EUR/GBP looks like 'pair most likely' in early European trade
EUR/USD is edging higher and cable is edging lower in early European fare as traders dabble, looking for the currency pair most likely to deliver some volatility. There is a daily high at .8165 in the cross and I suspect there might be stops above there; if there are, then I'll be booking some profits on that rally!
On the economic calendar there is a raft of European PMI data ahead of some important US data later tonight.
Anybody seeing any strong technical signals?
I've been trawling through the short-term charts looking for some potentially good-looking formations or convergence of signals, but to no great effect so far. Anybody got any bright ideas they'd like to share?
Cable orders: bids and offers aplenty
Buyers reported 1.6065/70 and sellers still solid at 1.6145/50, just like yesterday. The option players have this pair firmly in their grasp.
AUD/USD: Still plenty of interest on order books 1.0510/25
Sell orders still reported 1.0510/20 and large stop-loss buy orders above 1.0525. By my reckoning, the weekly bearish trendline comes in around 1.0535/40.
EUR/GBP: Looking to book some interim profit near .8180
I'm long of this pair and I'm looking at important technical resistance near .8160 and thinking to myself that there are sure to be stops just above there? I will look to book some partial interim profit near .8180/90 and then re-buy on dips after that. This pair never trades in a straight line and we can expect plenty of swings-and-roundabouts on the way (higher I hope).
EUR/JPY finds another surge during Asian trade
Regional stock-markets are higher, led by Chinese markets, and similar to last Friday, EUR/JPY has managed another quick 50 pip surge during Asian trade. Last Friday we saw two separate surges so if that happens again we should see important resistance 108.00/10 tested.
AUD/USD: Intraday stops building above 1.0490
No surprise to hear that, although there is still talk of solid sell orders between 1.0500/20.
I'm done for the day and will not be back on-line until lunchtime tomorrow, so apologies in advance for the missing 'opening comments'. Thanks and catch you later++
EUR/GBP: Adding to existing long position
Based on the technical support at .8105, I have added to my existing position, although this time I've bought straight EUR/GBP.
USD/JPY: Still plenty of buying interest below 81.50
USD/JPY has looked susceptible at times to a clean-out of long positions but so far the bulls are holding their own. The interbank market is still reporting plentiful buying interest near 81.50 and just below. Many are expecting a surge of Yen buying as the election day looms but then again many had assumed that the AUD would fall after a rate cut. Sticking with the recent trend in USD/JPY seems like the logical play so buying dips is still the preferred trade.
Quick overview of Asian market
- RBA cut rates by 25 bps as expected and maintained easing bias in statement:
- AUD/USD dipped by 10 pips before immediately rallying almost 50 pips with short-term market caught overly positioned:
- EUR/JPY had been trying to fall through the morning on lower equity markets but rebounded alongside the AUD:
- Gold falls heavily, triggering stops below $1705.
AUD/USD: If it breaks cleanly above 1.0550 then I'm giving up
I've been running a short strategy in AUD/USD for some time now but I must say I'm starting to get more than a little worried about the overall direction of this trade. Despite all the reportedly heavy sell orders near 1.0500, the very poor economic data of recent times, and a rate cut today, we are still trading at 1.0440 and having trouble dipping. What happens if the news turns good and the market gets really bullish? Will we be trading at 1.15 in January?
I will not be hanging around to find out and if this pair trades cleanly above its weekly bearish trendline (currently near 1.0530 according to my best line-drawing efforts) then I for one will be bailing out
Market now pricing in 60% chance of rate cut in February
That's two months ahead of the event so you can't tell me that the statement was anything other than 'maintaining easing bias'.
That means that the only explanation for the post-RBA AUD rally is that the market was overly short. What would have happened had they not eased! The old saying goes that a currency that goes up on bad news is bound to keep going higher! (I hope it's wrong this time!).
RBA: "Headline CPI will rise above 3% briefly"
Looks like this sentence in the statement is what has caused the AUD to rally. Doesn't make sense to me as the statement clearly says that this will be a short-term effect brought on by carbon pricing.
AUD rallies despite rate cut and 'neutral' statement
The teflon currency strikes again. Looks like the intraday market was short but to rally by 40 pips after a 25bps rate cut is certainly unusual. The statement reads quite 'neutrally' to me so I'm not sure what the market is reading into that. I'll be happy to sell into this rally, especially if AUD/JPY gets back near 86.10/20.
EUR/JPY: Look for trading opportunities post RBA
Whatever the RBA does AUD/JPY will move which in turn means that EUR/JPY will move. I'm looking for 50/60 pips move either way as trading opportunities, still with a bullish bias.
AUD/JPY: Bears looking for break below 85.20
According to positional reports in the professional market, it would seem that there has been a significant build-up in AUD/JPY longs over the last few weeks. A quick look at the 4-hour chart suggests to me that if there are trailing stops, they are likely to be placed below 85.20. This could be the important level to watch if the RBA cuts rates as expected. If they don't, then we can expect to see AUD/USD back near 1.0500.
AUD session outlook
Obviously the rate decision is the big risk event today and I'd expect the market to stay relatively quiet ahead of that. AUD/JPY is the pair most likely to move sharply, with prime broker reports suggesting that there have been big build ups in carry trade longs over the last few weeks. I'd expect that there will be plenty of stops now below short-term technical support at 85.20. Resistance in the cross should be very solid near 86.20.
AUD/USD looks like it should stay between 1.0390/1.0440 pre-RBA.
EUR/USD session outlook
Greek 10-year bonds had a massive 124bp fall last night and hedge fund squawk boxes are filled with chatter about opportunities in the Spanish debt market. In terms of negative EUR sentiment, the worst seems to be over for now and the EUR is rallying . EUR/JPY is consolidating after its recent fast move and EUR/AUD is also looking to accelerate higher.
I'd suggest that 106.50 is the downside level to watch in EUR/JPY, which is where we had the acceleration from last Friday. EUR/AUD will find some volatility around the time of the RBA rate decision.
EUR/USD should find plenty of buyers now on pull-backs to 1.3000 and the main upside target is 1.3140.