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Tension is once again building behind 'risk', but when to jump? There have been many false starts and false breaks this year. And, complacency perhaps the only true constant nowadays. However, the markets always revert to a level of normalcy. Since, I don't have a crystal ball; I will look for progressive steps of confirmation and take trades to match my confidence level.

Should full-scale risk aversion kick in, the opportunities would be endless. Yet, I don't see that yet. The disparity in risk measures is certainly starting to show through though between stocks and carry, or different sectors or return forecasts to volatility measures. With the recent swell in volatility, I have taken a EURJPY short at 132.20 (stop of 150 pips and first target to match). I like this pair because it could continue to retreat on the foundations of the yen crosses BoJ buoyancy loss and Euro's own issues.

If the risk aversion scales up, I have no issues with adding to the long-yen exposure. USDJPY below 100.50 and GBPJPY below 172.50 are two others I'm watching. If the draw of 'status quo' is too powerful, though, I do like NZDJPY reversing in the vacinity of its two-year channel floor (it has technical broken, but these are not conditions for levels to hold to the pip).

Other risk setups that require a bigger upgrade to the fear gauge are EURUSD should it drop below 1.3500 and GBPUSD below 1.7050.

For my existing exposure, I still have my 'Top Trade for 2014' on. The USDCHF long performs alongside (inversely) EURUSD. AUDNZD is taking advantage of the recent razing of the kiwi. Yet, it is still far from retaking that 1.1000 level.

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