Noisy markets set to continue

One thing I can say for sure is that there are some very large positions in the leveraged world with speculators, large and small, having big plays in the Yen, Swiss and the Aussie in particular. Equity markets have also been on a mad rush higher over the last few months and they are likely to provide the biggest source of volatility, as many FX positions will be determined by what happens in the stock and debt markets.

Yesterday we were talking about USD strength and today we are focussed on USD weakness, which is typical of noisy, consolidative markets. I’m not reading too much into any of these moves just yet; the EUR/USD is in a 1.28/1.30 holding range, the AUD still looks soft against virtually all of the other majors, and the USD/JPY is also stuck in a 100/104 consolidation range. USD/CHF is the one worry to me with a possible topping formation in the making; if it breaks lower then that could have implications for JPY weakness and USD bullish sentiment.

I’m still long of USD/CHF but will exit if the market breaks and holds below .9600. I’m still looking to buy any decent-sized dips in EUR/AUD and I’ll play the USD/JPY range with a bearish bias.

  1. Hi Johanes, and please remember that I’m famously bad at trading the CAD 🙂
    I think USD/CAD will move bit higher in coming months, maybe even see 1.10 before this current USD bullish sentiment starts to weaken. Then it wall fall back below 1.00 again. EUR/CAD medium-term bullish but have no idea on levels

  2. Good question Peter. We are not quite sure what to expect tomorrow but after big moves in asset prices this months there are expected to be large flows from institutional asset managers. USD/JPY and AUD/USD are likely to be busy; some strategists have been talking about this for a few days so its possible that the bigger HFs are already short in anticipation of these selling flows. Could be sell rumour buy fact play?

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