Yen crosses still easing lower
Dealers report some modest profit taking from Japanese accounts but otherwise not a whole lot going on.
The next level of interest in USD/JPY is the previous high at 93.15 which should now provide support but may have trailing stops below there.
AUD/USD: Solid sell orders seen after jobs data
The headline numbers were ok with unemployment steady at 5.4% but the lack of full-time employment is worrying.
AUD/USD tried to pop its head above 1.0330 but there were plenty of offers waiting on the interbank platforms.
Edit: Stops now reported below 1.0290
If NZD/USD tops out, look for bearish pressure on AUD/USD to increase
That may sound like a bit of a no-brainer but the NZD/USD has been very bullish in recent weeks, driven mainly by Chinese buying. Adding to the NZD demand, has been the sight of massive macro funds bailing out of longer-term AUD/NZD longs. I expect this latter trend to continue so if the NZD/USD tops out, I expect the AUD/USD to accelerate lower.
JPY: Still plenty of long-Yen exposure still to be unwound
Before you start getting bearish USD/JPY and trying to pick tops in USD/JPY (like me :( ) it's advisable to note that there is still a lot of very large long-Yen exposure in the equity market in particular. Many of these managers are waiting until after the Obama-Abe meeting in 2 weeks time before deciding on their next move.
USD/JPY: Short-term hedge fund strategy
These guys throw around quite significant amounts so its good to get a feel for how they are thinking.
If USD/JPY breaks back below 93.00, look for any 40/60 pip rallies to get short on with a stop above 94.25 and a target around 89.00.
Probably looking at a 100:400 risk-reward ratio which you would certainly need as you're fighting an ultra-strong trend. What I do like is that he is waiting for some confirmation of a weakening short-term bull trend before committing to any trade.
AUD: I've learned to my cost not to get bearish near range lows
The big picture for the AUD still looks compelling; a strong economy, plenty of demand for the currency from a number of directions, and non-participation in the race to the bottom. Certainly the market is quite long and we may see a gradual drift lower, and I'm sticking to my guns that we see 95 cents before 1.10, but there will be huge demand on any big dips.
Stay in short term range trading mode and pick your entry levels carefully as there will be spikes of 200 pips in both directions. Short-term bias remains to sell rallies and medium-term bias is to buy big dips.
Cable and USD/CHF operating around familiar pivots
Recent support in the cable around 1.5670 looks like it will become the next battleground as the bears seek more momentum and the bulls try to form a base.
Similarly in USD/CHF,where the market has been oscillating 50 pips either side of .9100 with no clear winner here either.
Levels to watch during Asian trade
- EUR/CHF: Technical support at 1.2260.
- USD/JPY: Previous highs now support at 93.15.
- EUR/USD: Sovereign demand 1.3460.
- AUD/NZD: Macro players looking to exit longs.
USD starting to show some teeth
Leaving the obvious USD/JPY out of the equation, but the USD is still showing some signs of life primarily against the AUD and the CHF at the moment. No real idea why it's happening this way, just a function of flows I suppose.
EUR/USD: Should find some support near 1.3510/15
That was the high for most of the day during Asian trade yesterday and once it broke up through there it seemed to accelerate. I'm thinking the interbank guys will be keeping a close eye on this level again today.
USD/CHF starting to show a bit of strength?
This could be the kiss of death, right here! My mentioning that the Swissy is starting to feel a bit bid could be the death knell for my patient long position?
I'm still well out of the money on this pair but the position is still small so I'm hoping still that it will turn bullish and give me some trading opportunities.
My EUR/CHF trade I shall henceforth refer to as 'Mona Lisa', as its a thing of beauty, and I'll be reducing slightly near 1.2405 (hopefully).
Flows and orders updated
- USD/JPY stalled at corporate sell orders near 94.00.
- AUD/USD triggered the stops below 1.0350 then bounced ahead of the asset manager bids (typical).
Nikkei +3.6% in afternoon trade
USD/JPY will be getting part of its bid tone from the sharemarket which is eagerly awaiting a new BOJ Governor with extremely loose purse strings!
USD/JPY: Buy it or leave it alone
Relentless is probably the best word to describe USD/JPY and with Yen Bears now salivating at the prospect of a dovish BOJ Governor, there seems to be no point whatsoever in trying to pick a top in USD/JPY.
Previous highs at 93.15 are the first obvious support level and the technical target is a pair of weekly highs at 94.90. I'm a non-believer in this current Yen sell-off, but I've been around long enough to recognise momentum when I see it. I will bide my time and keep my powder dry :)
AUD staying heavy but still rangebound
I think its probably safe to say that 100% of the professional traders I speak with are bearish the AUD which is no great surprise as everyone is getting the same information; macros selling AUD/NZD, Hedge Funds selling AUD/USD and a market which is overall very long. But we've seen plenty of markets like this before where prices can simply go sideways if real demand is strong enough to weigh out the speculative market.
Stops below 1.0350 are still safe but surely only a matter of time before they are done but asset managers expected not far below there.
Flows and orders updated
- AUD/USD; stops below 1.0350 but asset manager bids expected 1.0330/35:
- AUD/NZD; macro accounts reported selling overnight:
- EUR/USD; decent selling interest reported 1.3610 and 1.3640/45:
- USD/JPY; corporate offers reported, some already filled 93.60/65 and more closer to 94.00.
I'm offline for a few hours but will be back mid-afternoon.