Looking for some short-term opportunities in the crosses
The economic calendar will stay light for the next few sessions so we will rely on intraday sentiment/positional swings for some volatility.
- USD/JPY has found a resistance level at 108.30;
- Oil prices slipped again overnight which will put pressure on pairs like CAD/JPY;
- CAD/JPY support/resistance levels at 95.10/96.00 intraday and might be worth trading with a bearish bias if you think oil will slide further during Asia;
- AUD/USD has been capped again by .8820/30 so AUD/JPY might also be worth some bearish consideration.
EUR/AUD: Looking for selling opportunities
I'm not overly sure of my levels just yet as I haven't been trading this pair very actively. The EUR remains friendless and is likely to stay that way whilst I believe the bearish case against the AUD has been overdone. I will stay patient and see how the short-term market develops but I'm in rally selling mode and think and re-test of 1.37 at least in coming weeks is very plausible. Perhaps a short-term consolidation between 1.43/1.46 before more downside?
USD/JPY: Risk-reward favours long-term top-pickers
Picking levels in USD/JPY is will nigh impossible and it really is a matter of watching the market very closely for signs of accelerations and turns. I still cannot get away from the view that the big bull move from sub-80 on the back of the BOJ is running out of steam. That doesn't mean that we don't see levels above 110, in fact it could happen today for all I know, but I like the risk reward in trying to pick a medium-term top somewhere up here looking for a nasty dip back below 100.
That doesn't help us much today unfortunately! There is a short-term top near 108.30, which is also around the 61.8% retracement of the 110/105.20 move, so selling near there with a tightish stop above 108.40 does certainly make sense. Support levels don't look overly strong until 107.40/50 but I'm sure the dip-buying brigade will emerge in force at those levels.
AUD/USD: Looking for some range trading opportunities this week
- It will be a quiet week for the AUD on the economic calendar and movements will be driven by commodity and equity markets as well as positional adjustments.
- The iron ore price has stabilised near $80 and the longer that this price consolidation continues, the more likely AUD shorts are to start covering.
- Risk sentiment seems to be improving across global markets, another potentially positive sign for the AUD.
- On the downside for AUD/USD, the trend is very bearish and we are currently seeing a sideways consolidation of this.
I'm looking to play the edges of a wide .8680/.8930 range with a mild bullish bias for the week.
AUD/USD: Sideways pattern likely to break soon
AUD/USD has been trading in a wedge formation all week and the parameters are pretty tight now at .8735/.8810 approx. The AUD has made strong gains on some of the crosses this week (AUD/NZD, AUD/JPY, AUD/GBP) but the USD is also very strong so it's still a bit of a coin toss in my opinion as to which way it breaks. I'm staying out of it for now.
Markets staying choppy but USD strength still main trend
USD/JPY made a strong break higher yesterday, taking out heavy sell orders near 107.50 and proving that the market still has plenty of appetite to buy this pair. The USD also made strong gains against the NZD and whilst the other majors were choppy, the bullish USD trend remains the strongest lead in the market. Personally I don't get it, but at times like this it's best for me to step aside and save myself a lot of aggravation and money.
There is not much in terms of data today and although Friday is often risk-off in Asia, I'm not sure that the market has built enough big positions to warrant such a move.
Good luck and TGIF.
EUR/JPY: Nasty turnaround catches shorts unawares
The early EUR sell-off into early Europe had me thinking I was right only for the PMI numbers to set off a batch of very nasty short covering. There were obviously plenty of trailing stops above 135.80 in EUR/JPY judging by the speed of the move through there. Next resistance is nearby at 136.25/30. If it breaks above here then I will lose my bearish bias. Not doing very well at the moment, am I!!
NZD falls heavily after CPI data
Q3 CPI came in at 0.3% QoQ which was well below expectations.
The NZD/USD is 100 pips lower since NZ opened this morning.
Next support levels are around .7820 and I'm sure there will be some stale shorts out there who will be availing of this significant dip.
Trade of the Day, Thursday October 23rd: Looking to sell EUR/JPY
Markets are still pretty choppy and there don't seem to be any dominant factors influencing the major currencies.
- Commodities remain influential, with the oil market still looking nervy (and likely to affect Yen crosses) but Gold trying to form a significant base;
- Bond markets haven't had much information to go on and are in holding space (notwithstanding the occasional positional rout);
- Equity markets have been tottering recently but as long as the Fed, BoJ, ECB etc maintain their policies, stocks are likely to be underpinned.
Both the cable and EUR/USD have had periods of interesting price action in recent sessions and both look bearish to me in the short-term. There is still plenty of optionality at 1.2500 in EUR/USD which will act like a magnet.
