Which FX Pairs To Buy And Sell

The Japanese yen is the strongest currency following the Bernanke speech Wednesday while commodity currencies are the weakest. The reason for the strong JPY is higher US bonds/lower yields. On the overlay chart we can see that best market to sell is the AUD/JPY while the best pairs to buy in risk-on environment is EUR/USD or GBP/USD and even some EUR and GBP crosses.

Market Correlations

Based on market correlations below -- and the S&P futures count -- we may see more USD selling in the near-term. S&P is showing incomplete bullish impulse with current pause in wave four from where prices may rally up in five toward 1675 today.