OVERDUE - What a nice start to the month. I can't say enough how amazing it is to actually see volatility in the markets. Everything is playing out nicely and as I'm sure you've all noticed by now, equities have come off quite hard. I have been looking for the liquidation on this front and the pullback is very welcome and long overdue. The other nice reversal on Wednesday was in USDJPY. This market had been begging for a move to the downside with technical studies so heavily stretched, and after finally clearing 110.00, the timing felt right for a pullback. Granted we didn't quite get to the August 2008 110.70 peak, but we will get there on the next trip.
LOOKING FOR USD RETREAT - For now, look for this initial retreat to extend into something a little more meaningful in the days ahead. I think it is quite possible we see USDJPY back in the 106.00s. Looking ahead, it is back to some juicy event risk with Thursday's ECB rate decision and Friday's monthly NFPs. I really think the US Dollar is due for a serious correction, and will be looking to establish a short USD position somewhere if the opportunity presents over the coming hours. I could get long the Euro, or I might even consider a long Kiwi position if NZDUSD dips below 0.7700. For now, we will have to wait and see. Exciting times ahead.
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