Squeeze is being applied to Russia, with a looming trade deadline for China and ongoing shutdowns. Earnings reports are missing, and although there’s not much data, activity in the currency markets seems quite indifferent. It seems that when risk-off sentiment hits, it indicates that there should have been positions to close out in the first place; perhaps the FX market has already moved on. Regardless, I will keep pushing ahead and am hopeful for a more significant reaction tomorrow since we have little to hold onto while awaiting some informative data from both sides of the Atlantic.

My portfolio is somewhat mixed, as I lack strong confidence in the overall narrative and don’t have a particularly strong outlook on the dollar right now. I have a small long position in euros, as there appears to be considerable pessimism regarding Europe, and speculation positioning has been drastically reduced; I’m eager to see the results of tomorrow's PMIs. Another concern is that the sanctions might escalate tensions with Russia, and the oil price fluctuations are also unfavorable.

I’m short on AUD, as many expect a trade deal with China, so it serves as a hedge against further disputes leading up to the agreement or if no agreement is reached, especially if high inflation data comes out of the US tomorrow. My short position in EURSEK is based on the divide between those with fiscal advantages and those without; this appears particularly compelling since local data has already benefited from the Riksbank’s aggressive cuts before the announced fiscal boost, and local corporations are underhedged while breaking through favorable technical levels.

I’m potentially looking to short pounds, but I’ve avoided this trade for a while due to the lack of movement in EURGBP and consistent buying from corporate and real money flows. Lower inflation is a positive aspect, so while yesterday's repricing of rates diminishes some of the carry appeal for sterling, I will only consider selling if there’s accompanying weakness in activity data, starting with retail sales and PMI tomorrow.

There’s nothing new to report on euros; I have a small long position ahead of the numbers coming out tomorrow, with 1.1540/50 being crucial support on the downside.

Following yesterday's discussion, the recent dip in Gold has captured everyone's attention (notice the pun?). After observing some weakness in the AUD against other currencies, the bounce from the 4000 level led to a pullback. Regardless, I’ve begun to position myself on the short side for AUD. The upcoming Q3 inflation report will be crucial (refer to yesterday’s commentary), but I believe the market is somewhat indifferent about the US/China trade tensions. The US's recent sanctions on Russian oil companies and the potential effects on China's 2 million barrels per day imports, although I’m skeptical this will become a problem, are likely to heighten concerns (again, a pun intended). I see AUD longs as being at risk as we approach next week. The GBP weakened following yesterday's inflation data, but it made a decent recovery in the afternoon as new shorts were quickly covered, lacking any continuation, despite yields dropping by 8-10 basis points. Although the fragile condition of the government's finances is widely acknowledged, if economic activity begins to decline alongside softer inflation leading to lower rates, the GBP's yield support could weaken, prompting bears to reemerge. I might be jumping the gun here, and we need to see how things develop, so tomorrow's retail sales figures will be closely monitored.

It’s difficult to dispute USDJPY's current position, especially with the ongoing risk sentiment, absence of US economic data, negative real rates, only 3bps expected for next week’s BOJ meeting, and Takaichi taking the lead. The recent rise in oil prices over the last couple of days is likely contributing to the struggles of the JPY. We anticipate that as USDJPY approaches 153.20/30 and EURJPY hits 177.92, it will attract more attention. At this point, there’s no strong position to take—the local factors could weigh down the currency, but pursuing xxxJPY higher now doesn’t seem appealing, so I prefer to remain uninvolved.