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Broad but Questionable Rebound for USD, Yen Crosses and Equities

Broad but Questionable Rebound for USD, Yen Crosses and Equities

2016-02-16 01:39:00
John Kicklighter, Chief Currency Strategist
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Talking Points:

• Continuing with the rebound mounted on Friday, this week opened to an extended rise in risk-oriented trades

• Though broad, the bounce in these 'risk' positions fights a very strong current in global financial markets

• With the US and China back online with the upcoming session, convictions will be put to the test

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

We are once again faced with the eternal market question: is this a temporary correction or the foundation of a new trend? Monday saw a general rise in global equities, the Greenback, and Yen crosses. The correlation and intensity of these moves speaks to a rebound in risk appetite following weeks of sometimes intense deleveraging. While we have see a broad shift away from higher yield exposure for some weeks, this sentiment tide itself is difficult to peg as the prevailing view. Risk aversion itself can still be called a correction for benchmarks like the S&P 500. This disparity makes for difficulty in casting long-term calls and positions. So, as we look for conviction, short-term opportunities can be reviewed like the UK data coming up and the patterns from GBPUSD, GBPAUD, GBPCAD, GBPNZD that exploit it. We discuss trading approaches to current market conditions in today's Trading Video.

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