Commentary: Surveying the Week's Wreckage

This past week has not been fun for me.  EUR/CHF, my main position continues to slow grind lower.  I also booked a loss on a long USD/JPY position after the tone has tuned firmly bearish.  I still look to get long, but the evidence points to the fact that we are witnessing a larger pullback.  Notably, a poll of Japanese exporters showed that this sizable group of firms expects USD/JPY to retrace all the way down to 85.  Referring to the BoJ and real Japanese economy, one story on the wires declared "what we have here is a failure to communicate."  Alas, it looks like the specs are running for the exits, and the real money still hasn't caught on to the fact the Bank of Japan intends to, at least indirectly, weaken the Yen.  In light of this, and the risk off mood driven by some weaker than expected data, I chose to go flat and wait to get long again at a lower level.   

As for EUR/CHF, I will continue to stay long and buy into weakness.  Its no fun having a big paper loss on the books, but even if this pair fell to the 1.20 floor I would still be up a nice 10 percent year on year.  I have raised my USD/MXN offer to 12.5, in anticipation of some gloomy jobs numbers this Friday.  Longterm however, the market still seems to want to take this pair lower, and I expect that the Peso will slowly work its way down into the 11s no matter what Friday's report reveals.  

The surging Aussie has me giving Asia another look.  INR seems to finally ended its slide, though serious concerns remain.  USD/THB has pulled back on risk off sentiment, though the fundamentals remain excellent.  The low volatility of this pair also makes shorting it an attractive carry trade.  Stay tuned for a briefing later this week.