To me, the question is, what’s the surprise?

In other words, what does the market expect and how will the market react if it does not get what it expects.

This week is a case in point: The market expects the German supreme Court to approve the ESM (with perhaps some minor modification) and Fed to announce some form of QE3. That anticipation is largely built into prices in currencies, stocks and bonds today.

If the market is disappointed and the German court strikes down the ESM or imposes heavy conditions and the Fed stops short of a new round of asset purchases, the dollar would likely soar.

So its important to know what they market expects and what to do regarding your position if the unexpected happens.