Friday May 19, 2006 - 10:36:14 GMT
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Black Swan Capital - www.blackswantrading.com
āIn theory there is no difference between theory and practice. In practice there is.ā
FX Trading ā Volatility humongus
The yen is taking it on the chin on reports that exiting the zero interest rate policy game may be prematureāthanks to the dance by Chief Cabinet Secretary Shinzo Abe and BOJ Governor Toshihiko Fukui. But given Japanās expressed concern over a strengthening yen, we may be seeing a bit of kabuki on rates this morning. Itās working.
$-yen is sharply higherā¦and likely setting the stage for a good selling opportunity. But itās probably not today, for we have reached: square your position Friday!
And squaring positions seems the order of the day, as the rest of the pack is following the yenās lead on what has been a very volatile meat-grinding week in currenciesā¦the Europeans are sharply lower against the dollarā¦and the Aussie is making a run for the cheap seatsā¦
We saw news yesterday that Fed minions were actually thinking of 50-basis points next time. No wonder the beast āvolatility humongusā is devouring the market. And off the bottom of our head yesterday, we threw together some cross-currents traders are likely mulling as they take positions, they include:
ļ® Inflation, growth, risk:
ā¢ Is the Fed done?
ā¢ Is Europe recovering? ECB?
ā¢ When will Japan hike and how fast?
ā¢ Chinese revaluation?
ā¢ Commodities Bubble?
ā¢ Is the inflation genie out of the bottle?
ļ® Cyclical or Structural?
ā¢ Yield/Growth vs. Deficits/Geopolitical/Etc
Jack Crooks, Black Swan Capital
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