Sticking with buy-dip strategy in AUD/USD, Gold and Cable
I don’t see anything to change my medium-term macro view that the USD will come under increasing pressure in the months ahead. The market has had another look at the “Euro demise” trade but this got very overcrowded and is starting to unwind after the EZ fiscal stimulus package announcement.
AUD/USD is still my favourite play, as it was chronically oversold, and I favour a test of 65 cents before we get another decent dip-buying opportunity. Cable has weathered a few storms and should test levels near 1.2850 from here (currently 1.2450). That said I feel that the GBP will, sooner rather than later, start to under-perform on the crosses as the BoE measures start to take effect. Not sure on levels yet, so its a matter of waiting for the right time on the short-GBP trades I feel.
We certainly can’t complain about the volatility and with speculative positioning at mature levels, we can expect more of the same for the next 2-3 months.
Based on the data I am receiving on the strategy side, the discretionary traders are still lording it over the systematics who are still struggling to get to grips with the changed environment. Swings and roundabouts.
Stay safe out there.