USD/CAD: Some big players caught on wrong side of Fridays move
This is not a pair I follow closely, never having had much success with it in the past, but it seems the market was caught unawares on Friday and Prime Brokers report that their main speculative accounts are caught short of USD/CAD. Dips should be fairly shallow they reckon, but with the usual end-of-month oil payments about to go through, we should also see some decent supply of USD/CAD in coming days.
Conclusion, buy dips!
GBP/JPY: Sticking with the short trade
I sold smalls on Friday at 142.40, and yet again I find my ability to pick a good entry level somewhat wanting. Nevertheless, I still like this trade. I can visualise EUR/GBP trading up near .8800 again and I also think EUR/JPY is way overbought and much more likely to see 116 again than it is to see 126.
But I've been wrong on many occasions before and will be again so I'm keeping the position size small until I start feeling a bit more confident.
My profit target on the balance of my EUR/GBP long was hit on Friday night and otherwise I'm still running a small EUR/CHF long, having booked profits on the majority of that trade.
EUR/JPY: Modest profit-taking ahead of technical resistance at 123.00
The 38.2% retracement of the massive down-move from 170 to 94 comes in near 123.00 as also does a weekly high from 2 years ago. Obviously this level will have the bulls reconsidering their commitment so it's of little surprise to see prices dip from this morning's 122.90 highs to present levels near 122.35.
Technicals updated
I've updated EUR/CHF, EUR/USD and AUD/USD technicals in the members section.
Briefly, EUR/CHF is a very clear case for buying dips, EUR/USD is bullish but somewhat overbought and AUD/USD is sitting just above decent support levels.
You can also get the technical updates on Twitter, https://twitter.com/Sean_lee_forex
EUR/JPY technicals: Still like idea of bullish trend channel
The whole market is getting very bullish again but that's usually what happens in the FX market. This pair is bullish for sure but overbought in my opinion, and susceptible to dips back towards the lower end of this trend channel next week.
That's it from me for another week. Not quite as successful as the last two but no harm done either.
Long weekend here in Australia so hopefully Monday stays quiet. Have a great weekend.
Bit of chatter on the Gold front
Just reading a report from one of the big Prime Brokers on overall professional positioning in the Gold market. The typical macro-fund portfolio over the last few years in the 'global macro' space which covers futures, commodities and currencies, has looked something like this; short EZ assets and short EUR; long CHF and AUD assets and long both of these currencies as well; long Gold derivatives.
This is of course somewhat of a simplification but these positions are usually monstrous and can take a long time just to get back to neutral. We are seeing the Yen become the funding currency of choice, taking over from the not-so-beleaguered EUR. We are seeing long positions in the CHF get drastically reduced. The two trades which haven't yet developed are the sell-offs in Gold and AUD, but macro positioning would suggest that these two moves are not far away.
After reading this report, the obvious trade to me is to be long EUR/AUD, but after getting stopped-out at the absolute low before the rally began, I simply don't have the stomach to chase it :(
JPY crosses ease back toward opening levels
It's been pretty quiet in Asia, after a fairly hectic round of Yen selling in late NY trade. EUR/JPY and GBP/JPY are now back at their NY closing levels of 120.80 and 142.65 respectively. Comments from the Japanese FinMin extolling the virtues of free-floating currencies have helped the Yen regain some losses. I guess his interpretation of free-floating and mine are somewhat different :)
Yen staying heavy; not much of a dip in the JPY crosses
Corporate sellers at 90.70 through 90.85 have capped USD/JPY for now but dips are pretty shallow so far. If you want to buy Yen, then I think its a slightly safer bet to do so against the AUD or the GBP, but even there the dips are relatively small.
It's Friday, and I would expect some more profit taking on Yen shorts, but perhaps the market is not nearly as short as I've been thinking.
I'll stick with my small GBP/JPY short position and see how it develops.
USD/JPY: Still some selling interest around
BOJ are committed to aggressive easing according to the latest minutes. Obviously USD/JPY is catching an updraught but there are some corporate sellers perched above the market. I'll try and find some exact levels.
GBP/JPY: Initiating risky short play
I've taken a small short near 142.40.
The GBP looks to be under pressure across the board and whilst the Yen has also lost ground. I still think the market is short Yen and we are more likely to see extended consolidation.
If I'm right, EUR/GBP could see .8600 quite soon and EUR/JPY could retrace back towards 117.00 during this phase. That would have GBP/JPY at 136.00 or thereabouts. Let's see how this develops. I'm starting small and will look to build if it looks promising.
It's never too late to sell Sterling
Or so the old adage goes! EUR/GBP has broken up again and cable looks like it will close below 1.5800. If EUR/USD stays in its range, capped below 1.3400 and if the cross stays bullish, then cable could be in for some more heavy losses.
I'm not going to chase this one lower but if I had to have a position, I'd be short.
EUR ignores the bad news, rallies on the good news
The EUR crosses went on a bit of a rampage overnight yet again, with EUR/GBP, EUR/AUD and EUR/JPY leading the way. It looks like my anticipated consolidation period in these crosses is over almost before it started. The market NEEDS to buy EUR, rather than wanting to buy EUR, a big difference indeed.
Let's see if we can find some trading opportunities today. Good luck.
EUR: Tale of two countries
Dragged down by one and lifted up by the other! I wonder where the Deutschmark would now be trading if it stood on its own?
Good night and catch you tomorrow++
Spanish unemployment reminds the market of the downside to the EUR
Pretty horrible unemployment data out of Spain and poor French PMI data has turned the focus onto the downside for the EUR.
This is nothing new but it may give EUR/GBP and EUR/CHF longs something to think about? I'd expect to see heavy stops below 1.3250 in EUR/USD and the market might have a look there later on.
Quick overview of Asian FX market
- Apple stock was over 10% lower in after hours trade giving risk-sentiment in Asia a negative lead:
- AUD/JPY was one of the more active pairs, falling from 93.55 to 93.05 in early Tokyo:
- HSBC China PMI was better than expected and at a 22-month high of 51.9:
- Yen crosses started to rally thereafter:
- Chatter that CEFP would quickly promote aggressive easing gave the Yen crosses a bit more momentum:
- BBC reports that North Korea was set to test more long-range missiles gave USD/JPY extra bullish impetus:
- AUD/JPY topped out on the session near 94.00 and EUR/JPY near 119.10.
CEFP and North Korea send USD/JPY higher
Take your pick; more talk on the Council for Economic and Fiscal Policy (CEFP) will meet soon to promote more aggressive easing and other policies to stimulate the economy; also BBC reports that North Korea plans more long-range missile tests.
Probably a combination of the two, along with short covering after the Chinese PMI, are the likely reasons behind the rise in USD/JPY.
Stay in range trading mood is my view, and use rallies as selling opportunities.