Risk Trends and Dollar Shorts Will be Put to Task Next Week

Talking Points:

• The past week showed signs of moderation that helped to deflate volatility and lift the S&P 500

• A key technical break for USDollar didn't fuel immediate follow through, but what keeps the Dollar up?

• Top event risk ahead includes China 3Q GDP, the ECB and BoC rate decisions; while top themes lurk

See how retail traders are positioning in the majors in your charts using the FXCM SSI snapshot.

The financial markets seemed to regain a sense of confidence this past week with volatility measures retreating and benchmarks like the S&P 500 regaining lost ground. However, this optimism should be weighed carefully by traders looking to get the lay of the land. The rebound has covered lost ground but is far from reviving the investment buildup of previous years. Furthermore, it seems to be centered on the increasingly questionable hopes for fresh central bank accommodation. Skepticism in moral hazard is already shacky, so anticipation for this leverage should be put into perspective. With key event risk like Chinese 3Q GDP ahead, major themes just below the surface and market conditions striking an unlikely stability; it will be important to have options ready for different scenarios. We look at a range of options depending on the path we take in this weekend Trading Video.

Sign up for John’s email distribution list, here.