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Talking Points:

• The S&P 500 and Dow cleared important support at the same time volatility jumped the most in six months

• In the broad 'risk' move, however, the typically first-mover Yen crosses were stoic

• We haven't made the critical shift from volatility to true risk aversion

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We have seen many temporary bouts of volatility over the past few years, but these have consistently fallen short of making the critical jump to true risk aversion. This past session, we were faced with the jolt that raises the market's anxiety; but the next step is the most important. The make-or-break decision on trend and momentum will be decided over the next 48 hours of active trading. With the July NFPs and US labor data - accompanied by the PCE inflation statistics - on tap, we have event risk that can keep the pressure on or hasten the rebound. Traders will be watching benchmark readings like the S&P 500 and VIX volatility index to assess the next move, but conviction requires a broader view. Whether or not USDJPY and the Yen crosses conform to the capital markets will be a key milestone in his assessment. We weigh the market's bearings and potential in today's Trading Video.

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