USD/JPY: Another technical record surpassed
Thanks to Chris Weston on Twitter for another piece of interesting technical trivia; USD/JPY has now been above it's 21-day MA for 69 trading sessions (the previous record was 67 sessions which ended in December 2005 with a big sell-off).
NZD/JPY: Looks massively overbought on all daily indicators
As we well know, when strong trends are in play these indicators can stay overbought for a very long time. I'm not going to jam my technical analysis down your throat (you can see mine in the members section medium-term technical analysis) but even a very modest pullback would take this pair 300 pips lower. I refuse point blank to trade the Kiwi but the risk reward in selling with a stop above 79.65 does look quite attractive. I'll stay instead with my small USD/JPY short from yesterday and might look to add if the crosses turn nasty.
AUD/NZD: Rallying after Chinese milk ban
Reports that some brands of New Zealand milk have been banned in China are causing the NZD to drop quite quickly and sending AUD/NZD higher.
Macro funds are still looking to sell this pair and a quick look at the medium term charts (see members section) suggests that trend-line and 61.8% convergence at 1.2390 would be the ideal entry level for bears.
AUD/USD: Modest sell orders near 1.0335 still good enough to cap
Not a lot of interest in the AUD today and a 30 pip range has kept prices corralled. Dealers report modest sell orders from a few different types of accounts near 1.0335, and this level seems to be capping for now.
EUR/USD: Best to wait and see but longs still preferred
If I absolutely had to take a position in EUR/USD at the moment, I'd prefer to be long with a stop below 1.3260. Thankfully I can choose not to take a position and I will happily sit back and see what develops as the bulls and bears fight for control around a 1.3350 pivot. If the bears win, and can also break below 1.3270, then I would revert to a sell-rally strategy. If the bulls can hold this 1.3270/1.3350 support band, then they can build a strong base for a move towards 1.4000.
Modest volatility in JPY and AUD post CB minutes
USD/JPY dipped on comments from the Japanese FinMin regarding foreign bond purchases more than as a result of fairly uninspiring BOJ meeting minutes. Dealers reported modest bids at 93.60 but stops below 93.40 may come into focus a little later.
The AUD is also trading in a tight range after nothing unexpected emerged from the RBA minutes. Next batch of sell orders seen around 1.0330/35 but overall order books are described as light. Cash-rate futures now pricing in only a 25% chance of a rate cut in March.
Short-term technicals updated
- EUR/JPY; still in pennant formation.
- USD/JPY; possible topping formation.
- AUD/USD; starting to obey bearish rules.
- EUR/USD; 1.3270 will be key.
I've updated the charts in the members section.
Cable: There are still some who think it goes up
I must admit that the cable looks terrible to me but someone who started trading it even before I did (so pre 1986!) reckons that its a raging buy and that we will be back at 1.60 by the end of next week! He's undoubtedly talking his position but these old dinosaurs do have a good feel for the market so they are not to be totally ignored.
(Very sad side note: Many of you in the Sydney interbank market will know that one of our circle has been very ill these past 18 months and he finally succumbed to the insidious disease over the weekend. Rest in peace JB old friend, one of the truly nicest guys in the market).
USD/JPY eases back below 94.00 after some heavy turnover
I read from one source that turnover was light but one of the bigger banks is reporting exactly the opposite in that the sell orders starting at 94.00 were quite heavy indeed. The orders at 94.00 and 94.10 were taken out but the supply above 94.25 has capped the pair for now. We should find some interim support at 93.70 and with the US closed tonight, a few hours of 50-pip range trading seems quite possible.
Pretty lean pickings during Asian trade
The Yen has had a bit of movement after the G20 weekend but I think we all expected a bit more than a slow 50 pips. The other majors are even slower, trading in 15/20 pip ranges, so there's not many opportunities showing themselves.
I still like the risk reward in selling USD/JPY near present levels around 94.15 with a stop above 94.50, buying deep dips in EUR/USD towards 1.3270, and selling any intraday rallies in the AUD/USD for another test of 1.0150/1.0200.
Japanese PM Abe on the newswires
USD/JPY has popped up 10 pips through 94.00 on comments from PM Abe regarding future BOJ choices eg buying foreign bonds or affecting the stock market.
USD/JPY Sell orders reported 94.00, 94.10 and 94.25/30
Sounds like there is some decent selling interest above the figure.
Early Asia FX market staying quiet
With a holiday tonight in the US and a big risk event just behind us, it's perhaps little wonder that the FX market is taking a break. The key JPY crosses are trading in tight ranges and are likely to stay that way until Europe gets in.
AUD/USD: Looks heavy but likely to stay range-bound
There were some big falls in Gold and other commodities on Friday and the AUD/USD is back below 1.0300. I expect this weakness to continue but any breaks lower will be slow, with barrier protection and Sovereign buying interest at regular intervals.
I'd suggest a 1.0200/1.0350 short-term range with a bearish bias.
USD/JPY trade ideas
This comes from the intraday flow guy who made 200 pips in a session with his last suggestion so best we listen this time.
Heavy sell orders near 94.00 in USD/JPY should be hard to break and if they do break, then the buying wave is tsunami-like and we are surely headed higher.
The idea for the bears is to sell at 94.00 with a very tight stop above 94.25 looking for a return to Friday's lows at 92.25, an excellent risk/reward ratio of 25:175.
Bulls can try buying a break of 94.15/20 with a reasonably tight trailing stop back below 94.00.
Yen staying reasonably quiet in early interbank trade
The market has had plenty of time to digest any statements from the G20 meeting and movements have been fairly limited in early interbank trade. Dealers say that the lack of any stop-loss orders close to the market is the main reason behind the quiet start.
USD/JPY is trading around 93.70 and sell orders above 94.00 should ensure that we don't see any panic rushes higher in early Tokyo. Dealers at sales desks suggest that the main danger on the day is still higher, if Japanese corporates start to aggressively unwind long term hedges. If they don't, the hedge fund market is still very long and they may start booking profits if recent highs are tested and confirmed.
Best to adopt a wait-and-see approach. Good luck this week.