AUD/USD back below 1.0400 as risk sentiment continues to sag
EUR/USD is below 1.2750, falling steadily in quiet-ish trade, and there's a general soggy feel to the market. The poor old Kiwi has had a bit of a shocker, down 100 pips from this morning's opening level against the USD.
Risk sentiment turns south along with share markets
Chinese shares are almost 1.5% lower in early trade and this is affecting risk sentiment in Asia, with EUR/JPY sliding lower below 102.00 again. Moves are pretty slow at the moment, unfortunately we are not witnessing the same volatility as yesterday.
Chinese communist party congress getting underway
President Hu Jintao is currently speaking and is saying that China faces unprecedented risks.
AUD/NZD: Employment data scissors move
We've had an employment data scissors move in this cross with shocking New Zealand data sending the Kiwi lower and reasonable Australian data sending the Aussie higher. A quick look at the daily chart shows that there is scope for a higher retracement towards the 61.8% at 1.2810 or even the weekly trendline at 1.2900. Buying dips favoured in the short-term after the sharp move higher today.
Teflon AUD does it again
The AUD and the local economy is unaffected by what's happening elsewhere and just keeps on trudging along. The chances of a December rate cut have receded again and the AUD is edging higher.
The unemployment rate actually fell by 0.1% to 5.4%.
Asian market open, Thursday November 8th
You can click through here and read my opening comments on FX Street.
NZD tumbles after shocking jobs data
The official rate rose to 7.3% against expectations of 6.7%. The NZD/USD has tumbled hard from .8260 to .8200. Next technical support (prior lows and a 61.8% retracement) comes in at .8180.
Now the market will start worrying that Australian data later this morning might also hold some nasty surprises.
Greek parliamentary vote expected in next 30 minutes
More volatility can be expected especially if the result is overly delayed, meaning it's having trouble passing. There's over EUR 30 billion in aid riding on this vote.
EUR/AUD technicals: Support levels hold firm 1.2210/20
The 100-day MA comes in near 1.2210 and there is a 50% retracement level at 1.2220, which was the overnight low.
Risk sentiment turns very sour indeed
The bulled-up analysts got it wrong, initially at least, after yesterday's election result and the Yen crosses have taken a hit after the ECB downgraded EU growth forecasts.
I'm still looking to start covering some of my AUD/USD shorts anywhere near 1.0370 but I remain very bearish on USD/JPY and I think we can see levels near 78.50 before things settle down.
We will take our lead today from Asian equity markets and with the S&P down by close to 3% at one stage, it's likely that local markets follow to some degree.
EUR/JPY will be the lead pair in the FX market and after breaking below 102.15, it needs to reclaim that level in order to give the bulls some comfort.
If you want to make money trading then you need to learn to maximise profits
I'm about to sign off for the night so after a busy day and while in reflective mood, let me try and share some of the things I've learnt over 26 years trading the FX market:
- It's a young man's business! Sorry to tell you this, but there's a reason that banks primarily hire young, risk-taking males to work as FX dealers. When you're over 45 like me it's increasingly difficult to give this business the 100% total commitment which is necessary in order to make it big.
- Analysts, economists and strategists make terrible traders! Big banks have been studying markets for decades and developing models which work. They hire plenty of analysts, strategists and economists but they don't let them trade; trading is done by traders!
- So if a good strategist gets 65% of his/her calls right, why don't they make money as traders? Simple; its an entirely different skill set. Knowing when to increase risk and when not to is the mark of the great trader.
- There are very very few great traders and you will never hear from them because they have the ability to make $10 or $20 million per annum quite easily just using their own money. They have no need to sell their systems or publicise themselves.
And by the way, all those systems and experts out there who are purporting to sell the next sure-fire 100% definite way to make money in the FX market- they are scam artists! There is no such thing as a perfect system, some work occasionally but you may as well toss a coin. Go and learn how to maximise your profits and then you'll have some fun trading.
Good night and see you tomorrow.
EUR/USD: Decent-sized bids reported near 1.2835
The 'good names' that haven't been mentioned for a while as far as I know are back and they are looking to buy EUR/USD near 1.2835 according to a very reliable source.
USD/JPY trade update
For those who like watching torture live, they can track my USD/JPY trade in the members section! I've just added smalls at 80.27 and will only start reducing above 80.80.
Bank analysts: Bullish notes on JPY crosses
I'm just reading two notes from respected bank analysts and both are suggesting that we may be in for an extended period of improved risk sentiment which should translate into higher JPY crosses. The argument is that the new-look Washington houses will be more willing to compromise and that progress will be made on the 'fiscal cliff'. Add to this further easy monetary policy which should erode USD value over time except against the Yen and you have a recipe for higher Yen crosses.
Sounds good in theory but lets see what the market thinks over the next few sessions. I'm short AUD/USD and USD/JPY, so basically short of AUD/JPY, which is the exact opposite of what the analysts are saying. I'm feeling much more confident already :)
AUD/USD: Breaks above reported sell orders at 1.0470
Doesn't look like there was much heavy interest there and AUD/USD is trading at session highs as Europe gets up and running.
EUR/USD sell orders are reported at 1.2880/85.
EUR/USD: London open; analysis and trade signals
Courtesy of Chifbaw.com and you can find more details on their website.
Recommendations:
- Best: Sell EURUSD in between 1.2950/1.2960, SL above 1.2975 with targets 1.2920, 1.285, 1.2740, 1.25x.
- Medium: Sell EURUSD in between 1.2905 / 1.2915 with a scalping mentality (10/20 pips profit, quickly move SL to 0 for a possible trend reversal).
Paradigms:
- The EURUSD will not make new highs (higher than 1.317) until Spain requests a bailout and the OMT is activated.
Analysis:
Yesterday, as expected a rebound has occurred in EUR/USD although not from the levels we were looking for. This morning the market is bearish on the US Dollar as a consequence of the re-election of Obama. We do not believe that this will last, and a risk-off in stocks will progressively materialize into USD strength. This morning EUR/USD is bullish and has still enough energy to rally further up, to become a nice short opportunity for a downward continuation. First good entry point is the retest of the trend line support that held the EUR/USD from falling several times before being broken on November 2nd (see violet dotted line). This trend line currently arrives around 1.2910 and represents an important resistance ("seller's remorse"). Close to it, there is the 61.8% Fibonacci retracement from the top at 1.3137 at 1.2905. This makes the area of 1.2905/1.2915 a perfect opportunity for scalping (10-20 pips correction) during the early part of the London session while also looking for a reversal. There is still another risk event today that is the Greek parliament vote. A positive outcome can propel the EUR/USD further up. The trend line resistance from the previous tops (1.3137, 1.3020) around 1.2950/1.2960 will provide an excellent short entry if we reach it today. The 50% Fibonacci retrace is also located in this area at 1.2950.
USD/AXY: Around $1 billion bought today in intervention
We can expect to see plenty of activity from ACBs later today as they seek to recycle these freshly purchased USD.