EUR/AUD showing no signs of getting tired
EUR/AUD has rallied 150 pips since I wrote this yesterday and is showing no signs just yet of any tiredness, with the hourly chart on a vertical trajectory. I suspect that there is more to come, so if you are bearish, take a break and come back when conditions are more conducive to top-picking.
EUR/USD: Nice bounce out of early European lows
Very solid bids at 1.2870 are underpinning the EUR/USD and the pair pulled up at 1.2880 before bouncing, helped along by EUR/GBP buyers trying to trigger stops above .8020 (stops are still safe I'm hearing so they must be nearer .8030 as we've just traded above .8020). Very choppy noisy markets and very difficult to trade intraday unless you have direct access to big flows and orders.
Anybody got any really strong intraday views at current levels?
If so, I'd love to hear them. I can't help feeling that most pairs are not close to strong support/resistance levels but there is strength in numbers so perhaps someone else has a better view??
EUR/GBP: Should be a battle royale at .8020
One bank reports heavy sell orders at .8020 and the other reports heavy stops above .8020; should be good for some heavy hitting. Edit: Of course this level gets tested as soon as London gets up and running.
EUR/USD: Major bank analysts turning slightly more bearish in short-term
I've read reports from 3 of the major banks in the last few hours and the themes are consistent, mild risk-off sentiment and EZ uncertainty should put more short-term pressure on the EUR. The flip side is that the market is already short and currently covering these positions against the GBP and AUD in particular.
- Spanish PM suggested that request for bailout funds was not imminent:
- Moody's still likely to downgrade Spain:
- China's economy continues to slowdown.
EUR/USD dipped by 15/20 pips in the first hour of European trade and I think these reports will have had much to do with that.
China's non-manufacturing PMI gives yet more fuel for risk-off trades
Coming hot on the heels of the bearish tone from the RBA yesterday, this latest Chinese data showed that any recovery is a ways off yet. I'm going to stick with my long GBP/JPY trade but only because it's in the money and I've got a tight stop-loss, because otherwise I cannot think of any strong justification :)
EUR/USD: Bids reported at 1.2870
First mention of any order interest so far today in the EUR, with one of the big Europeans mentioning solid bids at 1.2870.
AUD/USD: Should trade towards 0.9700 over next 5-7 weeks
A quick look at the daily chart shows that the AUD/USD, once it gets started in a certain direction, likes to continue going that way and will only retrace occasionally when it becomes extremely overbought or oversold. The obvious target now is the bottom end of the weekly wedge near .9700 and based on recent history, I'd expect us to test that level in around 5 to 7 weeks; so plenty of trading opportunities in there as well.
AUD: Bearish momentum picking up
There is no sign of any bounce in the AUD at all and there is a smell of a 'big unwind' in the air. I'd look for prices to start operating on a lower plane in AUD/USD, perhaps 1.0125/1.0325 or something like that whereas in the AUD crosses like EUR/AUD, we may even see a stronger trend ie when AUD/USD bottoms out, that's the time to buy EUR/USD maybe?
AUD falls again after poor trade data
Some more less-than-inspiring trade data out of Australia has seen the AUD drop again across the board. The clean break below 1.0250 in AUD/USD now targets 1.0170 previous lows.
Cable: Buying big dips is favoured strategy
Recent reports from the interbank market and from prime brokers suggests that the bigger speculative players are taking a negative view of GBP whereas real money and asset managers are tending to be buyers. That says to me that the speculators will drive it lower in short-term but on a more medium term basis, the bulls will eventually hold sway.
Cable is never the best pair to trade from a technical standpoint but we should note the big levels nonetheless, with a 38.2% retracement level at 1.5995 looking like an obvious target just beside the always important round number at 1.6000. I think we may see a test of this level in coming sessions and my bias at the moment is to buy dips.
EUR/JPY: Favour return to test highs near 104.00
The EUR/JPY 4-hr chart is in a clear uptrend and the retracement off the recent highs at 103.85 looks to have run its course. This dip stalled at the 200-period MA and 50% retracement level, giving it extra credibility. Clear risk-reward trade here is to buy dips to 100.50 in anticipation of further imminent gains.
EUR/AUD: Bullish daily signal
Like I said yesterday this is one pair which has some definite potential and if the big macro funds start to buy then we could be in for some fast moves. The close above a previous low at 1.2570 is one possible trigger but more likely is the bullish 20-day/200-day crossover which many big funds still follow (daily chart). I'd be careful trying to short this pair in the current environment, especially after the RBA comments yesterday, and the market is still short EUR overall, another reason to be wary.
Slow going in early Europe
I'm off for a break as the going is just too slow. I'll pop back a bit later on and if anyone has any really bright ideas or tasty info, I'd be delighted to know :)
AUD/USD: ACB seen buying near 1.0300
The amounts are not large (50 million approx) but one of the more active Asian central banks has been seen buying a little earlier. The order boards are pretty light from what I'm hearing at least so we may yet see prices push a bit lower until the bears exhaust themselves.
EUR/AUD definitely worth a look
What falls quickly is also likely to rise quickly and that has been the case with EUR/AUD. This used to be the world's most reliable currency pair, stuck in a rut between 1.55/1.60 until the GFC hit and it went roaring up to 2.00. Then we entered the EZ debt crisis and this pair fell to 1.16, quite a move from a standing start! So where to next? My best guess at this stage is that we go higher, up to 1.30 and possibly 1.33. In the greater scheme of things, even 1.33 is pretty low for this pair.
- The RBA is bearish on China with probably good cause:
- The market is still short EUR, albeit at reduced levels:
- If risk aversion returns in force, this pair will usually move swiftly higher.
RBA bearish on Chinese prospects, worried about high AUD
Recent Australian economic data has been running pretty close to trend so the reasons behind the 25 bps rate cut are that the RBA is very worried about international economic prospects and it doesn't want to be left standing still whilst the Fed/ECB etc are racing to the bottom. They will use monetary policy to limit the AUD rise (and as they showed recently they are also willing to sell into rallies).
The RBA has a deeper insight than most into both Chinese economic prospects and central bank policies so what does this tell us about the immediate future? Based on this decision, risk trades might be set to struggle for the rest of the year.