EUR/USD: I still like the downside first in Europe
I have no scientific reasoning for it, I just have a feeling that we will have a go at 1.2800 during early Europe and possibly even break it. Don't forget to buy your shorts back down there though! We're already off 20 pips in very early Europe and interbank guys now turning a bit bearish++
Order boards and trades updated
Check the members section for updated information on AUD/NZD orders, a new EUR/USD trade, and adjusted stop-loss order on the overnight USD/CAD trade.
Looks good for some two-way volatility in European trade
The AUD was quite interesting, rallying strongly despite a much greater than expected rise in the unemployment rate, a sure sign that a market is short. Any dips now back towards today's opening levels at 1.0210/20 should be well supported whilst resistance levels at 1.0310/20 should also be hard fought.
EUR/USD should also be interesting. The Spanish downgrade illicited a bit of an over-reaction from the market, sending EUR/USD down from 1.2890 to 1.2850 and then triggering stops below 1.2850. The 200-day MA held well once again and we've had a relieving bounce. EUR/AUD selling has also been an important factor. I have a feeling that Europe may target the downside first up but whichever side is tested, a wide 1.2750/1.2950 range will surely contain prices for the next few sessions.
Cable is also interesting, with Sovereign buyers lined up 1.5950/70 and real-money funds selling into rallies. I like the buy-dip play here especially with EUR/GBP still looking soft.
Hopefully we should be in for an interesting and volatile session, driven by trading and not just news headlines++
AUD/USD still looks strong but offers reported nearby
As we saw in yesterday's hedge fund positioning report, the professional market is short AUD and it sure smells that way as well. The reaction to the jobs report was a dead giveaway and I suspect that more gains are around the corner. That said, offers should be particularly solid near 1.0310/20 and that should slow bullish momentum in the first instance. Remember, there has been a lot of bond buying over the last few days and that creates demand for the AUD.
EUR/USD getting very close to 200-day MA
The market always picks some level to focus on and in the case of the EUR/USD it's been the 200-day MA. This comes in today around 1.2820 and there are certain to be stop-loss sell orders below there. Interbank dealers still report plenty of buying interest starting at 1.2820 and staggered down through 1.2800, so I'm not expecting any vertical collapse.
EUR/AUD technicals: Break below 1.2550 targets 1.2360
Previous highs at 1.2550 have now been broken and the obvious target for this pair is the 38.2% retracement at 1.2360. Selling rallies definitely preferred.
AUD/USD: Unemployment rate increased to 5.4% yet the AUD still rises
This market is short! Traders may be justifying the rise by looking at the data breakdown but if this market was really bearish then it would fall on a number like this.
I like the idea of buying dips 1.0200/10 with s/l below 1.0170 looking for a test of 1.0310/20. I would not buy into this strength, risk/reward doesn't stack up in my view.
AUD/USD: What to expect after jobs data
We are currently trading at 1.0222 about 15 minutes prior to the much anticipated jobs data. My feeling is that the market sentiment towards the AUD is overwhelmingly negative despite the short-covering of the last few days. The market has been talking about a 'bad' number and a possible 50bps rate cut next month. In fact much of the recent AUD buying may have been bond related and not due to heavy short-covering, and last nights hedge fund data seemed to back this up.
My preferred way to play this is to see what happens at 1.0180 in the event of a worse-than-expected number, if we cannot break below there then it's a case of sell-rumour-buy-fact and I'd look to buy for a 100 pip short-covering rally. If the number is positive, I'd look to try and buy any small dips for a test of 1.0310/20 (if this level holds then medium-term shorts can jump back in).
Good luck and don't put too many eggs in one basket.
EUR/USD: Weak trailing stops triggered below 1.2850
EUR/USD is back below 1.2850 in the aftermath of the S&P downgrade of Spain. Dealers report trailing stops below 1.2850 have been targeted and triggered.
The downgrade needn't necessarily be bearish for the EUR; Spanish bonds are still investment grade and this S&P move might encourage Spain to ask for the bail-out.
I'd play a 1.2830/80 range intraday with a mild bullish bias whilst the 200-day MA still supports.
AUD/USD: Mildly bearish sentiment in early trade
Local interbank dealers are mildly bearish this morning although no-one is expecting any big moves before the jobs data is released in about 3 hours time. Bids are noted near 1.0180 and sell orders are solid above 1.0280, but it's unlikely that either end is threatened before the number. AUD/JPY is also generating a lot of interest with the market glued to support lines above 79.30, which if broken are expected to trigger heavy selling.
South African miners weighing up possible pay deal
This could have some impact on the GBP because the GBP was sold earlier this week as a proxy trade for the illiquid ZAR, which was getting hammered across the board. Now if the miners agree to a pay deal, this should stabilise the ZAR and lead to some of those GBP shorts being taken off the table.
It's been one of the slowest trading days in recent memory so I'm packing it in for the day, Auf Wiedersehen and see you in the morning.
AUD/USD making fresh intraday highs
Liquidity is quite poor still in the interbank market, better than yesterday but still quite poor. The AUD is still leading the way with shorts seemingly getting out of town before tomorrow's jobs data. Sell orders still reported starting at 1.0280.
I'd expect EUR/USD to have trouble re-gaining 1.2900 and EUR/AUD selling will likely still cap rallies.
Hedge Fund positioning: Very long CAD, NZD and NOK: Short AUD, SEK and USD
The latest insight into hedge fund positioning makes interesting reading with CAD the big winner in recent weeks whilst the market is eschewing the AUD in particular. Based on this, one of our interbank traders has posted a USD/CAD trade in the members section.
AUD 20% overvalued according to Goldman Sachs strategist
Just reading a headline attributed to Goldman Sachs strategist Thomas Stolper that the AUD is 20% overvalued. They don't really prop trade anymore so I guess he can't really now be spruiking their own positions, or?
EUR/USD: Bit of an 'oversold' feel in early Europe
Just feels like the market might have gotten itself a bit short at the wrong levels and I'm going for a 1.2850/90 range in early Europe with a very mild bullish bias.
AUD performance of last 24 hours can also be attributed to strong bond sale
Australia sold AUD$3.25B of 15 year bonds earlier today, and some of the AUD buying of the last 24-hours is being attributed to this demand.
Another ultra-quiet Asian session drifts to a close
Let's hope that we see more volatility through European trade. The obvious EUR/AUD short-term downtrend is still in control but the European market could easily take the EUR/ USD back above 1.2900 if the flows are in that direction. Don't get caught being bearish near range lows is my advice.