AUD/USD: Hanging on to longs for now
A combination of the budget cuts announced by the Australian PM and the RBA minutes (not particularly dovish) have helped the AUD/USD to rally to highs near .9170. Pull-backs have been quite shallow so I'm happy to stick with my long position. The daily chart looks so ridiculously oversold to my biased eye that I'm afraid of missing the big short-squeeze if I book even partial profits.
AUD/USD: Shorts getting nervous ahead of RBA minutes
And so they should be! With the daily chart looking so heavily oversold! But, sentiment remains bearish and I don't think we are likely to bounce to 95 cents in a straight line :)
AUD/USD has taken out yesterday's highs and is trading near .9130. The short-term charts suggest that levels near .9180/.9200 could be toppy in the short-term and I will reduce my long position on a failure there.
Little change in NZD after CPI
NZD/USD is still trading around .7800/10 after fairly benign CPI data showed that inflation is still well under control. AUD/NZD is trading quietly around 1.1650 and the lack of bounce in this pair in recent days suggests that a test of 1.1500 is likely sooner rather than later.
Another note of interest is that our hedge fund insider @FXWW888 reported overnight on Twitter that Asian central banks had been selling NZD/USD.
EUR/USD: Still plenty of big orders either side of 1.30/1.31
Like I reported yesterday, there is plenty of interest either side of the EUR/USD. The bids were tested yesterday near 1.3000 and I wouldn't be surprised to see the topside tested today, especially if EUR/JPY tries to break above technical resistance at 131.25.
I took a small loss on my EUR/USD longs as I really have no idea where the next 300 pips are coming from. Any bright ideas out there?
Hard to find any rhythm in this market
It's definitely starting to feel like 'holiday' markets and I know I'm not the only one who is struggling to find any rhythm. I have a feeling that I'll be running smaller and smaller positions through the end of August when the market will return to full strength again.
I will look more to the 'technical' trades during this period, looking for decent swing trade opportunities with good risk reward. Presently I'm long EUR/CHF after a base formed at a 61.8% pull-back near 1.2345 and I'm short EUR/JPY, with a potential H&S on the daily chart. I cut my EUR/USD long for a small 30 pip loss this morning and I'm still long AUD/USD, with a stop at break-even below .9000.
I'm expecting today to be very quiet in Asia although the market will eye the RBA minutes carefully given the 'jokes' which Mr Stevens made about deliberation times.
Asian central bank selling NZD
Our hedge fund insider @FXWW888 is reporting On Twitter that ACBs have been seen selling NZD/USD and probably also AUD/USD in recent trade. It could be a game changer if these central banks start realigning their reserves.
EUR/CHF: Nice risk-reward in going long at present levels
Just going through the charts and I found this nice risk-reward trade in EUR/CHF (see chart). The trend looks reasonably constructive and the most recent rally from 1.2275 to 1.2465 has retraced exactly 61.8%. I've taken a long position at 1.2375 with a 50 pip stop and a measured target at 1.2550.
AUD/USD: Still sneaking higher; look to lighten longs near .9175
The AUD was severely over-sold on Friday last and is starting to undo some of those losses. EUR/AUD is back below those previous highs at 1.4375/80 (but still a buy-big-dip proposition) and both AUD/JPY and AUD/NZD are trading at session highs.
If prices stall near .9175, I will look to lighten my long position, as we could quite easily get another few sessions of sideways trade.
USD/JPY: Japanese holiday ensuring very quiet trade
Take the next few hours off and go do those nagging chores as there is nothing happening in the FX market. Japanese markets are closed and nobody seems to have any interest whatsoever. I'm not sure things are going to get any livelier during European trade, maybe you have time to do the really big chores!
