Dollar Dump

One of the things we've been watching for the past year were the carry trades, when the carry trades are losing momentum/failing, equity positions are also being unwound which is not news to us, however this afternoon's Dollar Dump, the second in a week is a little ugly considering that's how a carry trade is closed.

 Around 12:15 today the $USDX dumps on volume, this is the second time in less than a week.

5 min $USDX chart.

This is what it did to the USD/JPY on a 60 min chart.

And the EUR/JPY is already in decline and has been for some time.

If you read the linked post on the members' site, "A Currency Crisis", one of the things I expected to happen when the stock market dumps is for the Yen to shoot up higher even though the BOJ has been trying to keep it in a sub $102 band (USD/JPY).

Here's the Yen (futures) 60 min chart...

Yen 60 min.

I think the IWM is going to turn to the upside soon intraday, I have a gain in the IWM calls, but they expire Friday so depending on what things look like, I will probably take the IWM cals off on the next upside run.

As for XLF, the calls there expire next week, I'll take a closer look at the market before I make a decision, but this sudden Dollar dump for the second time in a week along with everything else we know concerns me a bit for the speculative longs, especially options expiring this week.