AUD,NZD/Flows and Orders/FXWW News/Technical Analysis/Trade Ideas

AUD session outlook July 10th; short-covering picking up pace

The market has sold a lot of AUD/USD in recent weeks and the big question is, where will the big trailing stops be situated? I’m hearing that they will be above .9270 and again above .9360, and that certainly makes sense when you look at the charts (see chart). The AUD short-covering has already begun in earnest against the EUR, GBP, CHF and JPY and against this back-drop, I feel it’s inevitable that the AUD/USD will break higher in the short-term.

There are a few risk events today with BOJ minutes, Australian consumer confidence and Chinese trade. Yesterday’s data seemed to confirm an August RBA rate cut yet the AUD has rallied; when a market rallies on bearish news then you really need to take heed!

AUD/JPY should be one of the lead pairs in Asia and the technical close above 92.50 is an interesting development.

  1. Sean, I think biggest risk for tomorrow for Aud is FOMC meeting and I am expecting a fall in Aud, Nzd as the meeting could be bullish dollar. I will be bullish aud if it can rally post FOMC. Because we saw a preview on Friday how easily Aud can fall 100 pips + with a positive news on USD. Are you holding positions irrespective of FOMC?

  2. Short covering in gold is throwing up some extraordinary events in the paper gold market with gold going into backwardation for only the 3rd time in 20 years (the other 2 occasions at the low in 1999 and the other time when it collapsed due to liquidation in the GFC of 2008).

    The risk is that there are severe shortages in the spot market at the current price level.

    http://www.zerohedge.com/news/2013-07-09/golden-backwardation-rabbit-hole-gets-deeper-subzero-gofo-slide-accelerates

  3. Good point, thanks George. Yes, I will stay long, I’m in at a good level near 9050 and will leave my stops 8985. But I will reduce if we try and fail at 9250 pre FOMC. On other hand, I agree that if trading above 9250 post FOMC then I really start to load up for move to 98

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