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Just as the stress test advocates were getting ready to declare Friday’s results a success due to a selloff in USD and rally in equity markets, we then ran right into a summer whipsaw. The broad majority of G10 currencies sharply reversed their brief trends with today’s European open. Yesterday’s wave of risky asset investing lacked any solid drivers, so the momentum was bound to falter….

The substance and meaning of Friday’s Stress test results are still be hotly debated. Financial pundits are putting enormous emphasis on the European open as the barometer of the market’s sudden confidence in the results. We are still unconvinced about the stress tests and doubt that a single market open/trading day will create the directional rush some participants are looking for. FX markets…

The amount of nervous energy in today’s FX market has already translated into some choppy, range-bound trading. The source is obviously the impending release of the EU bank stress test due to be issued at 16:00 GMT. Today, German IFO data came in much stronger than expected spiking the EURUSD 40 pips rallying up to 1.2965. In the back of our minds, we remember that torrent of support…

Risk appetite was pared down during the Asian session as investors chose to focus on Fed Chairman Bernanke’s dovish comments. Bernanke’s semiannual report to Congress basically reiterated the position reported in the FOMC minutes and policy speeches. However, the markets seemed to have latched on the words “we recognize that the economic outlook remains unusually uncertain. We will continue to…

Markets gained a temporary sense of optimism as FX risk-correlated trades recover from yesterday’s sell off and equity markets rally in Asia. Yesterday we saw a sharp reversal - especially in the EURUSD as leveraged players cut their long positions after the pair lost momentum and seemed to run into resistance. EU officials are on the wires talking up the bank stress test due to be released this…

EURUSD was able to shake off yesterday’s Moody downgrade of Ireland and the speculation that a German Bank would fail the stress test to rally to 1.3028. The Hungarian decision to halt talks with the IMF/EU remains risk negative but was not able to weigh on the Euro. While none of the events are on-their-own monumental or unexpected for the Euro, we still believe that the there is a growing…

With Tokyo taking an extended holiday weekend - it’s hard to identify if there has been a shift in sentiment or if today’s actions are just the result of low liquidity. The media has taken a pessimistic tone following last week’s US data and this week’s upcoming EU bank stress test results. One event worth noting this week will be the BoC’s rate announcement on Tuesday. Markets are broadly…

With Tokyo taking an extended holiday weekend - it’s hard to identify if there has been a shift in sentiment or if today’s actions are just the result of low liquidity. The media has taken a pessimistic tone following last week’s US data and this week’s upcoming EU bank stress test results. One event worth noting this week will be the BoC’s rate announcement on Tuesday. Markets are broadly…

The main highlight of today’s session will be the latest reading of US CPI for Jun, where markets are anticipating the headline rate to decelerate -0.1% MoM to 1.2% YoY. Obviously, inflation readings in the US are unlikely to be viewed with any anticipation that a higher reading will prompt a hike just yet, but the release does take on a greater significance in the light of recent Fed rhetoric….

EURUSD traded above 1.2700 but lacked the momentum to drive above the 1.2800 level. Part of the reason for the restrained market activity may be the EU Bank Stress test results expected to be released next Friday. While some say the release will be good for risk-correlated trades due to the high level of transparency – we believe this may only be the case if the anticipated cost of recapitalizing…