Yen: Is it better to be long or short heading into risk events?
If we don't know the answer to this question then we should probably be square or have small positions and that leaves us able to react better to whatever happens:
- The Japanese opposition LDP looks set to easily win the upcoming general election and their leader has publicly stated that he will rein in the BOJ neutrality and insist on more measures to combat deflation- Yen bearish of course:
- But recent reports put Yen shorts already at extreme levels- Yen bullish as the market will need to start short-covering:
- Fresh easing measures from the Fed would be risk friendly, and should underpin the Yen crosses- Yen bearish
- But again, the market might already be positioned for this event?
I'd say we should keep positions small and be able to jump in once the market gets over-stretched, which is certain to happen.
Look for the 81.70/82.80 range in USD/JPY to break and that should be good for a 100 pip move minimum. Stay small long near the range base and stay small short near the base top, and be ready to react once the moves start.
EUR/CHF: Real money buyers reported on dips
These are the guys to look out for generally, asset mangers (particularly of the Sovereign variety), who've had funds parked in Switzerland for years in many cases. The introduction of negative interest rates by UBS and the calming of EZ bond markets has meant that some of these managers are now looking beyond safety and looking for some return.
If even a small percentage of the big real money starts to exit Switzerland then EUR/CHF will move sharply higher, especially at this time of year.
What to expect from the Fed later tonight- Citibank
- Fed expected to announce a US$85 billion per month expansion program:
- These outright purchases will be used to replace Operation Twist.
AUD not reacting to personal finance data
AUD/USD is trading quietly at 1.0530 in early Tokyo trade with no reaction to data, -0.9% MoM
AUD/USD: Time to drastically reduce short position
I've done reasonably well on this trading strategy over the last few months, selling rallies towards the top of the 'weekly wedge' and booking most of my profits on dips. According to my drawing, the top of the wedge has now been pierced and I sense that the daily close above 1.0515/20 is also a significant technical event. This may well be the top but regardless of that, I'm getting out of most of my short AUD/USD position and will now concentrate on my short cable play against my long EUR/USD trade.
AUD/USD session outlook: Looks likely to test range highs near 1.0640
The close above 1.0515 is a bullish sign and further gains look likely in the short-term. The obvious technical target is the top of a range band which comes in near 1.0645 but I think progress towards there will remain slow and steady. I'd suggest 1.0510/60 should cover most eventualities and look to AUD/JPY for intraday signals.
EUR/USD session outlook
There is Fibo resistance at 1.3030 which should cap Asian-market moves and support levels are likely to be found near 1.2970. The EUR bad news is now out of the way and the market is starting to focus more on the USD factor; poor trade data and the ongoing fiscal cliff negotiations.
The failure to form an hourly close below 1.3000 is moderately bullish in my eyes, and with stop-loss buy orders now reported above 1.3040, I prefer the buy-dip bias.
Day ahead in the FX market, Wednesday December 12th
- Minor data releases today; Australian consumer confidence and Japanese machinery orders:
- AUD/USD broke higher overnight and a consolidation above 1.0510/20 would be construed now as a very bullish sign:
- EUR/JPY and GBP/JPY are targeting resistance levels at 108.00 and 133.50 respectively:
- EUR/USD stop-loss orders now reported above 1.3040:
- USD/JPY needs to break above 82.80 in order to increase bullish momentum.
EUR/USD: Sell orders at 1.2980 capping after strong ZEW data
The EUR is higher after much improved sentiment data for the German economy but momentum is still lacking and sell orders at 1.2980 are capping for now.
Any dips now back towards 1.2940/50 are likely to find welcome buyers as last week's shorts start to cover.
I'm still running a long EUR/USD position against my short cable and short AUD/USD trades, and I will lighten up on the EUR longs if an hourly high forms below 1.3000.
Catch you tomorrow++
Pretty hard to get excited about 10 pip ranges
EUR/JPY has been the wildest pair today, trading a massive 28 pip range and otherwise its been a total snooze fest.
I have witnessed December markets like this before so let's just survive this and get back to normal in the New Year, please!
ZEW is main event during European trade
Nothing to report from the Asian session apart from a 15 pip dip in the AUD/USD and a quick topside stop-loss hunt in the EUR/USD. Australian business confidence fell to -9 from -1 which affected AUD sentiment. Asian stocks were slightly higher, apart from the Nikkei, and Gold continued its recovery to $1715/oz.
I'm not expecting much from European trade. The EUR looks quite well bid at the moment but that could change if the ZEW is poor. 1.3000 is probably a step too far just now and support should be solid at 1.2910/20; range-trading anybody?
EUR/USD: Quick stop-loss run above 1.2950
Quick spike above 1.2950 as stops get triggered then back to mid-range levels, usual rules apply. I'd expect to see a range trading session during European trade, with 1.2920/80 likely to contain.
EUR/GBP: Bank trading idea
The traders over at Nomura Bank have had a very good run this year in EUR/GBP and they are trying their luck at it again, going short at .8050 with a stop-loss at .8170 and a target at .7800.
Their analysis and trade decision is heavily based on Gilt flows.
I've got the opposite position, being short cable and long EUR/USD, but I do find these guys normally very prescient so I'll be watching for signs that they may be right and a downward turn is in motion.
Average daily FX volumes down by 15% YoY
Just reading through some official data on total daily FX turnover and it makes for sobering reading. The daily average turnover is down from $154 billion to $130 billion in the last year, affected no doubt by low volatility.
EUR/USD orders: Buyers 1.2920, sellers 1.2950.
There is also talk of stops above 1.2960 but more selling interest awaits near 1.2980.
AUD trading with heavy tone
Another forgettable session in Asia, with the AUD slightly lower and nothing else really going on. Modest bids at 1.0455 are stalling losses for now. Sovereign sellers still reported 1.0510/20.