AUD: Weekend press reports not having any impact at moment
- Australian Financial Review running a story saying that there will be a rate cut in August.
- The Australian reporting that the Treasury department will revise down the GDP forecast.
The AUD/USD is pretty much unchanged this morning and AUD/NZD is 50 pips higher (after another earthquake in Wellington this time).
I'm still long AUD/USD and will look to buy more near .9050/75 for an eventual break above .9350 towards .9600. Intraday rallies are likely to struggle near .9260.
Fed reviewing bank trading in physical commodities
This story over the weekend (Reuters version) could have a very significant impact on a variety of financial markets. Obviously the commodity markets will be affected, as indeed will the equity markets through the impact on the bank's bottom line. The FX markets will be indirectly affected but I think we will have to wait and see what the reaction will be.
USD/JPY trading sideways after weekend elections
The Japanese PM won the expected majority in weekend elections but early attempts to buy USD/JPY have failed and the pair is sitting close to Friday's closing levels.
The short-term range edges are at 99.80/100.80 and we can expect to see stop-losses either side. Dealers are moderately bearish in the short-term, saying that the market was long heading into the event and the most immediate danger is for a buy-the-rumour-sell-the-fact conclusion.
I'm not getting involved in USD/JPY at the moment; I'm overall bearish on the USD but I'm unsure what the Yen crosses will do.
AUD/NZD: Look for support to stiffen near 1.1500
I'm hearing that there will be decent sized buying interest near 1.1500 and local dealers expect the Antipodean cross to struggle to break below this support any-time soon. Resistance is clear 1.1750/75 so further slow range trading with a bearish bias might be the order of the day.
How to turn $20k into $1 million in 8 easy weeks
You think I'd tell you if I knew! But the up-side to tracking traders is that you eventually come across some who are very successful, and today I had the pleasure of seeing how 1 reasonably ordinary guy could turn a small account into a large account in a very short space of time. I can also say that there is no way in the world that this guy will ever manage money for others as he breaks every rule in the funds management handbook. The good news for him is that he probably will never want to; most of the really good traders make so much trading for themselves that they have no interest in managing other people's money. Anyway, the story evolved something like this;
- He chopped around for a few months using relatively small leverage and making no major losses;
- He got on a roll with 3 separate trades and increased leverage quite sharply (getting lucky a few times) until his account was up to over $50k. He withdrew his original starting sum.
- He used absolutely ridiculous levels of leverage trading multiple pairs across relatively short time frames.
- If trades went against him he added and added again until they went back into profit.
- He took relatively small profits after facing big losses and moved onto the next trade, his only criteria seeming to be that each trade be somehow profitable and he never seemed willing to 'give up' on trades.
- The amount of leverage was at times quite mad but he was lucky and on a 'hot' run and got away with it.
The good news is that it's doable. The bad news is that less than 1% have what it takes. Not a very fair game.
As FXWW888 just said to me, he feels like he could easily turn $1mio into $20k :) I'm in same boat :)
Time to stop trading the crosses and start selling the USD
The entire market focus in recent months has been on the crosses, buy risk, sell risk, sell the Aussie as China slows down etc etc. After the Bernanke testimony and the Detroit bankruptcy, maybe its time to ignore the crosses and concentrate more on selling the USD?
Personally I feel more comfortable being long AUD/USD near 90 cents rather than being short? Being long cable near 1.50 rather than being short?
Just a thought from a perennial dollar bear :)
Don't you love Friday afternoon markets, not...
Very patchy liquidity this afternoon with mini liquidity bubbles causing small gaps. USD/JPY got everyone (including Muggins here) bullish near 100.80 and then promptly reverses by 100 pips! Like I've said plenty of times, if you like getting stopped out then you should be trading USD/JPY!
AUD/USD is back near .9200 and I really like the buy-dips play here and cable is also looking very constructive. After the Detroit bankruptcy I think USD bulls need to realise exactly what they are buying into.
Macro fund behind the Nikkei sell-off
Our hedge fund insider @FXWW888 reported earlier that a macro fund was behind the sell-off in the Nikkei.
