EUR/AUD: Long trade starting to make even more sense
- Market is short of EUR and long of AUD.
- Double-bottom on the 4-hour chart has been confirmed.
- Hedge funds selling Gold aggressively (some of this exposure looks like it was against the EUR).
- Chinese economic data looking soft.
I'm long looking for a move to 1.3200.
USD/CHF: Stuck in neutral
My biggest position at the moment is in USD/CHF and it seems that it's had a total range of around 6 pips in the last 24 hours! I don't like sitting on large positions in stagnant markets so I will reduce again on a break back below 0.9250.
USD/JPY: Very sensitive to headlines regarding Softbank/Sprint deal
It's estimated that Softbank bought around $20 billion USD at an average entry levels of around 82JPY in order to buy Sprint but rumours in the equity markets over the last few days suggest that this deal might be in jeopardy.
If the deal is scrapped, then Softbank will look to sell 20 billion USD/JPY quick sharp, which will surely drive the pair sharply lower (500/700 pips depending on market conditions is my best guess). Whatever happens, USD/JPY is going to be very sensitive to any news regarding this deal's future.
[On a slightly side note, what a great deal it would be for Softbank if they booked a break-up fee of $600 million and an FX profit of $2.5 billion! That would surely qualify as the best non-deal in the history of deal making!!]
AUD/JPY: Trying quick intraday short at 101.25
This pair was trading below 99.00 earlier this morning and has enjoyed a massive intraday rally.
The 38.2% retracement of the 105.40/98.70 fall comes in at 101.25, right where we are currently trading, so I'm trying a quick intraday short position; let's see what happens.
Edit: Stop in place now at 101.65, keeping it tight in these whippy markets.
EUR/JPY up almost 250 pips from this morning's lows
I don't have a strong feel for the correct trading levels here so I'm leaving it alone.
Overall I still expect the USD to strengthen, and the AUD and CHF to weaken, and I'm positioned accordingly.
EUR/USD: Stop-losses and bids on downside
- Decent-sized stops reported directly below 1.3000.
- Bids reported at 1.2985 and 1.2970.
AUD inching lower after minutes
No surprises in the RBA minutes with usual double-speak regarding resources and interest rates.
By the way, both Kuroda from BOJ and Draghi from the ECB will be speaking later today, so watch out for those risk events.
RBA meeting minutes due later this morning
The AUD market has turned bearish and will be looking for reasons to sell. I'd consider it unlikely that the RBA minutes will contain anything likely to fuel a big AUD/USD rally whereas if the language is considered overly dovish, we could see a move lower to test out downside stop-loss levels.
Much of course will depend on AUD/JPY flows and whether there are more trailing stops in the market.
Cable: Orders suggest a 1.5250/1.5350 range
There is some decent sized interest reported either side of the cable market with bids seen at 1.5250, just ahead of technical support levels, and offers seen at 1.5350. Looks like we might get a few sessions of range trading.
Gold: Buyers will return once shock-waves die down
The market had been talking about these big liquidation trades below $1515 in Gold for almost a year so don't be surprised by the venom in the sell-off. Central banks will use this opportunity to buy at cheaper levels and the Russian, Korean, Turkish central banks are no doubt sharpening their pencils to start buying near $1250.
Even if Gold does steady somewhere around present levels, I still expect to see the AUD/USD play catch-up down towards 95 cents, especially if the commodity prices keep tumbling.
USD/JPY: Stops triggered below 96.00 in twilight trade
Nasty spike lower just after the NY close saw the market trade at 95.80 before an equally nasty bounce took the pair back to 96.75. Liquidity is poor and I would not try buying dips just yet, wait until the dust settles even if it is 100 pips higher.
The daily chart looks like we could easily see a test of the first Fibo at 92.00 and based on events of the last few sessions, it could even happen today!
Keep positions smaller than usual and play your limits a bit wider.
AUD/JPY: Close below 100.00 will be worrying longer-term bulls
The AUD had a bear of a day yesterday, driven by big falls in precious metals, poor Chinese data, and an overly long market. AUD/JPY bore the brunt of the fall, heading south in straight-line fashion after weeks of rising in a similar mode. There is little in the way of major support on the daily chart until 97.00 and 95.50 below there (see chart in members).
My long position from 1.2400 in EUR/AUD is looking a lot stronger and my partial-profit target at 1.2650 was hit overnight. I'll now look to re-buy on dips on the way to my 1.3200 target.
USD/CHF: Set for a sharp rise I hope
I've had a small USD/CHF long position for the last week or so which I added to earlier this morning, leaving me with a reasonably sized trade with an average entry level just above .9300. Technical support comes in near .9230 and if this level is tested and holds, then I may look to increase the position again.
My reasoning has been strengthened by the break lower in Gold, as there has been a very strong correlation in recent years between the moves higher in both Gold and the Swiss Franc. By my reckoning, EUR/USD can move back towards 1.20, EUR/CHF could see 1.30 again, leaving USD/CHF close to 1.10 again. You gotta have a plan!
As we know, in FX trading the most important ingredient is timing, closely followed by risk management, and a slice of luck doesn't go astray either! Fingers crossed that I get all 3 right. (And if you can't afford a trade, don't take it on!)
Yen crosses crunch through support levels
AUD/JPY seems to be leading the charge lower, taking out a 38.2% retracement support at 102.15 with lows so far near 101.70.
Next major support in AUD/JPY is a 61.8% retracement and previous highs near 100.00.
EUR/JPY: Testing support at 127.70
This level is the previous trend highs and should now offer plenty of solid support. If it breaks then we should see more trailing stops going off. As a local hedge fund just mentioned to me, once the big players start liquidating positions in one asset class, as they are currently doing in the Gold market, it can often lead to selling in other areas (ie liquidating Yen shorts).
Chinese data gives more reasons to sell the AUD
AUD/USD is now 50 pips lower after the poorer-than-expected Chinese economic data and you can add these developments to the other reasons listed below for being short the AUD.
Initial short-term technical support is at 1.0435/40 and those clever enough to have sold this morning's rally can book profits there and re-sell on rallies.