Another quiet Asian session as the US dollar was mixed -vs- the majors. The concept of de-leveraging has come to the fore as all the recent central banker machinations have had the unintended (or perhaps it was intended) consequence of mystifying the markets. The fact that this is a slow week from an economic data release perspective and that it is the last week of the second quarter appears to have also reduced the liquidity and increased the skittishness as traders seem less inclined to commit to longer term views.
The underlying theme still remains namely that the future path of monetary policies of the US and the rest of the industrialized world will continue to diverge. What is less certain is whether this will translate into a stronger dollar over the medium to long term horizon as most market pundits are positing. For now, the FX markets seem to be taking their cues from the respective equity markets and the nervousness that is building there is being felt here.