As the equity indexes appear to have avoided another Cruz missile this afternoon, some of our early warning currency arrays are still flashing caution.
The Australian dollar, which has performed strongly throughout the month is starting to display an overextension of momentum that will likely require a retracement decline to replenish its uptrend.
We brought up the Aussie's larger but similar momentum breakdown from 2008, which would indicate an interim top is approaching. The biggest difference for us is that although we had expected the Aussie to strengthen, it has gained with the equity markets and without the precious metals sector. Should it breakdown from here, we expect it would also run lower with the equity indexes, most notably - emerging markets.
The yen has backtested the breakout from earlier in the month and has firmed throughout today's session. While still early to call, former resistance has now become support.
If the yen finds a bid in the coming sessions, we would expect it to run with the precious metals sector and cause the most collateral damages in Japan.