[achiever]

The market was clearly confused overnight. Thus, on the edges, some players bought upside risk trades but most took profits. This cut back the long EUR or short USD positioning. The battle in FX is in the EUR with 1.4510 closing the decision maker – or perhaps more accurately decision forcer. The usual necessary conditions for a break out move in any market – positions being offsides and fundamentals shifting – both seem a bit soft on this latest bout of USD weakness. The biggest fundamental being the G20 and UN plea for anything but the USD as a reserve currency. The traditional driver of currencies – US rates - will remain a key part of the day with the 1pm auction likely the key event to fear. After that the Beige Book may help risk if it matches the other “recovery” hopes of the ISM reports. The focus on the Beige Book will be on the consumer anecdotes – as that is the soft underbelly of the market post the US consumer credit drop yesterday. Basically, we have too little information for anyone to feel comfortable – that is why trading is risky and the rewards will belong to those that get it right. Chances of this wedge formation in FX blowing out seem high and have started to attract more than the usual players. USD weakness has been linked to equities and commodities making today most likely volatile and more an equity vol and gold vol story – both are so much more noisy than FX that the information of traditional correlation trading will be lost. Bottom line – with so little conviction its natural that the ranges are the victim as momentum trading wins the day again – logic has nothing to do with markets here.