Jamie, in his wrap below, has perfectly summed up the confusion that most traders are feeling. We used to call these ‘summer markets’ but I don’t think that adequately describes what’s going on. The market is at a crossroads in terms of sentiment and cannot decide whether it wants to buy or sell dollars, Euros or risk.
I am going to sit in the risk-aversion camp in the short term. I was stopped out of my long EUR/JPY strategy and will leave this pair alone for a bit. USD/JPY is towards the bottom of my 92-102 medium term range so I won’t sell it. Chinas heavy manipulation of the EUR/USD market is akin to intervention and intervention distorts markets- so I’m leaving it alone. Therefore my trade is to run a small short AUD/USD position and sell more on rallies. USD/CAD has been giving us some clues after it’s very strong impulsive rally from below 1.10. I don’t trade USD/CAD but the AUD/USD should eventually play some form of catch up and fall to levels which people don’t expect around .7200.
Good luck today.