AUD still reliant on crosses for next directional move
AUD/USD is 60 pips higher than its Friday closing level after the China GDP came in as expected. The main bearish events for the Aussie in the technical analysis space have been the break above 1.44 in EUR/AUD, the breaching of recent lows at .9035 in AUD/USD and 1.1600 in AUD/NZD. On the positive side for the Aussie, .9000 psychological support held firm and AUD/JPY support at 89.00/50 is also still intact.
I'm still running a long AUD/USD trade but will reduce on any big rallies back towards .9300 whilst the crosses continue to emit diverging signals.
AUD/USD: Short-term market smells bit short
Quick spike above .9100 after Chinese GDP came in as expected which suggests that the short-term market is a bit short. Favour buying any dips back towards .9050 looking for .9200.
EUR/USD: Decent orders either side of 1.30/1.31
Dealers say that EUR/USD orders are already quite solid which is unusual for a Monday morning. Bids are building up near 1.3000/10 and offers are similarly solid near 1.3100. With Japan out today, it looks like we might have a tight range trading day in EUR/USD.
AUD/USD: Still long but case looking weaker for bulls
- EUR/AUD put in a strong weekly close above 1.4400 and looks likely to move onto a higher plane between 1.39/1.55 in coming weeks.
- AUD/JPY is putting in a big battle around 90.00 and whatever happens, this level is becoming pivotal for medium term moves.
- AUD/NZD has made fresh lows and looks likely to test 1.1500.
If the crosses are bearish, then it will be difficult for the AUD/USD to rally but I'm hanging onto my stubborn longs in hope rather than conviction. The one thing I did do correctly was to buy at the correct level near .9050 and reduce by 1/3rd near .9300 highs, meaning that I can put my stop at my average entry level. This shows once again that the most important think in FX trading is timing the correct entry level, if we get that right then we can even survive really bad calls.
Chinese GDP later today will be closely watched and will guarantee volatility but with Japan closed today, that might be the only moves we see.
USD/JPY: Risk-reward favours shorts at current levels near 99.50
- Possible topping formation in EUR/JPY (see chart).
- AUD/JPY looks to be re-starting its downtrend and a break below 89.00 would confirm this (see chart).
- Pretty obvious resistance level now at 101.50 in USD/JPY.
As I've said many times recently, I think USD/JPY is likely to stop out a lot of people on both sides of the market. I still think the short-term market is overly long and we could get another nasty squeeze lower towards 92.50 before the bulls re-emerge. For the medium-term player, a 200 pip stop against a 700 pip profit target makes excellent sense and I'm happy to be short anywhere near 99.50/100.00.
EUR/USD: Buying dips preferred whilst crosses are bullish
- EUR/AUD has made strong weekly close above 1.4400 and buying dips is once again the obvious play here.
- EUR/GBP is consolidating its break above .8600 and once again dip-buying looks like the safer play.
- EUR/CHF has seen increased demand in the last week (although we've read this book before!)
- EUR/JPY is the only one of the main crosses which looks a bit bearish given the topping formation (see chart) but a clean break above 131.50 would really change that outlook.
I prefer to buy intraday dips in the EUR/USD looking for a re-test of last week's spike highs at 1.3200.
Market focusing on China GDP data today
The AUD got hit pretty hard on Friday, especially on the crosses, after comments from the Chinese FinMin fuelled fears of lower-than-expected Chinese growth. There were some calming articles in the weekend Chinese press suggesting that the 7.5% growth target is still achievable and these reports have helped the AUD stabilise a bit, especially against the JPY where it's trading back above 90.00.
All eyes will be on today's official Chinese GDP data and that is bound to bring some volatility.
AUD/JPY will be another to watch on Monday morning
There is major technical support 89.00/50 (see chart) and I'm guessing that there will be plenty of stop-loss orders in and around this price window. If there are, they will be found out in early Monday morning trade.
AUD/USD bids near .9000 were very large on Friday evening but it remains to be seen whether they have stayed live or not.
I would also not be at all surprised to see stops in the USD/JPY back below 98.60, but that's guess-work on my part.