Wednesday November 11, 2009 - 02:21:09 GMT
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Cinneas.com - blog.cinneas.com
The Pause that Refreshed
Last week we noted the violent moves in the equity and currency markets and questioned whether this was an indication of us being at a tipping point; where a strengthening of the USD would begin along with a weakening of the stock market, or whether we were at a 'Pause that refreshes...' We conclude we were at the latter.
The violent moves managed to shake out a good number of weaker EUR/USD and AUD/USD longs according to the latest futures data. This should bode well for those that managed to live through last week's pain now that the IMF and the Fed have given the greenlight to further USD weakness. We continue to expect USD weakness going forward, and with higher stocks we expect higher JPY-crosses.
CNBC this morning described the weaker USD trade as akin to shooting fish in a barrel. Last week we think many momentum traders felt like they were the fish.
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