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Wall Street equity markets are collapsing during the lunch-time break, and forcing oil and gold prices lower, as well empowering the dollar in the near-term. The move out of stocks has been the reason for most of the sporadic Usd strength in June, and as such we are monitoring the pattern of trade that has the dollar being bought until Wall Street closes, and then drifts as the Asian markets absorb the U.S. based moves.
The only pair anywhere near the highs or lows of the day is Usd/Cad, and that speaks volumes in regard to whether the market really wants to own long-dollar positions right now; or whether they are forced trades that hedge the risk in the equity market right now. The bottom line is that the market is buying dollars and bonds right now, and selling equities and major pairs, in direct response to risk tolerance levels in the market that are at best, shaky.
Patience is key right now in seeing where the equity markets finish, and until that is known it may be hit and miss in regard to expecting afternoon U.S. equity trade to keep falling, and to therefore continue to empower the dollar. As we have just seen, following equity trade right now means the acceptance that momentum and sentiment can spin on a dime.