Neither the Swiss Alps nor the Golden Peaks of gold are enough to dissuade investors from paying any price given the lousy choice of safe-havens.
The USD has had a thorough market colonoscopy over the last several weak revealing all manner of fiscal polyps (how’s that for imagery?) and is out of favor except as a last resort. Investors are closing their eyes and buying CHF, JPY and Gold as the best lines of defense against spreading European contagion and a possible US downgrade. Emerging markets are less attractive destinations as risk aversion rises and global growth slows. Truly, there is no place left to hide.
In these circumstances, DO NOT BUCK THE TREND. Don’t try and pick a bottom in USD/CHF and EUR/CHF. Even the frickin’ SNB couldn’t do that….
USD/JPY? Be nimble, if you like and try and take advantage of expected BOJ intervention. But play small and nimble. If you get a multi-yen bounce, ring the register and get out. If we break 76.00 RUN, don’t walk to the exits.
EUR/USD. Avoid, if you can. While it is likely to remain offered as a result of risk aversion, the bounces (as we saw this morning) can be vicious.
If risk aversion continues to rise, selling AUD and CAD look like the way to play…
