USD/JPY weakness affects all other major pairs
I think they are called 'no-brainer' trades for a good reason and yesterday morning's open near the previous pivot and 50% retracement (see chart) in USD/JPY offered exactly such an opportunity. I didn't expect a 300 pip fall from there but obviously the market got caught long again. The correlation between US interest rates and USD/JPY is being totally obliterated and once all this cross-action dies down, I think we may enter an extended period of USD weakness.
Timing as we know is all that matters in the FX market but anyone waiting for very sharp dips in cable may well be disappointed, whilst I'm also firmly of the opinion that the AUD/USD market is too overwhelmingly biased in one direction ie bearish, and an overdue correction will soon happen there as well.
Good luck today.
Technical analysts and strategist programs
- Hope you're all enjoying the excellent FXWW888 service and the next one, FXWW303, will be ready in next day or so. All who've registered either directly or via the membership page will be instantly added.
- The free technical analysis module will also be sent out to all in next few days, so please be patient with me. Clyde Simpson was a technical analyst for Reuters for 20 years and he will be providing additional mentoring and training services.
Catch you all tomorrow++
'Swingy' markets likely to continue
I wouldn't be looking for any huge trend moves in these markets and I think it's better to wait for clear oversold and overbought conditions (preferably near technical levels) and then enter with 50/60 pip stops looking for 150/200 pip profits.
Japanese semi-official names supposedly buying dips in the Yen crosses so that's something else to watch out for.
USD/JPY: Be patient and wait for big rallies
I could've been a bit greedier on EUR/JPY but nobody ever went broke booking profits so best go and look for the next suitable trade. I'm looking now to buy biggish dips in cable or AUD/USD but won't leave any overnight orders, too dangerous.
EUR/JPY: Look to book intraday profits near 129.00
I'm guessing that there will be stops below 97.50 in USD/JPY and if they go off then EUR/JPY will probably trade down towards 129.00. I'm running shorts from this morning at 130.90 and will be more than happy to pick up a 190 pip pay day.
EUR/GBP: Intraday short-squeeze, next resistance at .8560
Slightly softish UK data has seen the GBP slide slightly on the crosses; next short-term technical resistance at .8557/59.
EUR/AUD: How to butcher a big order in the FX market
One week ago EUR/AUD was trading quietly on the 1.33 handle. Now its touching 1.42. What happened will surely be taught in years to come as the exact way not to execute a large order in the FX market. Instead of calm we had panic, instead of finesse we've seen heavy-handedness, and instead of subtlety we've seen the dambusters! One-way selling of AUD/USD during the Asian session and then buying of EUR/USD during the European session. Whatever happened to trading an order; selling some then buying part back to keep the market guessing? The stampede caused by the heavy selling has been a huge disservice to whoever the poor customer is.
Unfortunately the art of FX trading in banks is becoming a lost art. There are no traders, no risk takers, no common-sense chief dealers; all have been replaced by execution platforms and algorithms.
It's a myth that there is deep liquidity in the FX market, in fact despite it's growing size, the dearth of market makers and proprietary risk takers on a daily basis means that its impossible to clear any decent amount of business in a timely fashion. One big hedge fund recently told me that if he needs to clear EUR300 at the height of a normal European/US session, he needs to do so in twos and threes. No one will take on any of his risk.
Regulators should be careful what they wish for.
AUD/USD: Support breaks and .9250 next stop
Turnover is still very heavy and support levels at .9390 has been breached. I'm still prepared to buy any dips towards .9250 and I'm sure it will look terrible if and when it gets there.
USD/JPY: 97.50/75 looking like key support level
USD/JPY has stalled at important technical resistance at 99.00 and the bears will be optimistic that part of last week's bearishness can return. Remember that we have rallied 400 pips off the lows already so perhaps we simply get a period of sideways choppy trade.
On the downside, some big players are buying dips towards 97.50/75 and this should prove to be very solid support.
EUR/USD: Better trades elsewhere but is getting bit overbought
The EUR/USD is probably the least interesting of all the major pairs, chopping around as cross flows dominate the market. The recent short term bull trend may indeed continue to stay in control but I think its more likely that the long-term range trading bias remains in control. If that's the case, then levels near 1.3325/50 should be extremely toppy indeed.
EUR/JPY shorts looking a bit healthier now
Resistance near 131.00 has now been confirmed despite the marginal break this morning and selling rallies is preferred in my biased view.
USD/JPY falls heavily on BOJ announcement
Nasty fall to 98.00 after the BOJ announcement which shows that the market was caught a bit long. Bids expected at 97.50/70 according to the best inside source in the business :)
AUD/USD: Another marginal break but support holding for now
Same old story here in Asia with heavy selling of the AUD probably still related to the big EUR/AUD trade. Asian central banks are reportedly still buying dips and although support was broken marginally below .9390, its still basically holding.
Local banks still selling AUD
AUD/USD is testing ultra short-term support near .9415/20 as the local banks continue to sell. This is still cross-related flows so expect the EUR/USD or cable to pop a bit later on. Goldman Sachs lowered their AUD/USD forecast earlier (thanks to 888 for that snippit) and that is also weighing on the Aussie bleeder.
Asian market open
You can click through here and read my full opening commentary on FX Street.
Oops, apologies for technical stuff-up :)
JPY crosses: Algos probing for stops in thin twilight trade
The short-term liquidity market, with banks scaling back their risk taking, is increasingly being populated by algo traders who provide liquidity but also try and jam the market when they sense a weak side. I used to try and do the same thing myself as an interbank dealer so I best not complain about the activity :)
This morning's target of choice is the Yen crosses with NZD/JPY and GBP/JPY getting early mentions. No major developments, just the usual market activity.
BOJ: No major surprises expected
This afternoon's BOJ monetary policy statement is not expected to bring any surprises although there might be some minor tinkering around the edges with some of the already-announced policies.
USD/JPY is sitting just below a previously important pivot at 99.00 and much of what happens today will depend on this level holding or breaking. Semi-official Japanese interests have been buying dips in the Yen crosses and this could turn out to be a significant event so watch for reports of increasing volumes.
AUD/USD: Look to return to more normal day-trading activities
- Long-term technical support at .9390 held on the first test.
- Medium term down-trend is still in control but looks overdone.
- Heavy asset manager selling of AUD not yet complete.
- Japanese semi-officials buying AUD/JPY dips and China buying AUD/USD dips.
Sounds like a perfect recipe for choppy day-trading? Look to play .9425/.9480 range initially and get a slightly more extended bias on a break of either side.