Land of confusion

Macro Man's IT department is currently residing in the land of confusion, so the P/L is unavailable today. However the "better reboot" crowd aren't the only ones scratching their heads.

On the basis of the last two months' price action, one would have thought that Friday's goose-egg CPI data would have seen both the dollar and bond yields screaming lower. And while that was the market's first impulse, the stunning reversals seen Friday afternoon must raise the spectre that the bond bull and dollar bear markets may have run their course.

Not even reported interest from Voldemort has been able to staunch the tide of dollar strength, and suggests that the depth of the dollar short was more considerable than commonly supposed. As such, caution remains warranted on the postion, and a failure of EUR/USD to bounce over the next few days may well warrant a postion reduction.

Strangely, however, the NZD remains a bastion of strength, despite the underlying dollar recovery. Macro Man would be lying if he said that he understood exactly what's going on there, other than perhaps a naked grab for carry. With key GDP data looming later this week, however, the kiwi may be ripe for a collapse. Stay tuned.

Elsewhere, triple withcing passed without incident on Friday and equities continue to drift higher today. Closing the DAX and Aussie shorts was the right decision, but sadly Macro Man has maitnained a short DIA postion, partially offsetting the SPH7 long. This will have to be trimmed on a pullback.

Overall, markets should be relatively quiet this week, as traders spend more time on Amazon than they do on markets; perversely, next week could provide more excitement as people adjust risk for 2007 in limited liquidity conditions.