JPY

CAT I must admit secretly sold usdchf the pair is getting predictable same goes for GBPCHF, buy it every time it sells aggressively and sell it every time its stays side ways and there important fundamental is coming up and you think markets will get risk averse. No clear strategy but seems to work. Still see GBP to remain toppish with a slight chance here n there for a breakout (lucky if your long then) Other wise if pounds lifts aggressively due to a short surge of a rally in Euro due intervention, then a clear signal to short GBP for a day or two.
CHFYEN also staring back on the my list with the return of EBRGBP much needed and hope competitiveness. CHFJPY giving very clear rally both for long and short if know how to read the early into the signs. Signals usually early asian stock decline, Europe opens and rallies and and US starts and just sends it back to baking humble pies :) Sell on such a scenario.
With ccy vs equities correlation chapter coming to its end I pairs like CADYEN making some significant gains over weeks ahead.

EUR/JPY: Dive, Dive,Dive!
EUR/JPY is getting sold off in a hurry as this mornings optimism suddenly is called into question.
The cross rallied as far as 110.60 very briefly, just far enough to trigger stops in the 110.40/50 region.
Stops done, slide resumes.Were now down to 109.30. 108.85 and 108.35 are supports on pullbacks within the old range
Contributing to euro weakness is continued talk among respected officials of controlled sovereign bankruptcies (from Weber and Zoellick) . US equities have lost about two-thirds of earlier gains and gold is beginning to edge up again, a euro-negative of late.
Bids are seen in the 1.1975/85 area with stops seen down at 1.1960/65.


I Guess Rallies Are For Sale
As I wrote earlier in the week, blindly selling every rally in EUR/USD remains the most profitable strategy going. You dont have to be particularly choosy, as long as you are willing to put a stop up above say 1.2150.
CNBC is blaming BP bankruptcy talk for the latest Wall Street weakness. On the merits, the talk is silly, but when you have the White House stepping on your throat and kicking your ass at the same time, all bets are off
Also weighing is support for the swap-desk spin-off in the Senate finreg bill from Chairman Chris Dodd.
Traders are getting spun around like a record baby, right round, today

Wall Street are helping increase risk aversion again and risk aversion is helping cut US bond yields. USD/JPY has fallen back to the 119.15 level from earlier highs near 91.67 while EUR/JPY has slumped to 109.30 from 110.60 highs.
US two-year notes are down to 0.73% in yield from 0.77% when optimism was higher earlier in the day. 10s are at 3.175% from 3.24 earlier.
In EUR/USD, traders note heavy selling by US real money accounts from the 1.2010 area down to 1.1985. Note that there is often a lag between the underlying stock or bond trade being done and the FX component flowing to the custodians. It looks as though US managers continued to pull money out of Europe today, selling into strength.

Ashraf -

With the political turmoil in Japan considered....What effects should be considered in a market panic / risk aversion event? My first guess was this would amplify USD strength. What other currency would benefit in the event of risk aversion? Gold keeps coming to mind as another beneficiary.

Thanks in advance...
Darren