- USD/JPY
With the recent S&P downgrade, a drop to 76/75 may be possible, and my hopes for that trade would be that it would spur the BoJ/MoF to intervene once more to establish their credibility. Now that they have effectively drawn a line in the sand at 76.25, it will invariably be the target of speculators. The one thing I'm uncertain of is how US Treasury yields will respond to the downgrade, and whether that will have a sustained effect on USD/JPY. If there is knee-jerk selling, it would create a spike in yields, which normally tends to buoy USD/JPY, but I'm thinking the yields will drop back down as the market digests the downgrade rationally, and prices in slower growth prospects.
- EUR/JPY
I'm anticipating shorting after the BoJ/MoF intervenes to play out what I think has the potential to be a bearish move in EUR. The markets seem to have been comforted by the fact that the ECB was in the market buying Portuguese and Irish bonds, but they have not yet entered into the Italian and Spanish markets. They have hinted that they are open to the idea, and advocated for speedier reforms, but I'm not quite sure that the ECB committed to and conditioned bond market intervention on speedier reforms.
This may have been a misinterpretation by the market, and relief has begun to be priced into EUR/USD. If the ECB however comes out to say that they are not going to buy Italian and Spanish debt, EUR should drop speedily. Furthermore, before they go about doing this, they need to vote on it, and with opposition to intervene in the much smaller markets of Spain and Portugal, it may be a bit harder to get consensus to go ahead for Italy and Spain. Additionally, it would seem like the ECB would be playing the role of a dumping ground for toxic European paper. I'd think that their intervention would most likely be such so that they could pass off their bonds at cost to the EFSF when it's size has been increased.
However, an increase of the EFSF size requires unanimous consent, and Slovakia and Finland have already voiced their opposition to this, which would indefinitely lead to uncertainty. I don't think Germany would take too kindly to the notion as well, since they would be footing a large part of the bill. Additionally, this would increase the debt-to-GDP ratios of countries like Germany and France, which may put their sovereign ratings under question - and that would certainly rile the markets - if the core is affected.
In any event I'm not going to play these just yet, especially since the latter is conditional on the former. I'm instead going to wait for the BoJ/MoF to come into the market, to give me some juicy entry points. Should be a good trade.
- EUR/CHF
If the ECB does decide to come in and intervene in the Italian and Spanish debt markets, then I'd like to take a short-term long on EUR/CHF for the short squeeze it would create. Additionally I'm eying a small bit of CHF weakness later in the week depending on Swiss deals, so it may be a nice little trade.
- CHF/JPY
A long trade which I'm weighing the pros/cons since the central banks of both currencies are a little on edge. May be good for a short term trade - we'll see how things play out this week.
- XAU/USD
The Gold Market is particularly one sided, with record numbers of long contracts, and I think that's because it's pricing in the Fed hinting at some form of QE at either the Fed meeting or the Jackson Hole Summit. If the Fed does not hint at QE by the Jackson Hole Summit, I'm thinking it will spur a sell-off in commodities, and that will spur a sell-off in Gold, which has the potential to move quickly. I'll be paying close attention to the Fed events. That being said, Gold does have many things going for it, one of which is increased demand for diversification purposes and somewhat of a safe haven.
August should be busy. 
Regards,
xXTrizzleXx
Hope I can contribute to the discussion in the future. :nerd:
As for analysis, some of it is included below.
At least I live to trade another day.
