There you have it- sell off in Chinese stock causes “flight from risk” everywhere. Every  single day the same headlines “Dollar falls on increased risk appetite” followed next day by ”USD gains ground on flight from risk”. Mix the ubiquitous “green shoots”(what does that mean, anyways?) and “Yen rises on search of safe haven” and you have tomorrow’s headlines. It will be the same thing, maybe in different order. Take your pick. Looks like journalists define any asset outside of US Dollar and Japanese Yen as risk, while USD and JPY are safe havens. Peculiar definition.

Is it possible that every financial reporter in the world is limited in both vision and vocabulary? Or is it a case of being afraid to stand out? After all, if you write what everybody is writing, you can’t possibly be the worst. You are the in the middle of the pack, not the best, but also not the worst. That”s probably the key, same principle by which money managers operate- don’t be the worst and your job is safe. It is OK to be wrong, as long as everybody else is, perfect excuse. But really, they have to conjure up different thesuarus and come up with a new, explain all, phrase.

Seemingly situation is as follows: one day investors, traders and speculators want risk and all act in unison. Couple of days later they get scared, together again, mind you, and desire safety. Amazing! By the way, if the Dollar end Yen are perfectly safe, this means all assets denominated in these currencies are of sterling quality. If this is the case how come NIKKEI dropped over 3% today? Dow is down 200 points right now and its doubtful it will change much before the close. Hmm, are the “green shoots” turning into brown twigs or something?

Well, let them write whatever. Meanwhile trades from the currency futures post, Sunday, are under way. All Yen pairs dropped sharply, including the one I discussed, CAD-JPY. Trade is about 100 pips in profit, and the short term trader in me wants to take it and then seek another entry. Did in other pair, but this one I’ll sit on for a while, see if it can realise full potential. It is almost certain that trade will experience some adverse movement. Will have to patient here. Same with AUD-CHF. Intermediate term trades almost always have counter moves within them.

New Zealand sold off rather sharply today. Must be a currency plagued with risk. At any rate, I want to try it in combination with the Pound, buying GBP-NZD. Order is set at 2.4620 and 200 pips objective. One should expect sideways movement before breakout, if it happens. Kiwi has been very strong lately, still appreciating while other currencies started to turn. Chances are, that it will catch up in an accelerated manner, too.

Trades discussed yesterday, and this one, all have fairly large targets for either the pair of time frame. This is because last few days brought extra volatility and a little oversized swings. If the “flight from risk” continues, markets will likely behave as if on steroids. Should things stabilize, I will be looking for trades with smaller objectives. Depends on what the markets dictate.

Mike K.