FXWW Market Commentary http://www.fxww.com The Professional Source Fri, 06 Mar 2015 05:25:23 +0000 en-US hourly 1 Exiting AUD/USD longs at break-even (yet again) http://www.fxww.com/exiting-audusd-longs-at-break-even-yet-again/ http://www.fxww.com/exiting-audusd-longs-at-break-even-yet-again/#comments Fri, 06 Mar 2015 05:25:23 +0000 http://www.fxww.com/?p=14696 I don’t like these momentum-less sideways markets which are then followed by a 50:50 bet in the form of an NFP number. I’ve exited my post-RBA longs at break-even and will sit back and wait for a clear opportunity.

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Pre-RBA AUD move most likely related to liquidity and Algos http://www.fxww.com/pre-rba-aud-move-likely-related-liquidity-algos/ http://www.fxww.com/pre-rba-aud-move-likely-related-liquidity-algos/#comments Wed, 04 Mar 2015 21:53:54 +0000 http://www.fxww.com/?p=14693 Based on what I’m hearing in the market, Tuesday’s ‘gap’ higher in the AUD/USD just prior to the release of the RBA rate decision was more likely due to structural liquidity issues and the prevalence of Algos rather than any sinister leak.

Since the SNB debacle, banks are becoming even more cautious when risk-events are scheduled. Immediately prior to the announcement (between 30/60 seconds), major electronic pricing providers cancelled many orders within a certain radius of the price at the time (it was around .7780). There are a large number of big algorithmic trading accounts  which would react immediately (within milli-seconds). Obviously the skew in the market after the orders were cancelled was heavily biased to the topside, hence the Algos initiated the sharp gap to the right.

 

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Migration starting to new FXWW website and new product suite http://www.fxww.com/migration-starting-new-fxww-website-new-product-suite/ http://www.fxww.com/migration-starting-new-fxww-website-new-product-suite/#comments Wed, 04 Mar 2015 20:24:15 +0000 http://www.fxww.com/?p=14691 There will be regular disruption to the FXWW website over the next few weeks as we migrate to our new home and bring our new product suite on-line. We will try to minimise any inconvenience and customers should contact us through the usual support channels if they are experiencing unexpected service outages.

Many thanks for your patience and thanks also to members who’ve tested and provided feedback on the new information portal.

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GBP crosses continue to look vulnerable http://www.fxww.com/gbp-crosses-continue-look-vulnerable/ http://www.fxww.com/gbp-crosses-continue-look-vulnerable/#comments Wed, 04 Mar 2015 20:02:22 +0000 http://www.fxww.com/?p=14688 Cable rejected important technical resistance levels between 1.5550/1.5600 pretty categorically and this rejection is starting to have an effect on the other GBP crosses.

EUR/GBP has reached what for many was a long-term target (on the .72 handle) and with the market already very short, profit taking is to be expected.

The large stop-losses in pairs like GBP/CAD which the market had been talking about went off last night and other pairs like GBP/AUD are also looking vulnerable.

Selling short-term rallies in the GBP looks like the most sensible play for now at least.

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Post-RBA price action suggests to me that AUD/USD goes higher quite soon http://www.fxww.com/post-rba-price-action-suggests-audusd-goes-higher-quite-soon/ http://www.fxww.com/post-rba-price-action-suggests-audusd-goes-higher-quite-soon/#comments Tue, 03 Mar 2015 03:52:00 +0000 http://www.fxww.com/?p=14686 There was a pop in the AUD/USD just prior to the RBA rate decision and this occurred because all the big local players and prime brokers pulled their bids and offers out of the market around 30 seconds prior to the announcement.

With existing shorts at quite extreme levels, I don’t think it will take much to drive this market back towards .80 cents.

Corporate bids have been very solid between .7750/70 and buying any dips towards there makes sense to me.

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Market split 50:50 on RBA decision today http://www.fxww.com/market-split-5050-rba-decision-today/ http://www.fxww.com/market-split-5050-rba-decision-today/#comments Mon, 02 Mar 2015 19:47:35 +0000 http://www.fxww.com/?p=14684 There is a very even split amongst analysts and interest rate traders as to what the RBA will do today. The casting vote from the ‘chairman of RBA watchers’, Terry McCrann, would seem to suggest that they stay on hold this time due primarily to the white-hot property market.

AUD/USD sentiment remains very heavy but consistent corporate bids between .7750/70 are holding it up for now.

The double-risk of RBA and ECB this week has led to short-covering in EUR/AUD, up 0.5% from yesterday morning’s opening levels.

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EUR/USD: Opens week with a very heavy feel http://www.fxww.com/eurusd-opens-week-heavy-feel/ http://www.fxww.com/eurusd-opens-week-heavy-feel/#comments Sun, 01 Mar 2015 20:34:56 +0000 http://www.fxww.com/?p=14682 EUR/USD is currently trying to hang on to hourly support levels near 1.1170/80 but a break below here should hasten a test of recent lows around 1.1100. Nobody wants to buy the EUR at the moment, except to cover shorts it seems. Short-term resistance levels start at 1.1240.

