Whiplash Wednesday. I don’t know how else to describe it. The trend of recent sessions toward risk aversion and covering of medium-term dollar shorts reached somewhat stretched levels overnight after several days of China-led jitter and the snap-back has been quiet intesne. Thin markets ahead of the FOMC (and in the middle of August) are contributing to a nasty rebound in the risk trade that saw cable rally to 1.6560 despite a dire outlook from the BOE.
AUD shot up to key resistance in the 0.8320/30 region before stalling, USD/CAD slipped on to the 1.08-handle from 1.1075 overnight and EUR/USD stalled at key 1.4215 resistance.
Middle Eastern accounts were quick to book profits in cable in the 1.6550s after buying earlier in the day. That’s the way to play. Be nibble, but be quick because trends are few and far between in the markets at the moment. If you have a medium-term view, either set wide stops or trade short-term positions with your bias.
