USD/JPY: Stops lurking just below the market
Obviously there is still some decent buying interest around as the market has been unable to trigger these stops but they are only 10 pips away, and there are supposedly quite a few more stops all the way down through 98.20. Might give the early European traders something to do.
AUD/USD: I'm still happy to sell rallies
Today's jobs data has changed nothing in my very biased view and I think all rallies are to be seen as selling opportunities. We probably won' t see a test of 1.0115 this week but I'd expect us to close back below 1.0200 before tomorrow's close.
Algos take a bath after data dump
The Chinese CPI came out a few seconds before the jobs data, and Algos were busy selling the AUD/USD through 1.0160. The good jobs data was initially under reported on Reuters and this caused more havoc among the Algos. Hope you had sell orders in at 1.0250!
EUR/USD: Base of trading range seems to be in place
I expect to see plenty of range trading in the EUR/USD over coming weeks. It seems that Sovereign bids near 1.3000 are putting a base in place and now its a matter of figuring out where the top of this range might be. I'd guess for now that levels near 1.3300 will prove difficult to overcome.
USD/JPY: well confirmed range edges at 97.00/100.00
I have a mildly bearish short-term bias, only because of reports of stop-loss orders below 98.60, but really its a matter of waiting for range edges and trading these with tight stops.
The big option barriers are still in place whilst big dips will find plenty of corporate buyers whereas big rallies will run into profit taking from hedge fund longs.
AUD/USD: Important levels intact ahead of jobs data and Chinese CPI
The big downside level to watch is obviously 1.0115, the spike low from early March, and dealers tell me that Sovereign bids are expected near 1.0100. The obvious topside level to watch is the prior lows 1.0220.
Looking at the crosses, EUR/AUD has broken up above 1.2900 and I'd expect AUD/NZD to now consolidate in a 1.20/1.2150 range.
My bias remains overwhelmingly bearish on the AUD and all rallies are selling opportunities!
FX market moving into classic cross-movement phase
I believe that pairs like EUR/AUD, GBP/NZD and the like are set for major moves higher. Have a look at a weekly EUR/AUD chart for instance and you will see a possible basing pattern and the fact that this pair could rise by 20% and still not endanger that down-trend. This is not about being particularly bullish EUR or bearish AUD, simply that the market is mis-priced in my opinion.
The EUR/USD will consolidate inside of a set range and it may well be that Sovereign bids near 1.3000 are forming an initial base. The top is likely to be somewhere around 1.35/1.37 as we should not forget that market sentiment towards the USD is also improving off very low levels.
When the EUR/USD gets towards the upper-end of its range, be it the short-term or long-term variety, then that's the time to sell AUD/USD. Similarly, when the AUD/USD gets to a stage (like in last few days) when it's nearing important support, that is then the time to buy the EUR/USD.
The exact same rules apply to other crosses like GBP/NZD. I'm pretty sure that this is now the type of market we are dealing with.
Best to stay with crosses for trading opportunities
Whether it be GBP/NZD, CAD/JPY or EUR/AUD, I think we are likely to find more volatility, more reversals and more swing-trade opportunities in the cross pairs rather than in the traditional USD majors.
When I started out trading the spreads in pairs like GBP/JPY were so wide you could drive a bus through them! That has all changed now and the pricing makes virtually every exotic cross a potential swing-trading pair.
NZD/USD: .8360 the level to watch
The NZD is such a small currency that it's vital to know exactly what is going on at all times (which is why I've stopped trading it). Those 'in the know' tell me that 0.8360 is looming now as an extremely pivotal level. A break below there and we are likely to see much more liquidation of long Kiwi positions.
AUD/USD: 1.0220 should hold first test but AUD/NZD moves dampening bearish enthusiasm
The inability of the AUD bears to test 1.0115 post-RBA will be worrying the bears a bit and even though 1.0220 prior lows are likely to be well defended, I'm still of the opinion that we may even see a slightly bigger rally to take out stale trailing stops. Then we can go lower again.
EUR/USD: Tight ranges likely to remain
Dealers aren't very hopeful that we might suddenly see some movement in EUR/USD, and most seem to be tipping a tight-ish 1.3060/1.3130-ish range during European trade.
GBP/NZD: Contrarian traders should be having a close look at this one
I mentioned this pair a few weeks back and if it reverses properly then we will see a very sharp 10% rally in my opinion. I'm not coming out of Kiwi retirement for this one but I'm tempted :) Look to buy dips back towards 1.8200.
AUD/NZD: More heavy short-covering with big players trying to cover
Another day of short-covering in this cross and we reached a level almost 200 pips above yesterday's post RBA lows. The trend is still down but we could easily rally back towards 1.23/1.24 without endangering that trend. I'd play a wide range here in coming weeks, 1.20/1.24 say, as there could be some excellent opportunities to pick up an 'easy' 200 pips swing reversal.
NZ's Wheeler said that there was scope to cut rates if the housing market cools and he also mentioned recent smoothing which they've done to stem the NZD rise; this is what sent the Kiwi tumbling.
Technical analysis updated
Kyle's excellent technical analysis report is now available in the members section, and the Essential FX interbank report is also now posted.
If you don't have a password, let me know and I'll send you one later on.
Stop-losses reported downside in Yen crosses
- USD/JPY stops reported below 98.60 and at regular intervals through 98.20.
- NZD/JPY stops also reportedly at regular intervals, but getting quite heavy below 83.00.
Maybe the market might have something to aim at now.