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AUD/USD steady in early trade, not reacting to Chinese rate cuts http://www.fxww.com/audusd-steady-early-trade-not-reacting-chinese-rate-cuts/ http://www.fxww.com/audusd-steady-early-trade-not-reacting-chinese-rate-cuts/#comments Sun, 01 Mar 2015 20:14:53 +0000 http://www.fxww.com/?p=14680 The market has been expecting some stimulative measures from the PBOC and perhaps that’s the reason for the lack of reaction from the AUD market.

The Chinese central bank cut the benchmark lending rate by 25 bps to 5.35% and the benchmark saving rate, also by 25 bps, to 2.5%.

AUD/USD is having difficulty establishing itself back above .7830 and AUD/JPY technical resistance will get heavier near the 100-sma at 94.60.

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Large fixing flows expected today http://www.fxww.com/large-fixing-flows-expected-today/ http://www.fxww.com/large-fixing-flows-expected-today/#comments Thu, 26 Feb 2015 20:49:11 +0000 http://www.fxww.com/?p=14677 Most of the big banks are expecting very significant end-of-month fixing flows later today and all the reports that I’ve read so far suggest that these flows will be heavily USD negative with the GBP expected to be the main beneficiary.

Overnight price action certainly doesn’t agree with these presumptions but it’s probably wise to keep this information at the back of your mind later today.

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Exiting long AUD/USD play; too much uncertainty around EUR/USD http://www.fxww.com/exiting-long-audusd-play-much-uncertainty-around-eurusd/ http://www.fxww.com/exiting-long-audusd-play-much-uncertainty-around-eurusd/#comments Thu, 26 Feb 2015 20:36:52 +0000 http://www.fxww.com/?p=14675 I don’t like the overnight price action in EUR/USD and I’m exiting my long AUD/USD play basically at break-even.

It seems the market was caught long of cable and AUD/USD after a big EUR/USD flow hit the market and if EUR/USD continues to tumble then AUD/USD will likely follow, albeit to a lesser degree.

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Could USD/CAD be the next to topple from the USD house of cards! http://www.fxww.com/usdcad-next-topple-usd-house-cards/ http://www.fxww.com/usdcad-next-topple-usd-house-cards/#comments Wed, 25 Feb 2015 20:48:37 +0000 http://www.fxww.com/?p=14673
  • Cable has been leading the way, first rejecting levels below 1.50 and the daily close back above 1.55 will have changed the psychological profile for this pair;
  • AUD/USD has broken above .7850/75 and is threatening a basing formation. Talking my position here but I feel that we are headed to .83 cents in the shortish-term;
  • USD/CAD could be the next card to topple from the USD house of cards! Needs to break and close below 1.2350 imho in order to reverse the bull trend;
  • USD/JPY is in 116/120 consolidation and EUR/USD is similarly in sideways mode below 1.1500- these pairs will probably be the last to go in the event of a USD sell-off.
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    USD: I’m still clinging to the contrarian view http://www.fxww.com/usd-im-still-clinging-contrarian-view/ http://www.fxww.com/usd-im-still-clinging-contrarian-view/#comments Tue, 24 Feb 2015 20:53:10 +0000 http://www.fxww.com/?p=14671 Nothing has changed compared to yesterday morning with all of the major USD pairs still well inside their short-term ranges. Fed Chair Yellen gave no indication of any rate-hike timing and USD/JPY was the most affected, giving back the almost 100 pip gain it had made during the day.

    EUR/USD technical support near 1.1300 held for now but the bounces are pretty anaemic. AUD/USD broke below short-term support at .7750 but immediately bounced. USD/CAD was also influenced by the Poloz press conference and is currently trading at lows for the day.

    Cable is giving me the strongest hint that the market isn’t totally comfortable with its long USD positions, so I prefer to play the contrarian in expectation that we could see a test of big USD support levels at 1.1500 in EUR/USD and 116.00 in USD/JPY.

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    Range trading, apart from the GBP http://www.fxww.com/range-trading-apart-gbp/ http://www.fxww.com/range-trading-apart-gbp/#comments Mon, 23 Feb 2015 21:29:13 +0000 http://www.fxww.com/?p=14669
  • EUR/USD is in sideways consolidation below 1.1500. The market remains bearish. Only a break above 1.1550 will change the outlook.
  • USD/JPY also in consolidation mode between 116/120 and there seems little point in trying to pre-empt the next medium-term move. The market is still very bullish on USD/JPY but cautiously bearish on crosses like EUR/JPY and CAD/JPY.
  • AUD/USD is stuck between .7750/.7850 in the short-term and these phases normally end with a move in favour of the dominant trend (bearish in this case). Nevertheless, ever the contrarian, I’m long at current levels and hoping that a bottoming pattern emerges.
  • The GBP continues to make gains on the crosses and EUR/GBP has almost reached what seem like longer-term equilibrium levels near .7200. If the USD does suddenly turn for any reason, I expect the most significant  move to come from GBP/USD.
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    EUR/USD: Professional market still looking to sell despite Greek debt extension http://www.fxww.com/eurusd-professional-market-still-looking-sell-despite-greek-debt-extension/ http://www.fxww.com/eurusd-professional-market-still-looking-sell-despite-greek-debt-extension/#comments Sun, 22 Feb 2015 20:54:16 +0000 http://www.fxww.com/?p=14667 Most of the research and trade strategies that I’m reading this morning from banks and professional traders shows that nothing much has changed despite the 4-month debt extension. Traders are still very much in sell-rally mode.

