The CIT Group (not to be confused with CitiGroup) filed for a prepackaged bankruptcy protection before the markets opened this week.
So far reaction has been restrained and direction-less, however it’s worthwhile to note that volatility is going up as evidenced by the rise in the VIX over the past week.
This means if a break out does occur, it’s going to be very violent. This week couldn’t possibly be full of more event risk. Australia is setting interest rates, The Fed is meeting and will release a statement on monetary policy, the ECB and BOE will also meet on interest rates, and to cap it all of US nonfarm payroll numbers come out on Friday. By the time we reach the end of this list, we could be at significantly different areas of pricing for the major currencies.
Everyone hang on, it’s going to be a bumpy ride.