5 Days in a leaky boat...the currency market is drifting

The Finn Brothers of SplitEnz fame once wrote and sang a song called “I just spent 6 months in a leaky boat”. Copy and paste this phrase and change 6 months to 5 days and there you have the FX market this week.

Battered from pillar to post, we drift rather aimlessly in great expectation of that next headline/Greek election result/FOMC/SNB meeting etc

The net result is that levels observed and mentioned in this piece yesterday still hold water (pardon the nautically themed pun) and most Tier 1 houses and real money accounts are scaling out of positions if not closing them entirely for what will be a significant perfect storm of risk events in the coming days.

Option volatilities are reacting accordingly, having been bid up smalls from the Asian open on Sunday to now reverting back into their sleepy shells. Playing the One Touch/No Touch game is perhaps the only viable alternative if you can find value in 1 and 2 week tenors.

The only data point of any real interest today remains in the US session where we see retail sales and PPI prints. However I’m not expecting the market to react too much, as the US is too far away from the epicentre of current excitement, Europe.

Your scribe is tired, folks, and much like the above mentioned Tier 1 names and real money (myself these days) is scaling out of positions and looking to close the books by Friday afternoon. So with that in mind the rest of the week will be spent unwinding trades strategically and perhaps even in some instances being forced to take small p/l hits, but rather now, than at the mercy of a volatile Asian Sunday open.

Helmets on folks, you’ll need them this week.