Rising Risks Everywhere, Watch Japan Later

A few risks are mounting in days ahead but not always in the most-obvious spots. The Australian dollar was the top performer while its kiwi counterpart lagged. The focus shifts to Japan later with jobs and retail sales due.  We have a very bullish chart.  What does this chart represent? http://twitpic.com/e92dwq

Markets were lackluster to start the week but trading will surely pick up. Cable gained after 8 days of declines but ranges were small with EUR/USD trading in just a 17 pip span to start the week.

With risks mounting, volatility is sure to ramp up in the days ahead:

It's growing clear that global hostilities in Ukraine are rising. Putin did not use the Malaysian Airlines tragedy as a reason to de-escalate and the White House said more sanctions are coming this week. Argentina appears to be losing interest in negotiations with creditors as Thursday's deadline approaches. The only options are default or seek a delay but a technical default has probably risen to a 20% probability and the consequences are always hard to predict. The main risk is the Fed. FOMC voter Richard Fisher wrote an op-ed in the WSJ calling for a more hawkish stance, including a taper of portfolio reinvestment. We emphasize that expectations for change are extremely low so the market could be complacent. Economic data: GDP and NFP are the main ones but the market is losing faith in the US economy.

In the near term, a pair of Japanese data points could give markets a nudge with employment and retail data due. First at 2330 GMT is the jobs report but it rarely offers the kind of fireworks of NFP. The unemployment rate is expected to remain unmoved at 3.5%.

At 2350 GMT, it's the June retail sales report and this is more likely to give markets a jolt with sales expected up 0.8% m/m but down 0.5% y/y