AUD/USD eyeing reported stops above 1.0590
No point in getting in the way of the runaway train just yet, especially with reports of stops above 1.0590 and again above 1.0605. The high so far has been 1.0557.
AUD/JPY: Trade idea for contrarian hard-asses only
A Yen analyst out of Tokyo, for whom I have a lot of respect, is calling an end to the Yen fall saying that the BOJ independence will eventually outweigh any government promises. Domestic Australian data has been very poor but this is being ignored as risk sentiment remains exuberantly high to start 2013. Technically, AUD/USD should struggle ahead of 1.07, USD/JPY has its Fibo target at 88.95 and the AUD/JPY cross has its channel top near 94.00.
Very risky I know but I'm on the lookout for any exhaustive spikes in AUD/JPY and I will look to sell for a return to more 'normal' levels near 84.00.
AUD/USD orders: Mixed reports on order front
Sell orders reported 1.0530/35 and again 1.0545/50 but also reports of stops above 1.0535.
AUD pops up on strong Chinese data
Chinese exports +14.1% and imports at +6% against expectations of +4% and +3% respectively.
AUD/USD has popped up to 1.0520 but the earlier disappointing domestic data is curbing enthusiasm.
Building approvals +2.9%; more disappointing Australian data
Coming on the back of poor trade and retail sales data, surely the poorer than expected building permits will give the RBA food for thought. Then again, nothing bad seems to stick to the Teflon currency!
USD/JPY: Back above 88.00 despite lower US yields
Yet another staple FX market correlation, US yields and USD/JPY, seems to be getting completely ignored with 10-year yields falling below 1.85% in overnight trade yet USD/JPY rallying by over 100 pips through the day. Optionality at 88.50 and above looks like it will now prove magnetic.
CBA: Expecting higher than consensus jump in building approvals
One of the big 4 Australian banks, the Commonwealth Bank of Australia, were spot-on with their trade-data analysis on Tuesday and now they are predicting that the building permit data, which will be released at 00:30 GMT, could show much higher than expected approvals and that this could lead to a spike higher in the AUD.
NZD/USD: Inches higher after NZ trade data
The trade deficit of NZD$700m for November was a slight improvement on the October number but was worse than expected.
Nevertheless, the NZD/USD has edged a few spreads higher with dealers undoubtedly eyeing stops above .8410.
Day ahead in the FX market, Thursday January 10th
- Today's main event will be the Chinese trade data which should be released around 01:30 GMT:
- The AUD hasn't fallen despite successive poor economic releases so danger would seem to be to the topside from a positive Chinese release:
- The NZ trade data will also be released this morning and there are still stops being reported topside in NZD/USD:
- USD/JPY has coming roaring back after a brief blip lower and the focus remains on the topside, with optionality reported at 88.50 and above:
- The EUR has been choppy ahead of tonight's ECB meeting but we may finally get a directional move in the days thereafter.
Time to re-think the bearish AUD trade
On Monday I was lucky enough to sell EUR/JPY at the top but last night I experienced the other side of the FX-market equation by getting stopped out at the bottom in EUR/AUD. These choppy, stop-start markets are very hard to trade and it's becoming a matter of picking winners rather than trading the swings. As we know, recognising the type of market we are in is more than half the battle.
I've also been trying to sell the AUD for the last few months and whilst I've had a few successes, I've also had plenty of failures like last night. Perhaps I'd best leave it alone for a while, as I cannot bring myself to get bullish on the AUD at 1.05 and I'm simply not a good range trader.
We've had poor domestic Australian data over the last two days, trade and retail sales, and the AUD has still edged higher so if today's Chinese trade data is positive, then we might see the AUD take off to the topside?
AUD/NZD short-term trade idea
This comes from an interbank source (who is undoubtedly short already and wants the market to start selling); he recommends selling at 1.2545 with a stop above 1.2565 and a target at 1.2480. This is not a pair I follow too closely so I don't have a strong view, apart from the fact that the risk-reward looks quite promising.
Chinese-NZD connection
There are some very strong ties between China and New Zealand, particularly in the agricultural sector, and that's why the market is listening with interest to news that the Chinese banking behemoth, ICBC, is applying for a New Zealand banking licence. They already have an Australian banking licence and nobody is yet too sure why they are seeking one in Kiwi-land.
Any link with China is beneficial and this news has given the NZD a boost over the last few hours. Watch also for option-related stops in NZD/USD above .8400 and .8410.
Quick overview of Asian FX trade
- Stops targeted below 113.65 in EUR/JPY in early pre-Tokyo trade:
- Australian retail sales disappoints, -0.1% MoM against expectations of +0.3%:
- USD/JPY rallied quite sharply in Tokyo morning trade amid quite poor liquidity:
- Alcoa's generally favourable earnings report gave Asian shares a boost:
- Iron ore keeps on rising, steady now above $150:
- Gold steady at $1662/oz.
AUD and NZD orders updated
I've updated the orders for both AUD/USD and NZD/USD in the members section but unfortunately I'm not hearing much elsewhere at the moment.
Cable: Still in middle of it's 4-year wedge
Hard to believe that the crazy currency pair which I started trading in 1986, and which used to see 500/600 pip daily moves, has been stuck in an ever-narrowing wedge formation for exactly 4 years now.
I have absolutely no idea which way it will go but I'm confident in predicting that 2013 will be the break out year and we will either see 1.35 or 1.85! The edges of the wedge currently sit near 1.5650/1.6450 and whilst I'm currently short of cable (only because we got near the top) I'm ready and willing to go aggressively either way once we get the break.
One pair which seems to be giving a strong GBP buy signal is GBP/JPY, so perhaps this is a signal that the break when it comes will be a bullish one? I'm not sure but lets hope we get some volatility at least in 2013!
Few flows noted in afternoon Tokyo trade
There was a pre-lunchtime flurry up to 87.50 in USD/JPY but since then trade has been very quiet.
The steep rally began from 79.00 in mid-November and since then there have really only been two pull-backs; the first from 82.80 to 81.80 and the current 150 pip pull-back which we are now in the midst of. It's normal market behaviour to expect retracements and the steeper the up-trend, the steeper the pull-back. It's also normal for the market to be worried about trading against very strong trends.
What to do next is of course the $64k question and of course absolutely no-one knows the answer with any great degree of certainty. If I were forced to trade it, I'd play the 86.80/88.40 range in the short-term with a bullish bias, keeping very tight stops on either side of this range.
USD/JPY: Expect the unexpected
Once this pair opened below 87.00 this morning I think many presumed that the Yen short-covering was well and truly underway and that there was little or no chance of an intraday rally to 87.50. So what happens? Exactly that which we did not expect!
Bears might find a nice entry level near 87.80, which is an hourly high and the 61.8% retracement of 88.40/86.80.
EUR/JPY back above 114.00 after earlier stop-loss hunt
Stops were triggered pre-Tokyo below 113.65 but there was no follow-through and the cross is sitting quietly above 114.00. Selling short-term rallies is still the obvious play but with positioning levels now at 'less than extreme', the pressure on the downside is easing somewhat. Should stay fairly quiet now ahead on the ECB tomorrow, although 'quiet' for EUR/JPY might mean a 200 pip range!