EUR/AUD: Adding to small long position
Luckily I bought near the absolute top yesterday :( but I often find that these trades turn out to be the best ones (or at least I try to convince myself that they are). I've added to the position near 1.2455 and am running with a fairly tight stop below 1.2390.
Australian November retail sales -0.1% MoM Versus +0.4% expected
The AUD/USD tried to test 1.0520 before the number but the bulls were swiftly rebuffed when the data disappointed at -0.1% MoM. This will keep any lingering hopes of a February rate cut still alive. I'd continue to play the range, 1.0465/1.0525, with a mild bearish bias after disappointing economic data in the last 2 days.
AUD quiet ahead of retail sales data
AUD/USD is treading water near 1.0510 ahead of the retail sales data due in 20 minutes. Sell orders have been reported over the last few days at 1.0520/25 and again 1.0540/50 but I have no confirmation if they are still live or not.
Main FX market themes on Wednesday January 9th
- Yen positioning is undoubtedly the main factor at play in the FX market with heavy Yen shorts starting to book profits:
- Risk sentiment has been very strong in recent weeks with equity markets rising strongly and this of course underpins currencies like the AUD:
- Activity has also been high in the commodity markets, led by a runaway iron ore price, another pro-AUD factor:
- Debt markets have been generally well behaved with EZ auctions heavily over-subscribed in the main, a factor which should be pro-EUR in the short-ish term:
- Tomorrows ECB meeting is also impacting on FX market trade, although no change is expected in either policy or statement:
EUR/JPY technicals: Support breached at 113.65, next level at 113.10
The downside pressure on EUR/JPY has continued this morning with trailing stops triggered below hourly support at 113.65. The next level of support is at 113.10.
Alcoa reports increased sales, and optimistic outlook especially on China
One pair to watch this morning could be the NZD, with stop-loss buy orders reported in NZD/USD above .8400 and again above .8410, mainly from option-related players. The modestly better-than-expected report from the global aluminium giant could improve risk-sentiment through the Asian session.
Day ahead in the FX market, Wednesday January 9th
- Australian retail sales data at 00:30 GMT:
- EUR/JPY continues to attract profit-takers, watch important support now at 113.65:
- USD/JPY also hit by profit-taking with major prime brokers reporting a big fall in Yen short positions:
- EUR/USD range-bound, with short-term swings influenced by sentiment swings and headlines:
- Pressure remains heavy on USD/AXY and central banks like BoK will continue to intervene.
EUR/JPY technicals: Wedge formation on hourly chart with support near 114.30
Wedge formations are usually continuation patterns so bulls can consider buying near 114.30 with a tight-ish stop below 114.10, yesterday's low.
EUR/AUD: Buy now for move to 1.28+
There was very nice technical support at 1.2410 which held well and this pair is starting to rally again. News that Japan will buy ESM bonds is bullish for the EUR whilst the Australian trade data was quite poor, a reasonably good fundamental reason to be long this pair in the short-term. I've opened a small long trade near 1.2520, let's see what happens.
No clear obvious trading opportunities arising
The Asian session hasn't really given rise to any clear-cut trading ideas with the sessions biggest announcement, Japanese buying of ESM bonds, really only muddying the water some more. The failure of EUR/JPY to rally significantly after this announcement implies that the market is already at overly long levels, but its also very hard to contemplate shorts in this environment.
Watching and range trading seems like the best bet, across the board.
EUR/JPY at a short-term cross-roads
News that Japan will buy European bonds as early as today places EUR/JPY firmly at the forefront of FX market activity (not that it wasn't already!). This is bullish news for the pair and if EUR/JPY finishes the session lower, then that must be seen as a very bearish event. Perhaps the Asian market is simply reluctant to buy in size at these lofty levels and is waiting to see what the big European players do? One way or the other, if you want some action and volatility then EUR/JPY is the pair to trade.
USD/JPY failing to rally hard after FinMin comments
Japan will buy ESM bonds as early as today and this has seen the Yen crosses spike around the place but without any major impact. The EUR is mildly higher after touching 1.3140 against the USD but USD/JPY is looking heavy after rallying to 87.80 but has fallen back to 87.60. Yen bears will be slightly disappointed by the lack of reaction and this might be yet another sign that Yen shorts have reached saturation levels?
AUD/JPY: Worth considering a short after poor trade data?
The poor trade data does make a rate cut slightly more likely although the futures market isn't showing any marked change. Perhaps AUD/JPY might be worthy of some consideration at these lofty levels? I am watching the short-term charts closely for any sign of a topping formation.
USD/JPY technicals: Just a normal retrace?
If we look at the move from 83.85 to 88.40 as being the latest leg of an up-move, then we may well be undergoing a normal retracement which should take us to the 38.2% level near 86.65. Bears can try selling failures near the breakdown level at 87.65 with a tight stop.
Australian trade deficit AUD 2.64 billion in November
Nice call from the CBA earlier. AUD/USD is a few spreads lower but staying fairly quiet overall.
USD/AXY: Remains under quite heavy selling pressure
The main flows have been in USD/KRW, with the Bank of Korea reportedly buying around USD 1 billion over the last 24 hours to try and slow down the fall. The BOK were unsurprisingly reported to have been buying EUR/USD near the overnight lows at 1.3020, diversifying out of their dollar purchases. I haven't read any reports to confirm this, but I would not be surprised if they also sold USD/JPY, as the recent moves in JPY/KRW will be worrying them.
The USD has opened mildly softer across the board in Asia but dealers say its more about chasing stops at this stage of the session.
USD/JPY dips on yesterday's comments
Looks to me as if they same comments are being recycled regarding the level of USD/JPY which Japanese business is comfortable with. They were widely reported yesterday afternoon and they are being used to target weak trailing stops below 87.60. Next support is at two prior hourly highs near 87.35.