WestPac issue short AUD/NZD recommendation
This makes good sense after the big move higher in recent weeks. Today's GDP data should give the Kiwi a boost and the AUD is struggling to find any momentum.
They sold at 1.2560, with exit orders at 1.2300 oco 1.2690.
Cable orders: Still plenty of shorts out there
I wouldn't be at all surprised to see another push higher in the cable during London trade, with most of the big banks still reporting hefty short positions amongst their bigger clients. With sentiment swinging to neutral from bearish, trailing stops above 1.5200 could come into view very quickly. The big UK banks are reporting further stops up through 1.5230 but the flow guy has been exceptionally accurate in recent weeks and he insists that there will be plenty of supply between 1.5225/50. At least there should be some welcome volatility after very slow Asian trade.
Very dull session in Asian FX market
The Yen strengthened slightly as profit taking kicked in ahead of important technical resistance levels in EUR/JPY, AUD/JPY and USD/JPY. Dealers say that flows were relatively light all day and there was no sign of any hefty position shifts ahead of the maiden Kubota press conference at 6pm Tokyo time this evening.
The NZD strengthened early on the back of stronger-than-expected GDP data but most of these gains were given back as the market lost interest.
JPY crosses slightly lower after FinMin comments
Japan's FinMin Aso is being quoted on the newswires as saying that achieving the 2% inflation target will not be easy.
USD/JPY has fallen to session lows near 95.70, AUD/JPY is below 99.30 and EUR/JPY is back below 124.00.
Bookies have Rudd at odds-on favourite to defeat Gillard
As we saw during the US election, the bookies knew the result even before the vote took place! Rudd $1.33, Gillard $3.00.
Edit: Even that bit of excitement has been denied us, Rudd has changed his mind and won't challenge. Back to the crossword.
No bright trade ideas this afternoon
The trades that could tempt me are:
- Short USD/JPY with stop above 96.70.
- Long AUD/USD at 1.0370, exit at 1.0325 oco 1.0475.
But it's way too slow so I shall wait for the big-hitting Europeans to join the fray before increasing my risk exposure (I'm still small short EUR/JPY).
Australian leadership ballot set for 0530GMT
Looks like we might have our old PM Kevin Rudd back in the job in time for dinner.
This should not have any major impact on the AUD.
Kuroda to speak at 6pm Tokyo time tonight
Looks like we won't be seeing any wild volatility this afternoon.
Bank analysts are downplaying the significance of this particular speech, saying that he is unlikely to go into any policy details but he may (50:50) announce details of a special emergency session from which we could then presume new easing measures.
AUD pops up slightly after improved China PMI data
AUD/USD has popped up to 1.0390 from 1.0375 after HSBC China manufacturing PMI data came in at 51.7, up from 50.4 last month.
As I said earlier, I prefer the long side in the short-term, looking for a break above 1.0420 to test 1.0475 in coming sessions.
AUD/JPY, EUR/JPY edge back from important resistance levels
The 100.00 barrier in AUD/JPY and the 'gap' level near 124.35/45 in EUR/JPY are the two levels I'm talking about. So far movement has been very slow this morning and the market is waiting now on the HSBC China PMI data and Kuroda's speech later today.
Kuroda speech today; market speculating on early easing measures
There has been increased speculation over the last few hours that Kuroda San will use his first major speech as new BOJ Governor to announce new easing measures.
The important levels to watch in the JPY pairs are:
- USD/JPY trend highs near 96.60:
- AUD/JPY barrier at 100.00:
- EUR/JPY gap level near 124.35:
NZD/USD: Whippy after data, possible basing formation on s/t charts
The NZD/USD and AUD/USD are both giving me the same vibes this morning, namely that the topside could be in for a test. The Kiwi charts (see members) suggest a possible base now near .8185 and a break and hold above .8290 would confirm this.
For those interested in the GDP data, (which will be completely forgotten by this time tomorrow), the better-than-expected YoY in Q4 rose to 3%.
AUD: Much will depend on what happens in AUD/JPY
- AUD/JPY is again fast approaching the important physical and psychological barrier at 100.00.
- Option dealers report stops above this level.
- AUD/USD trading in a wedge pattern on hourly charts (see members), usually a continuation pattern ie bullish in this case.
- Stops reported above 1.0420.
- HSBC China manufacturing PMI is main risk event.
EUR/JPY: First of the main EUR pairs to close Monday's opening gap
EUR/JPY closed on Friday in NY around 124.35 and gapped lower on Monday morning after the Cyprus news to levels near 121.50. The gap has now been closed and we now must wait and see what happens next.
Cable: Still happy to try and pick an interim top above 1.5225
First one way then the other, don't you just love the cable. Market might be caught a bit short again and we are seeing recent highs near 1.5150 being challenged. I like the idea of probing for an interim top near 1.5225/50 in line with the recent trend of weak GBP and strong USD.
I'm off for the evening, sorry again about the technical difficulties but it should improve very soon.
USD/JPY: Should stay range bound 94.60/95.40
Hedge fund offers start near 95.25 through 95.50 as big players continue to book healthy profits. Corporate interest is reported starting below 94.70, all of which should ensure at least a brief period of range trading.
Cable: Bids still reported near 1.5060
Same source as yesterday afternoon so these buyers are staying patient. There is plenty of event risk for the pound in the form of BOE minutes, the budget report and jobs data, so we can expect a volatile session. Overall I still prefer the sell-rally play and levels near 1.5225/50 look attractive as an initial probe for medium-term entry points.