EUR/USD: Drifting lower, stops likely below 1.3080
Back to the usual Asian fare today with very quiet ranges. Some demand in the USD/AXY has had a modest impact on the majors with EUR/USD 15 pips lower and USD/JPY 15 pips higher. I'd expect there to be stops sitting below the 1.3080 break-up level in EUR/USD but the better trade might be to buy a dip with a tight trailing stop below 1.3060ish?
EUR: Macro funds still short after "ordinary" year
The chatter in the professional market is that most of the big macro hedge funds have had a pretty flat year performance wise and the big question now is whether they make a big play towards year-end or simply batten down the hatches and start anew in 2013. The big play earlier in the year was of course the EUR short, and there are still some sizable outstanding shorts in the market. The more recent play has been to short the AUD but this effort also seems to be running out of momentum. My contacts in hedge-fund sales are of the view that the big macros will not be making any more big year-end plays and will reduce positioning from now to year's end. If that's the case, expect EUR/USD to move towards 1.3500 and the EUR crosses to also appreciate. It should also mean that the AUD/USD fall is arrested and it moves back towards range highs near 1.0600.
AUD/USD: Parameters now at 1.0310/1.0440
The main dynamic in the market at the moment is position adjustment, but we should not forget that there are some other factors at play which are primarily AUD-negative. Falling interest rates, a slowing Chinese economy with subsequent lower commodity prices, and a somewhat stuttering domestic economy all point towards some rough times ahead for the AUD. Longer term players might have more luck playing this AUD-bearish view on the crosses. AUD/USD is still stuck in it's weekly wedge pattern and we could easily get a test of the topside again near 1.0650 before it turns lower. In the short-term, look for support to form at 1.0310 and resistance should emerge near a 61.8% retracement level at 1.0440.
EUR/USD: Play edges of 1.3080/1.3170 range
The break-up level yesterday around this time was 1.3080 and that level continues to provide support. The big banks are reporting solid US corporate and asset manager offers starting at 1.3150 through 1.3175. I'd play this range in the short-term with a mild bullish bias in line with the recent bull trend.
Cable: Trying to break higher after BOE minutes and jobs data
Sterling has been lagging well behind the EUR on this latest leg higher and it's been trying hard to make up some ground after the latest set of economic data and MPC minutes. I think any major gains will be hard fought and with EUR/GBP back in bullish mode, I think selling intraday rallies is the easiest way to trade cable. I have trendline resistance and a 76.4% retracement coming in at 1.6160 and if an hourly top forms near there, then I'll be interested.
AUD/USD technicals: Fibo resistance at 1.0350
There is quite strong technical resistance at 1.0350, which is the 61.8% retracement of the 5-wave downmove from 1.0475 to 1.0145. It might be worth while watching closely to see what happens if/when the stops are targeted; failure to follow through could give an excellent selling opportunity?
AUD/USD: Large stops above 1.0340 and 1.0350
Just repeating what I said earlier, the big macro funds are short and bearish, and have been selling into rallies for the last few weeks. The first of the trailing stops are reported above 1.0340 and 50 and as we have now graduated from range-trading mode to stop-loss-hunting mode, we can expect these to get targeted.
Spanish 5-yr yields down 21bps in early trade
This will give some impetus to EUR bulls.
10-year Italian yields are 11bps lower.
EUR/USD orders: Solid selling interest 1.3150/75
Just reading the opening comments from one of the big European banks and they are quite confident that selling interest between 1.3150/75 will prove very hard to shift. To be fair, they said yesterday that sell orders at 1.3050 would be similarly hard to shift, yet here we are!
What will Europe do?
My feeling is that stoploss driven moves in Asia usually get reversed in early Europe so let's see how we go today. Most of the big orders have been done I think.
AUD/USD still grinding higher
Offers near 1.0320 have now been filled and the market can now get back into stop chasing mode. I'm offline for the next few hours but will be back in time for European open
AUD/JPY: Time to book some profits
I find it very hard to trust any moves which happen in early Asian twilight markets so I've booked the balance of my profits at 81.30 from yesterday's AUD/JPY longs and will sit back until I feel more comfortable with what's going on in the market.
AUD/USD: Approaches very important levels near 1.0320
There's always one level which seems to take on extra importance and in the AUD/USD at present that level would seem to be 1.0310/20. There are reportedly more large sell orders from macro funds right close-by but if the sellers wilt, there are large stops waiting above 1.0340 and 1.0350.
EUR/USD: More stops triggered above 1.3100
Looks indeed like it was a barrier at 1.3100 and stops have been triggered (including mine) taking us to a high of 1.3125 thus far. Cable is still stalling near reported heavy offers at 1.6130.
EUR/AUD: Up-trend intact but stochastic indicators suggest it's overbought
The up-trend on the 4-hour chart is clearly intact and a re-test of recent highs at 1.2825 is favoured. Nevertheless, the stochastic indicator has been quite accurate recently so bulls should show some patience and wait for the overbought studies to unwind, hopefully resulting in prices falling towards the bullish trend-line.
EUR/GBP technicals: Breaks down-trend line and daily highs
The down-trend line on the weekly chart has been severed and a daily high at .8115 has also been overtaken. The overall trend remains bearish but a minimum pullback now towards .8260 seems highly likely. Buying dips favoured in the short-term.
EUR/USD: Heavy offers on interbank platforms ahead of 1.3100
The high so far has been 1.3099 and the market is thus far unable to work though some sizeable offers (sounds like barrier protection but I have no confirmation there yet).
AUD/USD takes lead from EUR/USD, back above 1.0300
I'm not sure if 'negative outlook' for Spain is a good reason for euphoric risk-on trading but that's what we are getting right now. As I just mentioned re the EUR, this is more about testing levels and chasing stops than it is about risk sentiment. 1.0310/20 is where the sell orders are reported with large stops supposedly gathering above 1.0340 (where it could get 'fast' I'm told).