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It seems that despite the massive writedowns at ML and their plans to dump their debt onto an anxious market, the carry trades are doing pretty well.
Realistically, this move is solely the work of the dollar; but we have seen it have a real impact on USDJPY and USDCHF.
For USDCHF, the dollar's strength has led to a notable channel break which has significant room to run before major technical levels come into view.
USDJPY is another story, however. The dollar jump is noted, but the major break has not been confirmed (what I would consider a move beyond 108.50).
So which one is really reflecting the direction of the dollar and the carry? The USDCHF would suggest the dollar is making its breakout (which isn't confirmed yet by the most liquid major - EURUSD - in a major break of trend) and carry interest is on the rise. USDJPY would say the dollar was just set for a short burst but now is caving to resistance.
What's the consensus?
I was triggered on a long USDCHF position and am now watching for a market entry on a confirmed upside USDJPY break of 108.50 (may move that over to limit orders).
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