NZD/USD trade initiated
We looked at this idea yesterday from The StochMan who's a professional technical analyst with a major financial news organisation. He has gone short overnight at .8237 with a stop-loss now lowered to .8277 and a profit target at .8105.
What to expect from the RBA tomorrow
One of the local Australian banks put out a note today, saying the the RBA is much more likely to act in November than it is in December. In other words, if they are going to cut rates by another 25 bps before February, then they will likely do so tomorrow or not at all (no meeting in January). The market is pricing in a 57% chance of a rate cut and 15/20 economists polled by Reuters came down on the 'cut' side.
I might be reading too much into this, but the outspoken public interviews given by board members Ridout and Broadbent earlier this month, where both spoke at length about the issue of the high AUD, are surely significant events. If the RBA does nothing, the AUD could be at 30 year+ highs against the USD when they reconvene in February so that's why I expect at least a 25 bps rate cut and some additional language regarding the high AUD. The RBA has been tacitly intervening by not going to the market to sell their usual amounts of foreign currency and I think they will take this 'intervention' one level further tomorrow.
Whatever happens, we are in for an exciting few days with the US election and the Chinese NPC also on the agenda. May you live in interesting times! See you tomorrow.
USD/JPY: Stops building below the market
The first batch of sizeable trailing stops are reported below 80.10.
EUR crosses break below short-term support levels
- EUR/AUD has taken out the 38.2% Fibo at 1.2360 and has scope now for a much deeper retracement towards 1.2210:
- EUR/GBP is consolidating below .8000 but should find plentiful support near the previous .7950 pivot:
- EUR/JPY fell sharply once below 103.00 and the downside looks weakest here also with realistic scope for a re-test of 100.00 over the next week or so.
EUR/USD: Stops targeted and triggered below 1.2800
Sharp sell-off into early Europe was caused by stop-loss orders being triggered below 1.2800.
EUR/USD intraday analysis November 5th
This is courtesy of Iridium and you can visit his website at chifbaw.com:
"Regarding EUR/USD, here are my recommendations today:
- Best: Buy EUR/USD at 1.2740 (Fibo 61.8%) with both short term (1.28) and long term profits (1.335) in mind PROVIDED the Greek parliament approves budget.
- Medium: Short EUR/USD on rallies at 1.289/1.2915 with S/L 1.2955, target 1.2850, 1.2740.
- Very Risky: Buy EUR/USD at 1.2830 S/L 1.2790, target 1.2870-1.29.
Analysis: The risk off reaction of the markets to the positive NFP numbers on Friday signals that Romney is a much more desirable president than Obama for the markets. Also the relatively low level of involvement of the market participants suggests a likely volatility boost once the election is over. We therefore expect short term further sell off if Obama is elected and a rally if Romney becomes president. With that said, the market will probably stay quiet till Wednesday. EUR/USD remains ambiguous since it did not close below the 200-day MA. Despite the sell off of Friday, we expect a mild correction this morning towards 1.2870-1.29. However, further declines seem warranted. The main risk for EUR/USD is the Greek parliament vote today. A positive outcome would be mildly bullish, while a negative outcome would be extremely bearish. Therefore any trading today must done with this potentially very dangerous event in mind.
Good luck and be careful.
Quick overview of Asian trade
Very little to report in Asia with the majors trading in tight ranges:
- Stockmarkets are slightly lower across the region, -0.25% on average:
- USD/AXY has settled down after some big moves higher on Friday, with exporters taking advantage of higher prices:
- Australian retail sales were slightly better-than-expected at +0.5% and the trade deficit was also slightly lower than forecast:
- AUD/USD was the day's main mover, up 40 pips from low to high:
- The Chinese National Party Congress takes place this week with a new leadership team about to take control:
- The US election result remains in the balance according to polls, but not according to UK bookmakers who've got President Obama at a very short-priced favourite:
- Nothing of interest happening in any of the other major currencies after a headline-free weekend.
GBP/NZD: Support levels holding for now
Another fairly clear risk-reward trade here with obvious support levels near by. This pair is trading around a 61.8% retracement level and despite 3 attempts, has been unable to break it. A clean break below targets 1.9290 minimum but if support holds, we can expect another test of trendline resistance near 1.9600.
