STILL NOTHING - A very quiet start to the week with markets barely moving as we head into Tuesday trade. Though we have been waiting for a major surge in volatility, and though it seems like there have been plenty of respectable catalysts to trigger such volatility, nothing as of yet. I continue to keep my eye on USD/JPY and EUR/CHF and will be looking for these markets to break lower as global macro pressures intensify and we finally do see that highly anticipated and well deserved market correction in risk assets. Emerging market FX is still too bid in my view and I would be on the lookout for some selling in these markets over the coming days.
TIME TO PAUSE - Elsewhere, the New Zealand Dollar has come off from recent highs above 0.8800, but still has yet to roll over like I think it will. The RBNZ will be out with its policy decision late Wednesday and I will be looking for the central bank to pause. There has already been some good evidence of the tightening working its way into the economy, with inflation coming off in recent weeks. The RBNZ has said repeatedly that they don't believe the NZD should be able to sustain current levels, and with geopolitical risk now coming back into the fold, I have a hard time seeing another hike. I will be looking for a less hawkish than expected decision. Any rallies should continue to be very well capped in favor of an eventual decline back down towards 0.8000 over the medium-term.