AUD: Remains resilient but for how long
AUD/USD is settling back above 1.0500 but the signs are strengthening that a sell-off will emerge sooner rather than later. Overall market positioning is still reportedly quite long, the sell-off in precious metals is certain to affect sentiment, recent jobs data was disappointing putting a June rate cut back on the cards, and US Treasury comments will undermine Japanese attempts to weaken the Yen (putting some downward pressure on AUD/JPY).
I'm not ready to commit to the short trade yet as getting the timing right has been very tricky, but I remain convinced that we will see 95 cents again before we see fresh highs above 1.11.
Asian market open
Now that Adam Scott has won the Masters for the first time we can get started on the trading week, and here's the link to my opening comments on FX Street.
My bias is getting stronger now to be short of Aussie and Swissy, preferably against the USD but possibly against the JPY given the right levels.
Gold below $1500 signals medium-term downtrend
Hedge funds were the big sellers on Friday, bailing out of longer-term long positions once the spot price broke below $1515. I expect this trend to consolidate over the next few months and we should now track lower towards $1250 perhaps.
I expect this move to flow through to the FX markets fairly quickly and I've added to my USD/CHF long positions this morning.
US Treasury warning sends USD/JPY lower
The unexpected mention in the US Treasury report that Japan shouldn't over-reach in its attempts to weaken the Yen have had an impact on USD/JPY this morning. It's traded down near 97.50 after closing on Friday at 98.40 but has now rebounded back above 98.00.
Don't like the look of these Yen crosses
I'm not sure what is going on which is never a healthy sign so I'm taking my 20 pip loss in the cable as I've seen nor heard no signs of any big buyers. The first cut is the cheapest, as the old song goes!
EUR/JPY back below 130.00
Just looking at the charts and they suggest that the next level of support should be around 129.40 (so likely to be trailing stops below). Not quite sure what's driving this move but I suspect it's positional reduction ahead of the weekend.
Stops in USD/JPY reported below 99.00.
EUR/GBP: Looks like there might have been some stops downside
I was guessing that there were stops below .8500 in the cross and that might well have been the case judging by the quick 15 pip dip in early Europe?
I've just bought smalls in cable at 1.5375 to give me a bit of interest for the European session.
Cable looks like a good bet for some European volatility
- Nothing of interest happening in Asia so it will be over to the Europeans to get this market moving again.
- USD/JPY capped by option and real-money sellers ahead of 100.00; stops above there and below 99.00.
- EUR/USD holding up pretty well as long as EUR/JPY does also.
- Cable buyers reported 1.5360, sellers 1.5425 with stops above there; talk also that we might see a big buying flow today?
- AUD and NZD remain strong but off yesterday's highs and no major flow reports today.
The only intraday trade that appeals to me for the moment is to trade the 1.5370/1.5420 cable range and perhaps trade up towards 1.5500 if big flows emerge. There could also be trailing stops below .8500 (guessing) in EUR/GBP to give the pound an extra boost??
USD/JPY: Not a complete one way bet
There are plenty of downside stops in USD/JPY below 99.00 which might attract attention if we get another 30 pips closer.
Cable: Be careful if trying to pick a top
There were quite a few European hedge funds trying to pick a top yesterday afternoon and they will probably be feeling a little unsure of themselves above 1.5400.
The flow guy usually has excellent GBP-related gossip and he tells me that there is talk of a big cable buy order to be executed in early London. I usually take these rumours with a few pinches of salt but his info in recent weeks has been really accurate.
He says that there are solid bids near 1.5360, intraday sell orders 1.5425ish and stops above there.
I just might try buying an early European dip if it happens.
EUR/USD: Decent selling interest at 1.3150
Most of the big banks are reporting the same heavy selling interest near 1.3150 but with EUR/JPY demand still strong, there has been no significant pull-back yet. A lot will depend on what happens in USD/JPY at 100.00; if it breaks, then EUR/JPY will rally, and those EUR/USD offers will be tested.
Looks like a day for traders, wait for intraday signals and hop on for 50 pip moves.
Prop trading system turns golf tipster
This sophisticated system turned its eyes on the Masters golf tournament this week and it based its predictions on a huge amount of historical data on both the tournament and on this weeks players; age, present ranking, course form and experience, etc etc.
I mention this because I just looked at the leaderboard; their tips were 1. Sergio 2. Adam Scott 3. Rory Mc.
USD/JPY: Still capped by massive barrier protection
Bulls will probably be getting a bit nervous by the inability to crack through these barriers but on the other hand they will be keen to stay long just in case the level breaks and we get another sharp rally. I'm sidelined here with no particular bias just yet, preferring to wait and see how this fight develops.
The Yen crosses are similarly positioned although AUD/JPY does look like it is losing short-term momentum. As for the completely out-of-control NZD/JPY rocket! I've stopped looking, I'm getting blinded :)
AUD/USD approaching range highs at 1.0625
So much for the poor jobs data, the Teflon AUD has bounced back easily and is approaching 1.0600 again. As I said earlier, I'm definitely a non-believer in the AUD but it's all about getting the timing right. If USD/JPY breaks above 100 then I'll start looking for selling opportunities in the AUD/USD.
No new signals from Asian trading session
- USD/JPY still capped by barrier protection at 100.00:
- AUD slipped on poor jobs data but this has been forgotten already:
- AUD/JPY the obvious mover, tested prior highs at 104.50 but bounced:
- NZD still the strongest currency on the planet! Chinese money still flowing in:
- EUR/USD stops reported below 1.3030.
AUD/JPY: Pulls back towards previous highs at 104.50
The combination of barrier protection in USD/JPY and poor Australian jobs data has seen AUD/JPY pull back from overnight highs near 105.25 to be testing prior highs-turned-support at 104.50.
AUD/USD: Testing 1.0500 after weak jobs data
I know the market loves to buy the AUD but I'm not a believer. Sooner or later this bubble will burst and the bears will have their day but until then the Teflon currency reigns supreme.