EUR/CAD technicals: Top in place, how deep will the retracement be
There looks to be a top in place now at 1.3020 after a 5-wave up-move and a retracement is currently in progress. The question now is how deep can the retracement go, with the 61.8% level quite a bit lower at 1.2480. Looks like a 1.25/1.30 range for the rest of the year so some patience is definitely needed here. Volatility can also be expected inside of this range as this pair is heavily traded by the big macro funds.
AUD/JPY: Given market's penchant for range trading, shorts preferred from current levels
Unless you have a really strong reason for wanting to be long at the moment, I'd suggest that the more likely scenario is that this pair remains entranched in range-trading mode just like so many other pairs are at present. The market tried to poke its nose above 83.50 on Friday but the fact that it couldn't maintain those gains suggests to me that the market lacks momentum and confidence. With obvious parameters at 79.50/83.50, and with the big risk event tomorrow with the RBA, I'd say risk-reward is definitely with the bears.
EUR/AUD technicals: Close to Fibo support again
The 38.2% retracement of the 1.1610/1.2820 move comes in at 1.2360. This was Friday's low and we are fast approaching there again.
NZD/USD: Trade idea
This one is from StochMan who is a professional technical analyst, working for one of the major news services.
Look for an hourly close below previous support at .8240. Place trailing stops back above .8295 with a target at .8105. Depending on the exact entry level, that's an approximate risk-reward ratio of 65/125.
Not for me thanks, I don't trade the Kiwi.
EUR/USD: Look for sharply increased volatility this week
We've had a number of weeks of sideways trade but that's about to end in my opinion, so forget about trying to pick the right direction all the time and put your trading cap on!
The election on Tuesday in the US is the big risk event and the market hasn't really put on any big trades ahead of this it would seem. Last week some technicians were of the opinion that the bullish cross of the 50-day MA over the 200-day MA were an indication that the market was turning bullish yet today others are saying that they break below the 200-day MA is bearish! Hocus-pocus, technical schmanalysis; nobody has any clue where anything is going. Wait for some short-term trends to initiate, then counter-trade as trailing stops get triggered in an environment lacking confidence and momentum; that's how I read this market.
Is it possible that we see levels near 1.2650 this week? Absolutely! Is it possible that we see levels near 1.3200 this week? Absolutely! I'm hoping that we finally get a market where quick-witted traders can have a definite advantage.
Asian market open, Monday November 5th
You can click through here and read my opening comments on FX Street.
US election: If you believe the bookies, an Obama win is all but assured
'Follow the money' the old saying goes and in this case the money is following President Obama to win tomorrow's US election.
Some bookies are offering only 1/6 (bet 6 bucks to win 1) about an Obama win although William Hill are being more generous with the best price at 2/7, with 1/4 being the average price.
The average price about a Romney win is 3/1 (bet 1 buck to win 3).
I think a lot depends on where pairs like EUR/USD are trading when the results are announced as to what the effects will be; but if EUR/USD is trading near 1.2700 and Obama wins, then I think it likely that we'd see a rally back towards 1.3000 in that event.
USD/AXY: Up to $6 billion bought during intervention this week
The scale of intervention is having some small success, with today's late move higher in the USD being mainly caused by the buying back of USD/AXY shorts before tonight's risk events and the weekend. This also indirectly led to EUR/USD stops being triggered below 1.2920.
Asian central banks have still got significant interest in the majors as they seek to recycle these freshly bought USD and dealers are speculating now that the ACBs have bids in the EUR/USD near 1.2865/70 and in the AUD/USD near 1.0330. If you hear reports that they are in the market, then the amounts are probably decent.
Have a great weekend and catch you next week++
EUR/USD: Big European banks mention stops below 1.2875
I'm presuming that they are quite sizeable. Still hearing reports of bids at 1.2865/70. Might be again a case of doing the stops then bouncing? Good luck++
Dealers complaining about pathetic liquidity
Nobody is playing according to interbank dealers and liquidity is very poor indeed it would seem. (I guess if you keep stopping traders out all the time, they will eventually stop trading!).
This 1.2885/90 level is where the ACBs were busy earlier in the week, no reports yet on any activity from them, and I'd expect there to be more stops directly below there. Bids reported at 1.2865/70.