USD/JPY: Japanese retail buyers out in force
Reports in the market suggest that it was heavy buying from Japanese retail accounts after the US election result which drove USD/JPY off its intraday lows near 79.85, up to session highs near 80.20.
Asian market overview
- All about the election, with the clear victory to President Obama giving risk sentiment a boost:
- Risk trades particularly EUR/JPY fell before the vote started from 102.90 to 102.30:
- Once it became clear that Obama would win, USD started to slide across the board but led by EUR/USD:
- Once the significant margin of victory became clear, risk sentiment improved across all markets and EUR/JPY screamed higher:
- EUR/JPY finishes the session where it started this morning, so it was a good session for old-fashioned FX traders!
- Now eyes turn to Greece parliamentary vote on austerity measures (which has already passed committee stages).
FX market starting to feel "tradeable" again
I'm not overly sure how to define a "tradeable" market, but it's a market which moves constantly and gives both sides plenty of chances; traders who are in form are able to take advantage of those chances whereas those who are struggling tend to mis-time their trades. It's so much more fun this way, rather than trying to get it right all the time!
Twitter going crazy now that election is over
I only follow about 30 industry professionals yet my Twitter page is updating every few seconds. 'More of the same' seems good enough for the majority of people and risk sentiment across all Asian markets is improving significantly. It will be interesting to see what Europe makes of this once the euphoria dies down. Overall I prefer the short-USD trade for now, looking to buy dips in EUR/USD and AUD/USD and hopefully build a short USD/JPY position below 80.40ish.
Obama re-elected, now what? I'm selling USD/JPY
For me the obvious trade is to be short USD/JPY so I've taken a small position at 80.00 and will see how it develops from here. The market is long according to this morning's Prime Brokerage reports and I'm guessing that many of these trades were put on in expectation of a Romney victory. I don't see much upside from here but best to wait and see how the next few hours unfold.
Risk trades turn higher with Obama on edge of victory
I thought an Obama win was expected to be risk-negative? Seems not, and the risk trades have turned sharply higher with the President's re-election seemingly assured. There has been a sharp jump in EUR/JPY in the last few minutes, unwinding the losses from earlier in the session.
EUR/USD: Intraday bulls probably missed their chance already
The fall towards 1.2790 earlier on was the opportunity for bulls to put on an intraday with stops below the Sovereign bids at 1.2765. That chance is now gone with EUR/USD starting to rally and there are no decent-sized offers reported until 1.2885/90.
USD/JPY: Watch for more heavy downside stops
Short USD/JPY has been the most obvious play for those who thought Obama would win so with the market still quite long, it seems that much of the market disagreed with the English bookies! There are more downside stops reported below 79.50 and again below 79.25 which might yet come into focus.
USD/JPY the first mover and risk trades could follow
As expected, the prospect of an Obama win has led to USD/JPY positional squaring. Once the result becomes more certain, we could see some short term selling in EUR/USD and AUD/USD as Yen crosses lose some luster.
AUD/USD: Buying dips now favoured in shortish-term
Yesterday's RBA decision certainly surprised me and I'm still sitting on my medium term short position but I'm not feeling so confident anymore. Nevertheless, we can expect some volatility when the US election results start flowing later today and hopefully I can trade my way in and out once that movement starts.
Reserve managers are reportedly looking to buy now around 1.0350 so that says to me that levels near 1.0370 will probably find plenty of buyers (like me :) ) and the obvious technical target is the top of the weekly wedge near 1.0600 (hopefully it doesn't go there in a hurry).
An Obama win in the election will probably be mildly risk-negative in the short-term (compared with Romney) but also mildly USD-negative (more Bernanke) so that's overall AUD neutral. A Romney win would be seen as risk-positive so good for pairs like AUD/JPY in particular.
USD/JPY: Should be the most volatile pair after election results
The theory is that a Romney win would be risk-positive and USD-positive, which would suggest a double-whammy topside for USD/JPY. Remember that the market is still long (albeit at reduced levels) so it could be a case of buy-the-rumour-sell-the-fact.
Of course the flip side is that an Obama win should be USD/JPY negative, mildly risk and USD negative, and triggering more stop-loss selling.
Asian market open, Wednesday November 7th
You can click through here and read my opening comments on FX Street.
Professional market positioning turns short EUR again
The biggest position amongst professional players at the moment is short EUR, according to data I've compiled from a number of big prime brokers. This data also incorporates much of overall retail positioning, as retail brokers will have open positions with the big Prime Brokers. I will send a more complete report out to members later today.
The market remains short of CHF but JPY short positions were significantly reduced over the last week (little wonder with all the stop-loss runs we saw!). It's also significant to note that AUD positioning is very neutral.
Gold could be a big mover in next few days (retail market is quite long)
The market, especially the retail market, is quite long at the moment with some brokers reporting over 80% of accounts as being long. If the election gets really tight, any possibility of a Romney win could see these positions start to get squeezed. Support/resistance parameters are at 1675/1725 and we could see some heightened volatility here.
FX market still in stop-loss mode: Positioning light ahead of election results
My main feeling at the moment is that the market is still in stop-loss hunting mode. Yesterday we saw USD/JPY orders below 80.00 targeted and eventually triggered. This is what drove the market and the rubbish rumours about big flows turned out to be just that. EUR/USD eventually found a base near Sovereign bids at 1.2765 and started triggering trailing stops back above 1.2810. The AUD seems to be the one currency driven by solid sentiment and flows, with reserve managers piloting it higher.
The US election results should start flowing in around 02:00 GMT but its unlikely that we see any big moves until after the result is officially announced. Prime brokers report that positioning is now very light amongst the shorter-term players so I do not expect to see any major volatility during this session.
Last word on Melbourne Cup day goes to the bookies
Some bookmakers, obviously looking for publicity, have started to pay out on a President Obama win the US election, saying that the result is a foregone conclusion. I don't know about that but I do think we should be in for some fireworks come this time tomorrow with both the likely result and the Greek parliamentary vote hitting the wires.
Good luck and catch you tomorrow.
EUR/JPY: Bit of caution advised as rumours swirl
The gossip is that a major EUR/JPY transaction is going through the market at present, it started yesterday and could be ongoing for quite a while. The talk is that a large long-term speculative position is being exited. So far the market hasn't reacted too much, after all EUR/JPY is only about 75 pips lower than yesterdays' opening levels. If we see some sharp moves in coming days then we can start believing that there could be fire behind the smoke. (By the way, I'm probably a bit late on this as it was first mentioned yesterday during late European trade).
From a technical perspective, support at 102.15 has held nicely but a break below there could trigger more selling.
EUR/USD: Sovereign bids holding for now
These bids at 1.2765 have been on the books since yesterday and so far they are scaring the bears away. That said, the bounce isn't particularly impressive just yet; I'm sure bulls would like to see prices back up at 1.2810 before committing again to the buy-dip strategy.