For whatever underlying reasons the Euro downturn appears to be intensifying and with correlated pairs like the AUD tuning down as well it looks like Risk Off trading ahead.
How will the EUR ever make the turn?
It’s virtually a month and a half until the ‘turn,’ or the New Year to most of us. As traders, we should expect Euro growth concerns, the fiscal cliff and Greece or Spain to dominate the reasons for most of our trading strategies. Until now, the past two months had been influenced by specific carry strategies, directed by core G10 policy makers. Long cheap EM position taking is now beginning to struggle as an outright strategy. How so? Due to the Central Bank policy of racing to weaken their own currency values the market should expect traders to shy away or close out most of the remaining carry positions. ... (full story)