Market Update
As we predicted, the social unrest in Greece was splashed across media headlines today and appeared to be the main driver behind the fall in equity markets and the Euro weakness observed. I think the Asian equity indices will close in the red as the negative sentiment from today's U.S. and Europe sessions spills over into the Asia session. However, that does not necessarily mean that currencies will sell off against the dollar. (Sideways price action in EUR/USD & GBP/USD is a good possibility.)
Looking Forward
I'm currently long EUR/USD at 1.2890, GBP/USD at 1.5990, and AUD/USD at 1.0205
I initiated these positions because I consider the Euro and Pound to be oversold at these levels and expect them to bounce. Also, the kickoff to earnings season appears to be positive. The Aussie has been propped up since Monday's Asia session - in part due to rumors of more Chinese stimulus.
Note: These are short term trades and I will reevaluate when I get back to my desk before the Europe session begins. I'm aiming for 50 pips; but I'll have to see how price action develops.
I'm still bearish on USD/JPY for now as I think the U.S. 10 year treasury note yield change will continue to slide (risk off) prior to the Spanish bailout rumors due out shortly before the October 21st Spanish elections.You can track bond yields at Bloomberg's website.
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