge in EURUSD accelerating most when it crossed the wires that a "rate cut had been discussed". Shock! Awe! Really, folks - if Trichet and company hadn't at least discussed a rate cut, then you would have to wonder if they lived on the same planet as the rest of us. While EURUSD did post new lows on the day, the action later in the day quieted and overnight EURUSD was even rallying up toward the first key resistance area at 1.3885, the old low and the approximate spot where the huge rising trendline from 2002 was broken.
The market fear level remains very high as evidenced by the various credit spreads and other indicators that simply aren't coming down yet. It's rather scary to be headed to another weekend of uncertainty with the TARP vote today (we assume it will be passed - big question is of course the reaction) and a probably very ugly US employment report. Unfortunately, the US employment indicator is a terribly lagging one - with the accelerating weakness already in the pipeline, we fear US unemployment could reach toward 8% next year - which would be the worst since the early 1980's, when the US was still emerging from stagflation. Research report after research report discusses the self-reinforcing aspects of the enormous web of credit dependencies in this situation, including everything from consumer financing to especially local government funding. The basic message is that the latest tightness will cause cutbacks, cutbacks, cutbacks. And every day that credit markets remain so dysfunctional, the belt tightens another notch.
The FX market will likely move along the axis of fear as it has consistently been doing lately. More fear and credit tightness likely equates to a stronger USD and JPY and any dramatic easing in fear levels means that we should all buy EURJPY. Those looking for a lottery ticket might look for a Monday expiry low-delta EURJPY or AUDJPY call if fear spikes even higher after the US employment report...more as an expression of hope that things won't simply continue to get worse in an unmitigated straight line than anything else....we find little reason to hope for positive outcomes here in the short term - but sometimes it's best to fade the fear. Of course, you can also embrace the fear with Monday low-delta EURJPY/AUDJPY puts on any rallies in risk appetite this morning. The spot market should be played with low leverage. Our basic ATR indicator shows that EURUSD is more than 3 x more volatile than it was in July of last year just before the Bear Stearns funds blowup kicked this whole credit crisis in motion.
As always, be careful out there...
Chart: EURGBP
The EUR weakness has become so pronounced that it is now even moving decisively lower versus the British pound, where so much pain had already been priced in. The relative strength in GBP is most likely a result of a deleveraging environment (taking off existing GBP shorts and EUR longs broadly speaking) rather than an expression of confidence in the UK economy, which is a study in slowly unfolding train wrecks. Nonetheless, if the support area just below 0.7800 gives way (this is the flatline support - the 200-day moving average comes in already close to current levels), we wonder if this could open up for a significant test lower toward 0.7600.
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