USD/JPY has been consolidating but the failure to break significantly higher after the GPIF news at the weekend suggests to me that the market is already long of USD/JPY. I'm also hearing reports of decent selling interest near towards 107.50.
Which leads me to EUR/JPY. I'm trading this pair with a bearish bias and will update levels as the day progresses.
AUD/USD: Cutting long position due to lack of activity
I've been long all week and the market is 30 pips higher! My general market timing has been very poor in recent weeks so I'm exiting this trade and will reassess. This is a 'hope' rather than 'conviction' trade and they usually turn sour in my experience.
I've really got no strong views so back to watching the market and hoping for the lights to suddenly come on.
Plenty of big data releases today, Wednesday October 22nd
- Australian CPI is expected to increase at a rate of 0.5% QoQ. The AUD/USD is consolidating in a 50 pip range around .8800 and I remain of the view that a bullish break is more likely. AUD/JPY is also stuck in neutral after some bullish/bearish events in recent days.
- Bank of England minutes from the October 9 meeting should ensure some volatility in the GBP during early European trade. Positioning is very neutral in the GBP according to prime brokerage reports so it looks ripe for a move (in either direction) prior to Christmas. I maintain my bullish bias (especially against the EUR) but as always with the pound, timing is key.
- US CPI is expected to stay unchanged at 1.7% YoY and is unlikely to move the market.
- The Bank of Canada rate decision and monetary policy report are unlikely to hold any surprises. There may be a slight upgrade in short-term growth and inflation prospects but not enough to excite the market.
Gold: Macro shorts unlikely to panic just yet
The Swiss Government and National Bank have certainly not been in favour of a referendum on Gold reserves, but this looks likely to happen in late November and is a chance of passing. This would prohibit the SNB from selling any more Gold reserves and would force them to up their Gold reserves significantly. We can start beginning to imagine the effect that this will have on Gold and on the CHF.
Prime brokerage sources report that there still seems to be plenty of interest to sell rallies towards $1280/90 but that a break above $1300 will see trailing stops being triggered.
Concerns emerging over GPIF equity weighting change
Stops below 106.50 were triggered in USD/JPY as concerns emerge over exactly how the GPIF equity weighting change will play out. The Nikkei is over 1.5% lower and US treasury yields are also lower #FXWWchatroom
AUD/USD: Still long- .8850 looks to be crucial level
I'm happy to stick with my long position from yesterday but gains from here through .8850 are expected to be hard fought indeed. Interbank sources are reporting decent selling interest between .8825/50. That said, stop-loss buy orders above .8850 are likely to be very heavy so I will stick with the long trade ands see how the market develops.
Looks like it should be a rangey, quiet session in Asia
USD/JPY ran into decent selling interest yesterday near 107.35, which is unsurprising given that it had rallied 200 pips off last week's lows. The other main Yen crosses have basically held onto their gains as the USD weakened moderately across the board. The GPIF news from the weekend is still very relevant for the Yen and I expect to see some short term JPY weakness continue.
- USD/JPY: Might be worth buying intraday near reported bids at 106.70ish with a fairly tight stop?
- AUD/JPY: I still like the look of this pair but it will probably struggle to break above 94.50 on the first try at least.
- AUD/USD: I'd suggest .8735/.8825 as the range parameters with a mild bullish bias.
For those who still haven't had a free trial in the FXWW chatroom on Reuters Messenger...........
If you like plenty of bank research and analysis, then you will love the FXWW chatroom.
If you haven't trialled it before, then go to https://fxww.com/chatroom-trial/. For more detailed information, go to https://fxww.com/fxww-product/chatroom/.
We can only manage a limited number at a time, so it will be a case of first-come-first-served for the first 20 triallists.
AUD/USD: Playing from long side to start the week
- GPIF news from the weekend will have an impact on AUD/JPY sentiment;
- There is still expected to be some residual interest from Sovereign players to buy AUD/USD for bond issuances;
- Charts show short-term consolidation between .8650/.8850.
The market has opened around .8760 this morning and I'm playing this pair with a bullish bias.
GPIF news will have significant impact on Yen
Reuters are reporting the following:
According to sources, the Japan government pension fund (GPIF) – the world’s biggest with a 1.2trln USD war chest – is being urged to cut low yielding JGB holdings and increase their equity holdings from 12% to around 25% in order to boost returns. The proposal is for the GPIF to cut bond holdings from 60% to 40%. The fund is also likely to boost holdings of foreign equities
Obviously the timeframes on such decisions can be quite longish-term but the effect on short-term JPY sentiment is likely to be significant.