EUR/USD: Bit of Sovereign interest near 1.2900
Two Sovereign buyers reported at 1.2900 but the amounts seem to be relatively small; low so far at 1.2896.
EUR: Look to EUR/JPY for leads
There are still some sizeable long positions in EUR/JPY which may come under scrutiny before the BOJ decision tomorrow afternoon. Prime brokers report decent selling interest above 103.20 and stops are also now reported below 102.50, though no sizes have been mentioned. With nothing else really going on in the market at the moment, we will probably revert to stop-hunting mode or 'finding the weak side of the market' .
Asian market headlines
- Asian stocks slightly higher ahead of tomorrow's BOJ meeting:
- US stock markets to stay closed tomorrow due to hurricane Sandy:
- Japan retails sales +0.4% MoM:
- Little action in FX markets; Yen crosses fell early but recovered in very light trade:
- Orders: Sovereign buyers noted in EUR/USD; good-sized orders either side of AUD/USD; EUR/JPY sellers noted above the market (full details in members section).
NY markets likely to stay closed on Monday
Hurricane Sandy's impending arrival in metropolitan NY is expected to keep the US stockmarket closed on Monday and other markets may follow suit.
The Asian market is staying quiet with JPY crosses regaining their early losses on the back of mild share market gains. Otherwise all quiet, and likely to stay that way until Europe opens.
EUR/GBP: Trade-idea developing for bulls
The 38.2% retracement of the 5-wave upmove from .7750 to .8160 retraced exactly 38.2% to .8005 and there is a possibility of a basing formation on the short-term charts. Coming on the back of Deutsche Bank's very bullish fundamental analysis last week, there could be an extremely good entry level for bulls (see Chart Ideas in Members section for full analysis).
Yen crosses under mild pressure as session gets underway
The market is still probably quite short of Yen across the board and we are seeing further profit taking this morning in fairly quiet trade. GBP/JPY has been one of the notable movers and a lot will depend on what happens at 79.50 in USD/JPY; are there big bids there or are the big trailing stops just below? My information so far suggests that there are some stops below 79.50 but solid bids around 79.25/35 should soak up most of the selling.
Sovereign bids are being reported in EUR/USD below 1.2900, although no amounts have been mentioned, and you can keep up to date with changes on the order boards in the members section.
Good luck out there!
Asian market open, Monday October 29th
You can click through here and read my opening comments on FX Street.
EUR/JPY trade update
As always with these things, I wish I'd sold more but such is the nature of trade-building that we must take care of the risk element first. I've got a small short position with an average entry level at 104.20 and I shall wait and see how the market develops on Monday before deciding on my next step. The important technical level to watch on the downside early in the week is at 101.90, which was a previous pivot and is now a 61.8% retracement level.
In USD/JPY, watch for trailing stops below 79.50 to attract dealers attention early on Monday morning.
AUD: Focus will increase this week on RBA meeting
I got a little bit carried away in my previous post, (getting excited by the Melbourne Cup!), and of course the RBA meeting doesn't happen for another 9 days but no less a person than the head of the ANZ bank was quoted in The Australian newspaper echoing my views exactly. Forget about China and the CPI, comments from board members Ridout and Broadbent show that the RBA is seriously considering measures to combat the high AUD and Mike Smith from the ANZ thinks this is not before time. Important industries like tourism and education are suffering massively under the high AUD and with other regions trying to drive their currencies lower, Australia should be doing the same.
RBA rate decision next week: Board-member statements suggest a rate cut still very much on cards.
For many people, the big event on Tuesday will be the Melbourne Cup, the race that stops a nation, but 30 minutes before the off the RBA will deliver its latest rate decision. The market had been pricing in an 85% chance of a rate cut but this was lowered to around 65% after the CPI number mid-week. I'm definitely talking my position here, but I think the market is totally ignoring the comments this week from board members Broadbent and Ridout, both of whom spoke out against the high level of the AUD. The RBA has also stated clearly that it will use monetary policy to fight the high AUD, not direct intervention. If we read more RBA comments in this weekend's newspapers then I will be smelling plenty of rats, and presuming that a minimum 25bps (and why not 50bps) will happen to put some more AUD speculative bulls to the sword.
Pretty uninspiring start to European trade, looks like traders are going to wait for the US GDP data before doing anything dramatic.
USD/JPY: Stops getting triggered and not many bids in sight
No buyers today it would seem in USD/JPY and the pair is back below 80.00 driven by long liquidation ahead of the US GDP and the weekend. Heavy trailing stops are reported below 79.50 but the bulls should be able to stabilise before we get there, or?
EUR/GBP: Still headed for .8500 by end 2012 according to a big German bank
That's an amazingly bullish view, 6% rise in just over 2 months, but at least they are brave enough to make the call and put their name to it. Their reasoning is based on likely UK issues; a mix of large current account deficit, lack of capital inflow and that the market hasn't yet reacted to the increased QE by the BoE.
If you like this trade idea, there is a 38.2% retracement level (of the 5-wave upmove from .7750 to .8160) which comes in around .8005. That could be a nice entry level?
Risk trades looking bit sick as Europe gets underway
No major story to report out of Asia with the usual case of positional adjustment ahead of the weekend. The market has been buying the Yen crosses for most of the week so its no surprise to see some profit taking setting in. NZD/JPY and AUD/JPY were the main movers and the focus will now turn to the European currencies.
I'm still running a small EUR/JPY short but will cover on dips onto 102 handle and hope for rallies to re-sell on. I'm also short AUD but I'm in for the long haul there.
Quick overview of Asian trade
- Regional stocks around 1% lower:
- South Korean economy grew at slowest pace in 3 years:
- Risk trades in FX market saw profit taking ahead of tonight's US GDP and weekend:
- The NZD fell early on comments from RBNZ member hinting at intervention:
- AUD has been biggest loser in afternoon trade:
- Heavy selling of USD/JPY by Japanese bank has dulled the bullish momentum of last few sessions.
AUD/JPY losing ground on Friday square-up
Looks like some profit taking ahead of the weekend and we are back near yesterday's break-up level at 82.65/70, where it should find support.
Asia settling in for a quiet trading session
There was some JPY demand into the Tokyo fix which saw USD/JPY and EUR/JPY ease somewhat but that's now over and we are back near opening levels. The ranges I mentioned earlier seem to be holding and I expect it to stay fairly quiet until US GDP later tonight.
Ranges to watch in early Friday trade.
Obviously the Yen crosses are the main ones to watch:
- USD/JPY: Reports of a barrier at 80.50 and strong technical resistance at 80.60 should be hard to breach. Dips towards 80.00 will find plentiful support:
- EUR/JPY: I'm running a short trade here (see members) and I think 103.70/104.30 will cover it for the next few hours:
- EUR/USD: Depends what happens in EUR/JPY; looks like 1.2920/60 should contain:
- AUD/USD: I'm still bearish but momentum is lacking, lot depends on AUD/JPY. I'd suggest 1.0335/75 range trading:
Overall it should stay quiet so I'm off for a few hours. See you a little later++
There are 4 criteria that need to be filled before the RBNZ can intervene
Coming on the back of comments from the RBNZ's Wheeler that intervention can have some short-term impact, Deutsche Bank have just listed the 4 criteria that need to be assessed before intervention is sanctioned:
- Is the exchange rate exceptional on an historical basis:
- Is the exchange rate justified:
- Would intervention be in line with the RBNZ policy target agreement:
- Do market conditions exist to successfully shift the NZD.