USD staying strong, eyes on 104.00 in USD/JPY
I still like the risk reward in selling any strong rallies in USD/JPY towards 103.80 ish in expectation of solid barrier protection ahead of 104.00. AUD/USD support is also looming just below .9600 so it looks like we've got some big levels to fight over in coming hours.
AUD staying heavy in early Asia
- AUD/JPY is trading toward the lower end of its consolidation pattern and a break below 99.30 could well set off a round of stop-loss selling.
- EUR/AUD continues to look extremely bullish and any dips back towards 1.3150 are sure to meet with welcome buyers (me included).
- AUD/USD looks set to target last year's lows just below .9600 and short-term resistance should be solid now near .9750.
All told, its hard to find any reason to be long the AUD at this very moment.
USD/CHF: US rates, SNB policy make this still look like a sensible long trade
- Despite Bernanke's comments, the market wants to be bullish USD.
- SNB reiterate that they will take steps to counter CHF strength.
- US 10-year rates make strong move higher amid massive volume.
- EUR/CHF closing in on important (long-term) technical resistance at 1.2650.
I'm staying long USD/CHF and still think 1.10 is achievable in coming months.
USD/JPY: Another topside test favoured today
The USD generally looks bullish across the board and unless some of the big Yen crosses like EUR/JPY suddenly turn bearish, we can expect the recent up-trend in USD/JPY to continue. Nevertheless there will also be some joy some top-pickers I feel, with China still expected to be defending a 97/104 dnt structure. My sell order was triggered overnight but I've already booked profits on that (to partially pay for my bad cable trade :( ) and I'm hoping for a quick intraday spike towards 103.80 to reinstate my shorts.
USD bulls still in control
Plenty of action around the time of the Fed overnight and I'm expecting plenty of volatility today in all of the crosses.
- USD/JPY did what we expected and pulled back sharply ahead of large barrier protection at 104.00. I'd continue to play the 100/104 range here over the next week or so.
- AUD/USD looks very heavy indeed after the break below .9700 and it seems pointless to try and fight the dominant downtrend. I'm looking for a .9650/.9750 range today.
- EUR/USD encountered very heavy selling above 1.2950, including Sovereign players, and a test of important support at 1.2745 looks likely this week given the strong USD sentiment.
- USD/CHF continues to lead the way higher and will gain fresh momentum if EUR/CHF can break above important technical resistance near 1.2650. I'm staying long.
- Cable is bearish again after the break and close below 1.5100; I'm hoping for small intraday rallies to exit my long position.
EUR/GBP: Next resistance at .8590
My GBP/CHF trade isn't looking too good at the moment and cable support at 1.5110/20 has been breached. I'll hang in for now as I'm well in the money on the Swiss leg.
EUR/GBP will meet some resistance at .8590 but the real target should now be .8635.
EUR/AUD: Global macro fund massive buyer; finished now I believe
There was a very large buy order go through the EUR/AUD market during early London and a big global macro fund was behind the buying. These flows are seldom one-offs and I'm sure either this player or one of his buddies will be back at this particular 'well' in coming days and weeks.
NZD/USD: Look for support near .8100/10
I'm hearing that there are some decent bids out of Asia in the NZD/USD near .8100/10.
EUR/AUD: Fresh air on topside; new technical target at 1.3800
Unfortunately I'm not long anymore but I'm sure I will get plenty of opportunities in coming weeks to buy dips. The clean break above 1.3250 should open up the way for a strong bullish move towards weekly highs at 1.3800.
EUR/CAD, EUR/GBP, EUR/JPY are all rallying hard as well.
EUR crosses still looking perky
Carrying on with the overnight trend, the EUR looks to be well supported against all of it's cross pairs. EUR/AUD is trying to establish itself above 1.32 but I'm not going to be tempted pre-Fed and EUR/JPY is benefitting from decent corporate buying interest.
EUR/USD: Sell orders 1.2940/50 but EUR crosses staying bullish
The EUR is looking very strong again on the crosses, making gains against all the other majors over the last 24 hours. The latest batch of analysts at my old employer Deutsche Bank swung from being ueber-bullish at 1.35 to being ueber-bearish at 1.28, which was the ultimate death knell for EUR bears :) Range trading ad infinitum.
Sell orders between 1.2940/50 are likely to cap the EUR/USD pre-Bernanke, at least that's what the interbank gurus are telling me, and any dips below 1.2900 will probably run into cross-related buying. All looks very uninspiring still.
I fancy the GBP will have a bit of a rebound today during early London trade (talking my position as always) but I don't have any strong reasoning behind this; the trader's Illogic we'll call it.
USD/JPY: No change after BOJ policy statement; stops reported both sides of market
Dealers tell me that the risk is now to the topside in USD/JPY with stops building above recent 103.25 highs and corporate demand seen on dips towards 102.00. That said, stops are also reported below 101.80 and we are stuck at the mid-point between these two stop-loss levels.
Sounds like a good reason to leave it alone.
AUD/USD: Still prefer the buy-dip strategy in short-term
The AUD/USD is back below .9800 in reaction to some irrelevant consumer confidence data which will be quickly forgotten. Overnight comments from Fed members do suggest that we will be hearing little or no mention of the word 'tapering' from Mr Bernanke later tonight and with the speculative market already short of AUD/USD, I'm anticipating a short-covering rally sometime in the next 24 hours.
I certainly wouldn't rush into longs at current levels but I'm definitely prepared to buy any big intraday dips, especially if they happen in Asia. 'Cos we know, Asia's always wrong!
Early Asian FX market staying very quiet indeed
Nobody is showing any interest according to local banks and when much of the focus is on USD/CAD, then we know that things really are quiet! The heavy rainstorms in Hong Kong will delay the opening of their stock-markets and are giving traders yet another excuse to do nothing.
I've updated any orders I know of in the members section and I've also updated my personal positions, for anyone who's interested. As before, if you don't have a log-in just let me know and I'll e-mail one to you.
By the way, many of you will know Milan, one of the regular contributors in the comments section, and he's just started a new role with Order Flow Trading, so have a look and see what you think (free plug for the day :) ).
US 10-year yields close in NY near lows after volatile session
Much of USD moves in recent times have been driven by sentiment in the fixed income markets and US 10-year yields closed near session lows at 1.92% after the comments from Bullard and Dudley. USD/CAD bulls backed off their attempts to take out the weekly trend-line and the market in general seems to be accepting that Mr Bernanke will make little or no mention of any 'tapering' in the Fed's QE programs.
The short-term speculative market seems to be long of USD, especially against currencies like the AUD, so I prefer to buy any deep intraday dips in AUD/USD in expectation of a short-covering rally towards .9900 sometime over the next 24 hours.
BOJ today, Mr Bernanke tonight
It should be a reasonably busy day and I expect that we will see plenty of ups and downs across all pairs. Put your trading caps on and don't get too married to any particular view.
The BOJ are unlikely to offer any surprises and personally I would be surprised if Mr Bernanke does anything surprising either. Comments from Bullard and Dudley would seem to suggest that a mention of 'tapering' is an outside bet and the fall in 10-year US yields late in the day suggests that the market thinks the same thing.
Plenty of action in crosses overnight
- GBP was the main mover, losing ground across the board after disappointing economic data. I increased my long cable position near the 61.8% retracement level (see chart) but will reassess this strategy if 1.5100 breaks.
- The USD/CAD market is watching a weekly trendline very closely (see chart) and there was a lot of activity reported overnight above 1.0300.
- EUR/CHF has turned higher again and looks set to test the January highs at 1.2565.
- Pretty quiet in most of the other majors.