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US Dollar, Yen See Inflows as Investors Lose Appetite for Risk

By: Minyanville
Posted: 9/4/2013 8:45:00 AM
Referenced Stocks: EMB;JNK

For the latter part of last week and the early part of this week, it appeared like global investors and traders wanted all the risk they could find. However, as soon as Obama and his administration hit the airwaves with new tough talk, everyone seemed to lose their appetite for risk.

OBSERVATIONS ON THE GLOBAL MARKETS THIS WEEK:

Below are some additional notes on the bonds and currencies.

BOND NOTES

FOREX NOTES

There's no short-term edge here from a technical perspective. Gun to head, I'm going with a continued short-term rally (possibly up to 0.9193 resistance) before the clear macro bearish trend takes back over. I'll be shorting all things Aussie up at that resistance if not sooner if the trading activity dictates.



SUMMARY

Were it not for the Syrian situation, I am fairly convinced that we would be seeing a continued "risk-on" condition in the global markets. My call, however, would not be for a runaway rally. Rather, I saw short-term / limited upside in stocks (1,690 was my target for the S&P futures) and risk currencies (as reflected in my Aussie dollar comments). I definitely felt / feel, though, that another fairly nasty down-leg in risk would / will take place once the upside correction played out (perhaps due to tapering, budget battles, Ben Bernanke successor talks, or international goings on; check this piece out by Nouriel Roubini for more on the risks we face. Now, my question is whether we will even get to enjoy the projected bounce.

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