Breakfast Blog

Good Morning Traders,
                                    A quiet start to the week with no Tier 1 Data from Europe this morning with Traders awaiting the Retail Sales Data from the States at 13 30 this afternoon.
Thursday and Friday were two days completely dominated by Dollar Strength. We saw the USD/JPY push from below 99 to nearly 102 in just two trading sessions. Strong U.S. Data combined with a rumour that FED watcher John Hilsenrath's weekend articles had a direct interview with a member of the FOMC and a detailed plan about the FED's exit strategy proved a catalyst for Dollar Strength with a number of significant levels being breached. These included 1.30 to the downside in the EUR/USD pair, parity in the AUD/USD pair, 100 to the upside in USD/JPY and the break of the narrow trading channel in spot Gold. This was a break of the 1440-1480 range, where we broke to the downside before recovering with a low print seen at 1419 on Friday, we trade at 1431 Spot as I type.
Over the Summer Months one of the Markets main risk events will be how the Fed plans to reduce/halt/continue/increase its Asset Purchase program as the Markets have become petrified that their training wheels could potentially be removed in Q4 of this year. Even on Thursday afternoon a rumour that John Hilsenrath's weekend press contained details of a Fed exit strategy from its current program caused a 60 point drop in the Dow Jones before it rallied back after the close of U.S. trading. This clearly shows the Market is overly long and looking for any reason to short the market. Trading Equity Indices in this current climate involves no knowledge of Company Performance, technical skills or Analysis. The Market simply revolves around Central Bank policy and nothing else and this evidently won't stop until Bernanke or Yellen or whoever chairs the Printing Press starts to draw out the Liquidity in the System causing a huge Stock Market Crash and hopefully resetting  the Market in a more rational and transparent mind set.
The Move over 100 in the USD/JPY confirms that the Market believes in Kuroda and his easing Policies and bid to beat deflation once and for all. With Japanese nationals now Net buyers of Foreign Bonds compared to Domestic Bonds it saw the JGB Market being halted on Friday as the Yield grows so small as Japanese Investors are forced out of the Country with their Capital in a bid to Find a 3% or greater Yield for their Money. This is the point that the Yen may start to weaken significantly when Wealth from Japanese citizens is forced into Europe and The United States. If we see more Data supporting the outflow of Jaonese Wealth over the coming weeks and months we may see 1.20 in the Pair before the End of the Summer.
The EUR/USD pair has been constrained between the 200 DAY MA at 1.29 and 1.32 topside. The Market thinks that the Big Panda (Asian Central Bank) has a large DNT (do not touch) Option in play here and is playing the ranges with big money on both sides. The play here is to go with a daily close under or over these parameters or simply trade at extremes of this 300 Pip Range.
We will have some order levels up later once America wakes up.
Good Luck in the Markets. Lowkey