There have been some inconclusive breakouts in today’s markets, reflective of an inconclusive market attitude to risk. EUR/JPY has had a proper breakout, the JPY has risen against everything, and the AUD is dropping. The immediate causes are the downward revision of a leading indicator for China and a poor CB US consumer confidence number (which contradicts an improved Michigan consumer confidence reading last Friday).

I think that it is too early to play this latest risk-off round. There are plenty more things to break out if the tone turns really bearish — not least the equity market. And I am reluctant to add to my short EUR position (EUR/JPY seems the most obvious new trade to do). Non-farm employment change tomorrow may cement the picture. A bad number should see a bearish story take further hold; a good number will put things on hold until the ISM manufacturing report on Thursday.

Update: Incidentally, natural gas is dropping like a stone — getting out was the right thing to do. On the other hand, EUR/CHF is still dropping — I should have traded it.

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