The last time we saw a big macro fund dumping assets we saw the USD/JPY fall by 10% pretty quickly. This is probably just a one-off flow after poor data from Microsoft earlier today spooked them a bit, but it's always worth watching what the big macros are doing.
Nice call on USD/JPY from FXWW303
You can follow him on Twitter @FXWW303 and he went short 40 minutes ago at 100.82, nice one! Pity I didn't do anything :(
EUR/USD: Structural flows suggest will eventually break higher
Let's face it, 'eventually' could mean in 10 years time the way this pair is trading! A good source who does in-depth analysis of the big banks flows and orders thinks that the next move in EUR/USD will be higher, presuming that the speculative community doesn't suddenly gang up on the pair. Positioning is at relatively moderate levels (but still overall short) and demand from the real-money and Sovereign spaces is likely to be net-net EUR positive over the next few months.
I wouldn't be taking any short-term positions based on this analysis but the medium-term bulls should look to buy big dips
JPY outlook: Crosses starting to look bid again
- EUR/JPY broke through technical resistance at 131.20 and looks like a buy-dips proposition for a re-test of 134.00.
- GBP/JPY looks likely to test technical resistance levels near 154.20.
- USD/JPY is unlikely to scream higher in a straight line but should find support near 99.50 for a 101.50 re-test.
The lack of Fed tapering should keep risk sentiment quite strong which is bullish for the Yen crosses but also mildly bearish for the USD. I'd expect more range trading for USD/JPY and look to the crosses for the trends.
AUD outlook: Mixed bag on crosses but AUD/USD set to recover
- AUD/NZD continues to drift slowly lower and is targeting 1.1500, but that level should be tough to breach. Resistance is solid near 1.1750/75.
- AUD/JPY is consolidating in a daily channel between 90.00/93.50 (see chart).
- AUD/USD looks really oversold on the dailies but could consolidate .9050/.9350 whilst the market musters some momentum.
- [NZD/JPY looks like a stand-out buy-on-big-dips play].
I think the combination of improving risk-sentiment, wavering USD-sentiment and an already very short market will ensure that AUD/USD rallies towards .9600 in coming weeks.
Yen crosses break higher as risk sentiment improves
My stop-loss order was eventually triggered in EUR/JPY and it looks like the Bernanke testimony is signalling an improvement in risk sentiment. Stock markets made decent gains again and the market's seem to be breathing a sigh of relief that their lifeline won't be cut off anytime soon.
I'll have a look at the individual currencies shortly but I'm now very strongly in the buy-dips club for AUD/USD, NZD/USD, and cable.
Bernanke: Another case of "sell the rumour buy the fact"? Buying AUD/USD dips is obvious trade!
It looks like the market might have even gotten itself a bit short of the USD heading into the Bernanke testimony and now we are getting the post-event square up. USD/JPY has led the way and my stops loss order in EUR/JPY is unfortunately getting very close (and my AUD/USD longs are also looking more vulnerable).
My reading is that the short-term market was short USD and is squaring up but that the testimony was risk-positive hence the rally in the Yen crosses. Once the dust dies down, AUD/USD should be the big beneficiary and I will add on any dips below .9100 for a rally to .9350 and beyond.
EUR/JPY: Shorts looking precarious again
I would have thought that the Bernanke testimony yesterday would be modestly USD-bearish and risk-positive, which would sound like a good reason to buy AUD/USD, but the market has gone on the opposite direction. Australian business conditions data wasn't all that flash and Chinese house price data also gave the AUD bears some fresh ammunition.
USD/JPY has dragged EUR/JPY back towards the technical resistance levels and my stops above 131.50 are looking endangered.
Asia likes the look of the USD again
USD/JPY is testing 100.00 again, AUD/USD is back at short-term support levels near .9170 and EUR/USD is below 1.3100. Asia obviously heard something bullish in Mr Bernanke's testimony and has been happy to buy dollars all day. Movements have been slow but steady in one direction and dealers say that turnover has been healthy.
AUD/USD drifting lower amid decent two-way flows
Local dealers tell me that flows are fairly decent so far this morning and the AUD/USD is drifting lower towards short-term support at .9170. Sorry I've got no strong insights as to which way this market is likely to break, just hanging in there until the fog lifts!