This week was very interesting. Fundamentally, given data out of China and the United States, it became clear that growth prospects are dimming across the globe and that the Federal Reserve will stay on the sidelines in terms of more easing. With that said, I still believe that the People's Bank of China and the Fed will introduce some forms of easing in the near-future. I am now cautiously bearish, and the technicals certainly would expect some further downside in the commodity currencies, in particular, the Australian Dollar.
Ahead of nonfarm payrolls, I remain on the sidelines, as the implications for this print are profound. On one hand, a strong print would validate the Fed's belief that the US economy needs no further easing, which would ultimately be US Dollar bullish; on the other, a weak print could result in a pullback in risk-appetite as well as the US Dollar. I would expect QE3 chatter among media and traders - maybe not policymakers - to pick up in that case.
Either way, with equity markets closed for the Easter holiday, liquidity will be thin and I would prefer to preserve my capital in this instance.
Any other trade ideas and general macroeconomic musings can be found in the Real Time Newsfeed, or by following me on twitter @CVecchioFX
