Stop losses are marvelous inventions in times like these (hence we use them!). The USDJPY is staging quite the sharp descent of circa 390 pips, and this move is 'blamed' on quite the set of numerous alleged factors; Firstly, the political uncertainty in upcoming Greek elections, has caused quite the jitter (understatement perhaps...) of a 13% drop in Greek equities today. On top of that, the USD/CNY has also lost ground, slipping the most since Dec. 2008, to add more to the headache of positive sentiment. It is not anything surprising that when market positioning is highly skewed to one side, the risk for price shocks increase in tandem. The question to ask really, is was it really risk-off trade? Perhaps, as concurrently, the Swiss Franc was bid as well along with Gold, which provides the argument that 'safe haven' flight was what occurred in yesterday's US afternoon trade.
What is interesting to note is that although one might think it's safe haven flight (which it very well could be), the USD was sold as well against the AUD, EUR, and slightly by the GBP. The traditional belief would be to think that comdollars would drop in tandem, and so would the EUR (Greece in Europe herp derp) but reality yesterday proved otherwise. The question that's poking my head then is : since the USD has starkly fattened up due to 'front-running' the Fed for 2015 hikes, will the USD play out as a loser when global sentiment deteriorates as market participants pare out positions?
Well the one that everyone gives a real rat's ass about : Do we or do we not - buy the [expletive] dip? My answer to that, for myself, is a very tempting yes but a very cautious one at that. No one wants to close a good year by eroding profits through some unnecessary risk taking in times where you aren't as sure.The Cyprus Bank Run last year in February was the point for blame when equities and the USDJPY to shat itself for a day sharply - but that was it, it rallied all the way after. The price shock in June as well took an approximate week to fade before the USDJPY just chugged along happily after. The whole Ukraine mess as well when the Crimea crisis was at hand, took approximately a week to fully fade away from the focus of the market. This one? Something tells me its different, as it's numerous things happening simultaneously developing globally at multiple angles, rather than just a country-specific risk that gets off the radar quite quickly.
I'd buy the dip, but I'd give it till next week before attempting anything. if nothing pops up nice, well that's closing books for this year!
Mostly a place where I write down my macro/RV ideas. Feedback more than welcome.