GBP/JPY trade update
I've been long since Monday and am currently 150 pips in the money. This pair is stalling near a 50% retracement level but I'm hopeful that we can break through here in early Tokyo and tackle more important resistance at 127.50.
EUR/USD still holding well heading into press conference
Mario Draghi is sure to get a grilling from financial journalists on the Spanish situation as well as on his reasons for leaving rates on hold (no surprise), when the press conference starts in a few minutes. EUR/USD has worked through sell orders at 1.2950/55 but has stalled at 1.2970 so far.
I don't have a strong bias on the EUR/USD but with the EUR crosses looking strong, I prefer the buy-dip strategy. I presume there will be stops immediately above 1.2975 and if they are triggered then I think we will need to raise our buy-dip levels. Barring that, stick to the tried and trusted 1.2870/1.2970 range.
Catch you tomorrow and be careful out there :)
Deutsche recommends staying long EUR/USD in Q4 2012
Deutsche has been one of the big banks that have stayed almost uniformly bullish for the EUR/USD in the last couple of months and as the biggest player in the FX market, they are well worth listening to.
They sent out a note to their customers a little earlier recommending that, based on ECB and Fed policy, the natural play is to stay long EUR/USD for this quarter.
- They expect some upside growth surprises in the EU this quarter:
- Any aggressive QE programs from the ECB, similar to the Fed, are highly unlikely given the current structures within the EU:
- Any chance of cutting deposit rates to negative is also considered highly unlikely:
That of course doesn't discount any nasty sell-offs on bad-news headlines but I get their drift.
The Gold Medal for the Technical Analysis Flip-flop goes to..
This guy who last week on Reuters was calling the AUD/USD to 1.1150 but now thinks it goes to .9700. You need to be very well trained to get a job as a financial market analyst, NOT.
Rumour has it...
Some of the bigger FX hedge funds have not had a great year and with only 3 months left, they are very keen to find that elusive trade which will save their bonuses. I'm hearing from one of the biggest prime brokers that short AUD might well be the trade of choice with USD, EUR, and GBP seen as the likely counter currency. I mentioned earlier this morning that an ex hedge fund and interbank prop trader is starting to build a GBP/NZD long position and it would not surprise me if he is talking to exactly the same people that the PB is speaking with. The market is still slightly long of AUD overall and there's a long way to go before it can get itself to significant short positions so if you're a medium term AUD bear, now would seem to be the time to start building.
EUR risk events: Spanish bond auction and ECB decision
- Spain will sell up to EUR 4bln of 2014, 2015 and 2017 bonds:
- No rate change expected from ECB:
- "Wait and see" likely to be main message:
- Don't expect Draghi to say anything too dramatic in his press conference:
EUR/USD: Decent selling interest above 1.2950
EUR/USD just poked its nose above 1.2950 and interbank dealers report solid offers on the various electronic platforms.
Still looks like a sell-Asian-currency play
The AUD has bounced after posting fresh lows but still looks soft and the JPY is also out of favour. The market is ignoring factors like falling oil prices and instead focussing on Yen negatives. I think this trend of buying EUR, GBP and USD against the AUD, NZD, CAD and JPY is likely to stay with us for a few more sessions
AUD/USD: Still no sign of any bounce
The Aussie posted new lows after this morning's lower-than-expected retail sales (+0.2% MoM Vs +0.4%) but we are now back where we started at 1.0210. The fall has been stalled for now, with AUD/JPY buying out of Tokyo providing some welcome relief, but there is no sign of any major relieving bounce as yet so best to stick with the short-term down-trend and sell into rallies back towards yesterday's 1.0250 breakdown point.
GBP/JPY: Slightly overbought at present time
I've been long this pair since last week and I see scope for much bigger gains in coming weeks. Nevertheless it is looking a bit overbought on the 2-hr chart as it's now trading above a recent parallel channel. Still looks bullish to my subjective eye but we might get a 50/60 pip pullback before next bullish leg begins.
EUR/JPY: Short-term parameters now at 101.10/102.10
The bulls look to be re-taking control with the move out of Asian currencies seemingly swamping any risk-off sentiment, overall leading to a weakening of the Yen. Speculation ahead of tomorrow's BOJ is also undermining the JPY. EUR/JPY should encounter resistance at a prior high near 102.10 and s/t trend line support is at 101.10.
AUD/USD: Next support 1.0165
Safe to assume stops below there, with next below there at 1.0100. If AUD stops go off then NZD will probably follow
Australian retail sales data due shortly
Don't forget that there is economic data due shortly which might shift the market.
USD/JPY: Overnight comments raises possibility of further 'measures'
The new Japanese FinMin was on the newswires overnight and he's obviously had some coaching from his predecessors (Yen gains one-sided, don't reflect fundamentals; ready to take necessary steps; will discuss at G7 level). Despite falling oil prices, USD/JPY managed to sneak higher through 78.50 and I suspect that the market is getting long again ahead of tomorrow's BOJ decision, just in case.
Not expecting much action today with prices expected to oscillate in a 78.25/78.75 range.
How about some GBP/NZD for breakfast? Big rally imminent!
A very experienced macro trader who likes to make some big plays has started to build a long GBP/NZD position. He expects this pair to now stay above 1.9300 and that we will see a move back towards 2.10 over the next few months. His argument is that the Asia-centric optimism which has driven flows over the last few years is now starting to wane and he wants to express this view via this cross (with EZ-debt woes and QE3 turning him off the EUR and USD).
AUD/JPY: Testing resistance at 80.35; selling rallies preferred
The hourly chart still looks bearish overall so selling rallies is my preferred tactic given recent events. An hourly high and 38.2% retracement level near 80.30 is currently being tested but there are more resistance levels not far away. The bearish hourly trend-line coincides with a 50% retracement near 80.50 and the 61.8% pullback sits near an hourly high at 80.65.
With regional economic sentiment on the slide and commodity prices turning soft, I prefer the sell rally strategy here.
NZD/USD: Watch out for large stops downside
I don't know for sure where these stops are sitting, but one of the bigger banks says that they are very large. A cursory glance at the daily chart would suggest that they are sitting directly below .8180, as that's a possible neckline for a double-top formation. I'm not a big fan of selling breaks, but in this case I think it might make sense with a tight trailing stop back above .8200?
That's me done for the day, catch you tomorrow and good luck out there++