This market is like a parent saying to a child “stop crying or I’ll give you something to cry about!”
The risk rout came on worries about Europe and the end of QE, not US economic weakness. The US economy is still in good shape but with the market already pulling a QE tantrum, poor readings on US retail sales and the Empire Fed couldn’t have come at a worse time.
Traders aren’t looking past what happens in the next five minutes but there’s some good news is the pipeline. The Beige Book later will be upbeat about the economy and remind everyone that the Fed hasn’t committed to anything. But for the dollar, that could be more bad news.
The trade right now is purely to sell the dollar but if the worries about the global economy have a foundation, then the dollar still has plenty of room to run (except against the yen).
