I’ve probably been one of the more consistent USD bears over the course of this year but the signs are starting to emerge that the tide might be turning:
- EUR has taken over the lead in the ugly contest
- Risk aversion is driving the market away from the AUD
- Massive moves yesterday in Asia, with the NDF market in close to panic mode, as real money exited Asia in billions
- Any European credit crunch will greatly increse the short-term demand for the USD
- Talk that the big ME Sovereigns are now buying back their USD/CHF sales made above 1.10 last year
I’m still running a long cable trade but my stop is very nearby, just below 1.5700, so I’m not going to exit here but overall I have to say, most signs seem to be pointing the way of an extended USD rally. It’s also not unusual for the FX market to start a new trend at this time of year, mid-September, when the market gets going again after summer holidays.
