WATCHING THE POUND - The economic calendar is absolutely stacked this week and should start to sizzle today with the release of UK CPI and US retail sales. On Monday, things kicked off with a disastrous China trade print, though interestingly enough, the data did nothing to shake the confidence of stock market participants, with the equity market still very well supported and once again contemplating fresh record highs. Perhaps even more interesting was the fact that the China data sent chills through the spines of currency traders, with emerging market currencies hit hard, while the correlated Australian and New Zealand Dollars were also hit. China data will come back into the fold tomorrow with GDP and industrial production due, but in the interim, it will be worth watching the Pound to see if this currency can manage any recovery. Of course, a lot of this will initially be contingent on UK inflation data. If we get a higher than expected CPI print today, look for the Pound to emerge as an outperformer. Then we get US retail sales. The market is looking for a recovery from last month's disappointment, and if the data falls short, it could open a more substantial sell-off in the Buck.
NEW TRADES - Overall, I have said a number of times in recent reports that although I remain Dollar bullish, technically, there is plenty of room to see the US Dollar correct a bit more before it looks to truly reassert and extend gains. So I am skeptical that even with recent Dollar strength, we see the Dollar push much higher from current levels. I actually went ahead and took a short USD position on Monday, but did so on the emerging market front via the Rand. I sold USDZAR at 12.1763 and no longer have any risk on the trade after moving my stop-loss to break even once the trade moved into the money a bit. I don't expect to be holding this trade too long, but it's definitely cool to be holding a proper carry trade, with actual yield. I can't remember the last time I was in a position that paid me money to hold. Feels weird. I was also busy away from the Dollar, establishing a fresh long position in EURCHF at 1.0330. I had said I like buying this market into a stretched intraday dip, and this is precisely what we got late Monday. I have a hard stop in place on this one at 1.0279, and will happily exit for a small loss there if the trade isn't working out. Ultimately, with the SNB still very capable of weakening the Franc, I like the idea of playing this side of the trade in overdone market conditions like we saw on Monday. Otherwise, I continue to sit on long AUDNZD 1.0215. So only into Tuesday and two fresh trades in play. Exciting stuff.