GBP/JPY: Sticking in a silly bid
I took a small short yesterday at 145.08 and it's moved very nicely into the money. I haven't tried to trade this at all, and am happy to try and pick up a 350 pip profit, so I'm sticking in a bid at 141.50 which will hopefully get filled whilst I'm having my badly needed beauty sleep :) I'll run the small AUD/JPY shorts for another while and leave a stop at entry. Of course I'll stick with my long EUR/CHF trade and leave a stop below 1.2240.
Have a great weekend and keep positions manageable just in case of some big weekend announcements.
Not a lot of new information arising from the Asian session
- USD/JPY got close to testing last week's spike low at 92.15 but bounced.
- AUD/USD failed again at 1.0370 Fibo.
- NZD demand remains very strong.
- Very few flows of note in the EUR, with a small late rally on ECB Weidmann comments.
AUD/USD: Still struggling to break above Fibo resistance at 1.0370
If minor resistance levels like a 38.2% Fibo start providing solid resistance, this usually means to me that the market is turning bearish. We've had 3 or 4 attempts to break above this level and all have failed.
No reports today on any hedge fund selling interest, they were noted yesterday on the approach to 1.0400.
Plenty of order activity confirmed in USD/JPY
There are some bids around 92.20 but heavy stops just below. Better buying interest noted at 91.80 and 91.50/60.
USD/JPY trying to push lower
I'm not hearing of any interesting flow activity from the market but I suspect that there will be a lot of interest around 92.10/20 if we can just generate enough momentum to test there.
Very quiet start in early Tokyo trade
Looks like I got the volatility call totally wrong and no-one is doing anything. The NZD has been the main mover again but USD/JPY has been stuck in a 15 pip range. Not hearing much of interest on the order front so looks like we are set for a very quiet session (usually when I say this it gets busy :) ).
AUD/NZD: New day, same story; don't be caught long
Macro funds have been trying to get out of longer-term longs since this pair broke below 1.2300. If you feel like buying it, wait a few weeks until the squeeze is well and truly over.
Short-term technicals updated
I've updated some of the shorter-term technicals in the members section:
- EUR/JPY; still trading in a pennant formation.
- EUR/USD; targeting 1.3270 but looks like a buy there.
- GBP/JPY; short-term topping formation.
- AUD/USD; capped by 38.2% Fibo for now.
Yen crosses looking soft into the NY close
There are reports of sizeable trailing stops in USD/JPY and in the JPY crosses and the market has a nervous feel to it ahead of the G7 and G20 meetings (even though we sort of know already what to expect). USD/JPY has dipped 30 pips in the last hour and I expect the topside to be limited today as last-minute profit takers start to dominate.
I'm running short positions in AUD/JPY and GBP/JPY so let's see how the day develops. Good luck out there and TGIF.
USD/CHF: Opting out of long position and hoping to re-enter at better levels
I'm a bit worried that USD/JPY might turn sharply lower so I've cut my USD/CHF longs at break-even and will look to re-enter at better levels. I've still got a decent-sized exposure in EUR/CHF so that will do me for now. Too many positions can be a bad thing.
Taking risky shorts in AUD/JPY and GBP/JPY
Going off a tip from someone in-the-know who tells me the trailing stops in these pairs are very large and not far away. Of course these stops may never get triggered and the up-trend may continue on its merry way, so therefore I'm only running very small positions.
In USD terms, some of the bigger hedge funds are running positions of around $15 billion so if this trend turns, watch out!
Edit: Doing the right thing and taking my lovely wife out for Valentine's Day dinner. Hopefully she doesn't catch me checking the rates!
Not the time to be trading off economic data
The EUR got smashed 50 pips lower on poor German GDP data but the market is presently being driven by flows rather than fundamentals, and with the main demand being for the EUR crosses, I would consider all dips to be buying opportunities.
GBP/JPY should be a good pair to trade during the European session
That's if you're feeling brave as it can tend to swing around the place quite violently. Both the GBP and the JPY are attracting plenty of volatility and if we can get each currency moving in opposite directions then we will have some fun and games.
My initial bias is to be short but I haven't been trading this pair at all so prefer to watch for a while until the important levels become clearer.
No change from BOJ
As expected ahead of the G20, the BOJ kept policy unchanged.
USD/JPY has had one of its quietest sessions in recent weeks, basically trading a 40 pip range.
Iwata comments send Yen lower, but losses limited
There are still plenty of profit takers out there and USD/JPY really only gained 30 pips on the comments from the former BOJ deputy.
He said that a Yen correction was necessary in order to fulfil the BOJ's 2% inflation target and that levels between 90/100 for USD/JPY were simply a return to equilibrium.
I still think that range trading broadly between 92/94 is the most likely outcome for the next few sessions.
AUD/NZD: Don't get caught long
All I can do is repeat the same thing everyday; the big macro funds are long and wrong and trying to get out. More downside likely for this pair unless something drastically changes.
Cable downtrend looks ready to accelerate; 1.40 here we come.
The cable has a very nasty feel to it at the moment and the medium term sideways movement, which basically has been going for about 4 years, looks set to end. Chatter from the market suggests that both option and real money players are poorly positioned and if they have to start chasing it lower then it will fall vertically with levels back near 1.40 a possibility in coming months.
Don't try and bottom pick this pair, that's my advice, or at least wait until the interbank panic starts to subside.
If cable starts free-falling then EUR/USD will follow to some small degree though of course the EUR/GBP cross will go through the roof. Pairs like GBP/JPY will also be seriously affected and currencies like the AUD, CAD and NZD are also likely to follow the sterling, albeit lagging and at a much slower pace.