The financial markets are expressing adversity to risk in a regular way after a day of confusion. The European and commodity currencies open marginally lower and the yen higher, the Asia/Pacific stock markets closed mostly down, the European bourses are down, while the gold/oil spread climbed up. The US stock indexes are lower in pre-open market. Of note, Iranian President Ahmadinejad survived an unsophisticated bomb attack in Iran; thus, expect the cunning extremist leader to launch a new wave of threats against the West in order to mask his failures to help the domestic economy. In the US, keep an eye on the MBA data, the ADP employment change as a precursor of Friday’s non-farm payrolls report, and on the ISM non-manufacturing report. The short-term outlook is sideways to slightly bearish for the European and commodity currencies and mildly bullish for the yen. The medium-term outlook is slightly bullish for most of the foreign currencies futures. My model is long all of the foreign currencies futures.

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