Was today's New York session just a pause for the cause or a case of the markets not sure where to go from here. The New York session could be characterized as drifting markets. Our favorite trades to follow lately, the carry trades, were in consolidation mode much like the U.S equity markets were today. We saw USDJPY trade in a relatively tight range today. It meandered in the 109.45/110.20 area most of the day. EURJPY was much the same. It needed a break from the mayhem and traded within the 161.55/162.55 range. The ferocious high yielding JPY crosses were no exception today. GBPJPY stayed tight as well to trade within the 225.75/227.20 area. That pair traded with a bias to the downside as U.K data overnight was not good and the market is taking on a negative GBP view of late. AUDJPY stayed within the 96.20/97.30 areas today. Today showed that the markets didn't want to get too ahead of themselves for fear they may get burned if the recent rally falters and we resume the recent down trend.

We have a number of factors that could be causing this pause/indecision. The big event the market will be focusing on will be the speech from the Fed's Bernanke at 23:45 GMT. He will be speaking about the U.S. and regional economies at the Charlotte Chamber of Commerce annual meeting. There will be only text from this speech and no Q&A session. We have seen Fed speakers of late leaning more to the side of risks to the economy slowing being more of an issue than inflation. Be on the lookout to see if we get confirmation of these recent statements from the Fed chief. The markets will take this as dovish and we could again see the equity markets and carry trades rally. On the data front we get Japanese jobs data and Household Spending. Although the data out of Japan has been somewhat overlooked lately, we can't ignore it completely. Should these numbers surprise with data that comes out off the mark we could see some volatility in the JPY crosses.

Remember to be on the lookout for news related to the credit crisis as well. Clearly these events have been the drivers of markets lately. As the end of year approaches they could drive the markets even more. Historically, going into the year end the credit markets are normally volatile. With recent credit events not nearly cleared up, the magnitude of year end funding issues for financial companies could be off the charts. These issues will certainly provide the F/X markets with a bounty of trading opportunities. Stay tuned in. Traders need to be focused and nimble in these volatile times.

Upcoming Economic Data Releases

  • 23:30 Japanese Jobless Rate for October; Expectations 4.0% vs. prior 4.0% (relevance: high)
  • 23:30 GMT Japanese Overall Household Spending (YoY) for October; Expectations +0.6% vs. prior 3.2% (relevance: high)
  • 00:30 GMT Australian Current Account Balance Q3, Expectations A$-16400m vs. prior A$-15998m (relevance: high)
  • 00:30 GMT Australian Private Sector Credit (MoM) for October; Expectations 1.1% vs. prior 1.2% (relevance: medium)