Nothing has change

NOTHING HAS CHANGED - I am still off the desk and running around with the family, so keeping updates shorter than usual. It has definitely been nice to not be looking at the markets as much as I am normally forced to while on the desk. Overall, there is nothing too exciting going on, but as I scan across the markets, I can see where there may be some frustration for some traders. On Wednesday I had said that I am projecting broad US Dollar strength across the board, and weakness in risk correlated assets. And yet, Wednesday proved to be a bit of a let down in this regard, with most currencies consolidating, while others were very well bid against the buck. Meanwhile the US equity market continued with its bounce out from recent lows. But I had been expecting this bounce and with the market testing 1860, I think we are once again primed for a fresh downside extension and bearish resumption. On the currency front, if you were playing your long US Dollar view through the Euro, you would have been disappointed, and if you were playing it against the Pound, you would have gone mad! But I have also said that while I do see broad USD demand over the medium-term, I wouldn't recommend playing this view through these major currencies.

FIRST IN, FIRST OUT - Simply put, the UK was basically the first economy to follow the US into crisis back in 2008, with the Eurozone right behind. So it stands to reason that these economies will be in a position to benefit more going forward on a "first in - first out" rationale. But despite all of the strength in the Pound over the past 24 hours, with Cable breaking to fresh yearly highs, I would also defer to the monthly chart which shows the market locked in a longer-term range trade since 2009, with the top of the range coming in around 1.7000. So to expect anything more than a bit more upside from here, with the market trading in the 1.6800's, would probably be a letdown. I still think that US equities will be the catalyst for volatility in the currency markets, and I am actually pleased with this latest recovery, as it only makes things more interesting when they roll over again. Look for underperformance in the commodity bloc and emerging market currencies, and look for another round of weakness in the very well supported USD/JPY and EUR/CHF markets. Oh ya...I am still exercising my view through the New Zealand Dollar with a short NZD/USD position, and will be looking for a break below 0.8515 to confirm my bias and really open the door for a major depreciation. Let's see how it plays out.