Expect super volatility weeks

6/29/08

Remember I have mentioned about the relationship of currency pair USD/JPY vs Dow index movement. Currency traders are always like to use carry trade with USD/JPY pair (In fact, EUR/JPY is gradually more active). The correlation/trend ratio between USD/JPY with DOW is getting unity more than usual for this coming weeks and after. Currently, USD is falling close to all time lows against other countries. The most important economic data(Non-Farm payroll) is going to announce this coming thursday rather than firday right at the same time as the post rate announcement news by the ECB due to july 4th holiday. Therefore, the volatility in the currency pair as well as the US stock market would be huge, especially if there are surprises on both issues. And the worst would be, if ECB increases rate, dollar would get more weaken(means USD/JPY weaken also), and with bad NFP number. Then, it surely will give Bulls a hard time for US stock market. Moreover, greenback would clearly on the defensive play after july 3rd(thursday) as US currency traders are off for holiday that no patriotic action help support our $$. Well, hopefully that US stock markets are off making good capitulated bottom technically before thursday. Monday, the chicago PMI survery estimate 48.4. Let see how this surprise(if there is one) play out on traders/investors action monday.