EUR/JPY: Fresh longs in play
This could be a bit of a longer term trade, let's see how it develops, and if you fancy following my foolhardiness, you can do so in the members section.
Quick overview of the Asian market
- EUR saw plenty of volatility as Greek-debt headlines hit the newswires:
- The overall new debt terms will be easier for Greece to repay but they still must meet stringent guidelines:
- EUR/USD didn't quite manage to trigger stops above 1.3005 and has settled back into very quiet ranges:
- EUR/JPY tumbled hard at one stage as the market mis-read some headlines relating to interest rates:
- Japanese press reports relating to a possible new economic stimulus package also helped EUR/JPY recover.
Retail market reportedly running quite short AUD
I was only popping out for a quick coffee but I seemed to bump into every FX trader in the city, so apologies for the down time. Not sure what you are hearing from other FX brokers but it seems the local Aussie market is sitting quite short of AUD/USD at present and there are plenty of stops building above 1.0520.
EUR/JPY: Trailing stops reported below 106.00
Just a reminder that there are stops reported below 106.00. Guess we can't complain about the volatility so far this morning.
EZ to cut interest rates on first bailout
EUR/JPY has fallen sharply on this headline, down 50 pips from earlier highs. I certainly had not anticipated that they would announce a rate cut tied to the bailout and I'm sure many others in the market will also be surprised.
Edit: The headlines were misconstrued by many, myself included, and the losses were quickly undone as the rate cuts were of course related to the interest rates Greece will have to pay. Apologies for my obtuseness.
AUD/USD session outlook: Plenty of selling interest near 1.0500
Regardless of what happens in Europe, the AUD/USD market seems likely to stay in range trading mode for yet another week. Plenty of selling interest starting at 1.0480 and getting heavier near 1.0510/20 should prove tough to crack. Even if EUR/USD does break cleanly above 1.3000, perhaps we see a big EUR/AUD move? Bids are reported in AUD/USD starting at 1.0420 and the reserve managers will undoubtedly appear somewhere in the mid 1.0300's.
Greek debt: No final deal yet on other aspects of negotiation
EUR slid back slightly on these headlines but as we know it's going to be a long night in Brussels with lots of headlines.
If there was a barrier at 1.3000 it's been triggered but the stops above 1.3005 are still safe.
EUR/USD session outlook: Surely only a matter of time before it breaks higher
The market is bearish EUR and is always keen to sell as last week's CFTC data showed. Remember, its the speculators who are bearish and short. All bank research that I've read in the last few months show that real transactions are EUR positive. If the market bias returns to neutral then EUR/USD will probably be trading 1.33/1.34 and if sentiment turns bullish, then EUR/USD will be trading back near 1.40.
With the Greek debt saga likely to leave the headlines for a few weeks if not months, the EUR bears might struggle to maintain their patience and this suggests to me that the big risk in EUR/USD is to the topside.
Looks like there could be an option barrier at 1.3000 but if this breaks watch out for some more sharp short-covering. Support should be firm near 1.2940.
I'm going to trade this view through a small EUR/JPY trade which you can follow in the members section.
EUR pops up 15 pips on first positive headlines
Reports are that the EZ FinMins and the IMF have reached agreement on cutting Greek debt/GDP ratio in 2020. EUR/USD has rallied by 15 pips to 1.2985. Those stops above 1.3005 are coming into focus.
Yen shorts at 6 month highs- CFTC
Just reading the Dow Jones headlines of the latest CFTC data and they show Yen shorts at their highest levels since April this year. EUR shorts increased by 10% up to Tuesday of last week, but much of this was probably unwound in last week's late rally. USD longs increased 3-fold, albeit from quite a low base.
The day ahead in the FX market, Tuesday November 27th
- Market on hold ahead of EZ/IMF meeting on Greek bail-out package:
- Meeting expected to go late into European night and we may not get any announcement until this afternoon in Asia:
- Market has partially priced in a positive outcome:
- Very tight ranges overnight likely to be repeated in Asia:
- EUR/USD orders; large stops reported above 1.3005:
- AUD/USD: Totally range bound ahead of RBA next week; reserve managers buying dips but plenty of selling interest near 1.0500/20:
- USD/JPY: Classic bullish consolidation shows up-trend still in control:
- NZ trade balance data this morning expected to show that the deficit is widening (NZD-1.25 billion YoY expected).
Order boards updated
There's a bit more colour now on the order board with Europe up and running, and you can follow all updates in the members section. Of most interest are the heavy topside stops now building in EUR/USD but the AUD/USD and USD/JPY are also attracting interest.
Have a great day/evening and I'll catch you tomorrow++
USD/JPY technicals: Prefer buying dips to 81.45
The strongest trend in the market in recent weeks has been the bullish USD/JPY trend and with still 3 weeks to go before the general election, I'd say it should still have some legs to it. There is obvious support near 81.45, which is a 38.2% retracement level (always very relevant in a strong trend) and also the top of a previous resistance band. I will look to buy bounces off this level looking for a resumption of the bull trend.
Azerbaijan joining in AUD buying spree
I'm not sure exactly how much Australian government bonds the Azerbaijanian Sovereign wealth fund is buying (just reported over Dow Jones), but it is an indication of how widespread this reserve diversification has become around the globe. Little wonder that we hear about reserve manager bids every time the AUD/USD dips by 100/150 pips.
Resistance level start on the day at 1.0480 and should be very firm near 1.0510. We can expect plenty of stops above 1.0525 as well. Downside support levels begin at 1.0420.
EUR catches an immediate bid tone in early Europe
EUR/USD and EUR/GBP are trading at session highs as the European trading day gets underway. Next resistance of note in the cross is at recent hourly highs just below .8110 and in EUR/USD at 1.3020. Not much to report on the order front and flows are most likely to be related to positional adjustment ahead of the Greek-debt meeting.
JPY crosses looking a bit fatigued
There is no doubt that the market is already significantly long of the JPY crosses but there is also no doubt that the Yen bearishness of recent weeks is as strong as ever. Macro funds are reportedly on the bid in USD/JPY near 81.50 as they look to add to their long positions and whilst we have seen somewhat of a turnaround today in EUR/JPY, its probably premature to start calling an end to the trend. The up-trend got a push forward on Friday in thin markets and Asia has simply undone that part of the move, as it so often does. Now if both Europe and the US have down sessions in the Yen crosses, then that would be a different matter altogether...
Quick overview of the Asian FX market
- Market in waiting mode ahead of Greek debt conference:
- Quiet start to interbank trading week suggested no major stops close to the market:
- JPY crosses rose to session highs on the Tokyo open on what looked like investment fund demand:
- The Yen has gradually strengthened since then with profit-taking blamed for most flows:
- Most major USD pairs traded in 25 pip ranges just below their closing levels from last week.