Quiet Out There....But Not for Long

  • Quiet trade always warns of volatility
  • Commodity currencies looking stretched 
  • Looking to buy USDJPY into next dip

BEFORE THE STORM - Most days, the market is very exciting and there is a lot to look at. But there are some days where there just isn't that much going on. On days like these, it's critical to process this fact and know the best thing to do is to sit back and do nothing. When studying volatility, we learn that the times when things are super quiet and directionless, are quite often the times right before some big moves go down.

FADING COMMODITY FX - So with that in mind, be patient, as I have been urging this week. I think if we break things down, there could be a sweet opportunity to buy the Buck against some of the commodity currencies in the sessions ahead. I don't think Aussie, Kiwi and Cad have much room left in the tank, and I suppose I like the idea of selling Kiwi the most on a rally towards 0.7000. There is plenty of solid medium-term resistance up there.

Stock market weakness could open another drop in $USDJPY. Via @joelkruger

ONE MORE DROP - Otherwise, I'm still liking the idea of buying USDJPY, but just as per above, would like to see one more run of currency strength before stepping in. It's hard to hold back from buying USDJPY around 108.00, knowing full well that we may have seen a bottom already, but we need to be disciplined and take the right trades. But I think if equities retreat, as I believe they will, this will open that downside in USDJPY to attractive buy levels.  

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