A market outlook for traders and investors in all global risk asset markets, focused on stocks and currencies
As we discussed in part 2 of our post on last week's lessons for this week, the things that have really moved markets over the past months have been:
- Hopes for more stimulus
- Entrenched technical momentum
- Excessive complacency about EU risk
Sure, actual economic reports occasionally have had some influence. For example, last week's weak EU GDP figures had some fleeting effect.
Therefore with the above in mind, note how most of the below market movers are variations on at least one of the above 3 types of top market moving events.
1. Market Reaction To G20 Statement Issued Saturday (Stimulus Hopes)
Market interpretation and reaction to the G20 statement this past Saturday is likely to influence a number of markets in a number of ways.
Japanese Yen and Stocks
Japanese stocks, and to a lesser degree other Asian stocks, have been moving mostly with hopes of a cheaper Yen driving exports and earnings. Over the past week the big threat to the JPY downtrend and Nikkei uptrend was that the G7 and G20 statements might reflect opposition to the ongoing JPY debasement. They didn't, so expect both trends are free to continue, possibly with a big move early in the week that reflects the collective sigh of relief over the passing of the threat to these trends.
However, note that both trends have been continuing relentlessly for months and could easily see at least a temporary reversal. Some big players have likely closed out their short positions. For example, George Soros recently bragged about his successes shorting the JPY. We suspect he wouldn't be doing that if he were planning additional JPY short positions.