    The big levels to watch topside would seem to be around 1.1550, as a break above that will have many re-assessing their medium-term strategies. On a shorter-term scale, I’d expect to see plenty of stops above 1.1460 based on what I’m reading.

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    AUD/USD: Still long, hoping for a break above .7850/70 resistance http://www.fxww.com/audusd-still-long-hoping-break-785070-resistance/ http://www.fxww.com/audusd-still-long-hoping-break-785070-resistance/#comments Sun, 22 Feb 2015 20:49:38 +0000 http://www.fxww.com/?p=14665 It looks like there are still plenty of offers in the AUD/USD ahead of .7850 and we could be in for longer periods of sideways consolidation. I’m still running my long, bottom-picking, strategy and I need a break and hold above .7870 before I will consider elevating risk levels.

    There is nothing of note on today’s economic calendar and the Chinese financial market remains closed until Wednesday.

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    Big Prime Brokers issue liquidity warnings for Monday morning http://www.fxww.com/big-prime-brokers-issue-liquidity-warnings-monday-morning/ http://www.fxww.com/big-prime-brokers-issue-liquidity-warnings-monday-morning/#comments Sat, 21 Feb 2015 03:17:44 +0000 http://www.fxww.com/?p=14663 Liquidity gaps will become an increasing issue for the FX market and we are seeing/hearing increasing instances of big Prime Brokers warning their clients that such events could occur.

    This is part of an email which Barclays sent out to their client base of hedge funds, corporates, banks and retail brokers:

    As a result of current uncertainty surrounding the ongoing position of Greece in the Euro Zone, there is a chance of dislocation and highly illiquid conditions in the EUR FX market.  Whilst Disrupted Market Conditions could arise at any time, there is, in particular, a risk of FX markets opening on Monday morning at a significantly different level from the Friday night close.

    I’m also hearing through the chatroom network that “a few of the retail shops hiked margins pre weekend due to the same reasoning”.

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    AUD/USD: .7850 still key short-term level topside http://www.fxww.com/audusd-7850-still-key-short-term-level-topside/ http://www.fxww.com/audusd-7850-still-key-short-term-level-topside/#comments Fri, 20 Feb 2015 08:04:36 +0000 http://www.fxww.com/?p=14661 There is talk in the market of a short-term exotic option structure which is corralling prices between .7750 and .7850. This is easier to do during the Chinese New Year holiday when turnover is lower. I expect this structure to roll off today and I’m hoping that the first move will be higher. I’m still sitting on my long position and will initially reduce on any rallies towards .7950.

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    AUD/USD: Short-term exotic structure .7750/.7850 http://www.fxww.com/audusd-short-term-exotic-structure-7750-7850/ http://www.fxww.com/audusd-short-term-exotic-structure-7750-7850/#comments Fri, 20 Feb 2015 00:18:56 +0000 http://www.fxww.com/?p=14659 I’m not sure of the exact levels but the weight of bids towards .7750 and the weight of offers towards .7850 suggest that this is indeed a quick 100 pip play by one of the bigger players. All of the bigger interbank players were reporting similar order books yesterday.

    One source tells me that this rolls off later today at NY cut.

    Elsewhere on the order front, the same big European corporate was buying AUD/USD yesterday near .7770.

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    EUR/USD: Next wave of downward pressure about to develop http://www.fxww.com/eurusd-next-wave-downward-pressure-develop/ http://www.fxww.com/eurusd-next-wave-downward-pressure-develop/#comments Thu, 19 Feb 2015 20:17:10 +0000 http://www.fxww.com/?p=14657 Germany and Greece remain poles apart when it comes to debt negotiations despite minor progress from time to time. EUR/USD has managed to get back onto the 1.14 handle on a number of occasions but the failure to break above 1.15 again is quite telling.

    I’m also hearing reports out of New York (in the FXWW chatroom) that the market read too much into the FOMC minutes and that we can expect a more hawkish Yellen at the Humphrey Hawkins testimony.

    Looks like the current phase has all the hallmarks of bearish consolidation. Selling rallies still the preferred play here.

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    USD bears not panicking yet post FOMC http://www.fxww.com/usd-bears-not-panicking-yet-post-fomc/ http://www.fxww.com/usd-bears-not-panicking-yet-post-fomc/#comments Wed, 18 Feb 2015 22:30:12 +0000 http://www.fxww.com/?p=14655 The FOMC statement was more dovish than expected and while the bearish USD trend looks to be stalling against the GBP and the NZD, other major pairs like USD/JPY and EUR/USD remain in sideways consolidation. EUR/USD would need to break above 1.1550 and USD/JPY below 116.00 before the USD bulls will start getting really worried.

    I’m sticking with my contrarian long AUD/USD position but with the AUD struggling against the GBP and NZD for now, I may have to remain very patient.

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