The Month of June

"What is one to say about June, the time of perfect young summer, the fulfillment of the promise of the earlier months, and with as yet no sign to remind one that its fresh
young beauty will ever fade."
-  Gertrude Jekyll,  On Gardening

As inspiring as the northern hemisphere summer might be, whether or not that optimism feeds into the markets is another question.  There were rumours last night that the Fed intervened in the Euro.  That would explain the jumps to 1.2350.  Here we are though, going into the European opening back down at 1.2200.

I'm going to back the central banks again and am long EURUSD at 1.2200 and AUDUSD at .8300.  Its not a do or die position for me, but I'll stick with it for a while - especially since the month of June might just, just, make people feel better about themselves and the world.

May was a tumultuous month as the market focused on the risk off deflationary trade.  This was spurred on by the concerns over European sovereign debt and fiscal positions.  As the Detma model D6 and D12 signal summaries show, systematic trend following traders would be 100% long USD and JPY in positioning for this.

As a consequence of this global uncertainty, the Aussie, which relies on steady global growth for its well being, was caboshed again.  Whether or not the AUDUSD holds here will depend on whether the EURUSD can hold the 1.21/2200 area.  If the EURUSD goes to 1.1000 for example, the AUDUSD will go to 0.7500. 

This is all madness of course.  We all know that the USD needs to weaken but it is all a matter of timing with the markets.  

Systematic models that react to past price action are fully placed for further USD strength.  June will be the make or break month for the Euro and stock markets.  I'm hopeful of a reprieve from the doom and gloom of recent times so here's hoping.

Frank