AUD/USD: Still long and looking wrong
After the strong jobs data yesterday I'm quite amazed to see the AUD down across the board. But the market is always right and I will need to adjust my expectations. If AUD/USD starts to establish itself below .9100 then I will exit the position ahead of the weekend. I'm in at levels just below .9150 so it isn't a disaster; more lost pride than lost cash :(
It is risk-off Friday, never a good time to be long of AUD, but let's wait and see what this morning brings. Initial resistance starts around .9130.
AUD/USD update
The strong Australian jobs data has been forgotten and the AUD/USD is being dragged lower by a rampant USD against the Yen and NZD.
I'm still of the view that a base will form now near yesterday's lows so I'm happy to stick with my long position for now. Any lengthy break onto the 90 handle will probably see me exit the trade, but let's see how it develops.
Focus will be back onto the GBP for the European session I'm sure.
AUD/USD: Adding to long position
I bought AUD/USD yesterday on the dip below .9150 and I'm adding to this position this morning near .9150 opening levels. Obviously this is a bit risky with Australian jobs data due later this morning, but the market has done pretty much what I expected it to do and so I will back my instincts as always.
I'm not running a huge position and will play with a pretty wide (for most people) stop over 100 pips. I will reduce on any silly spikes.
I think the market is very wrong in trying to sell the AUD or the CAD. The EUR, GBP and JPY are seriously out of favour for different reasons and I simply think its illogical for the whole world to pile into USD and only USD! Therefore the AUD and CAD will be 'must-have' alternatives in my view.
RBNZ main risk event this morning
The recent downtrend in the NZD has been very strong indeed and despite the upcoming RBNZ meeting, there has been little in the way of a decent bounce. So either the market is playing with trailing stops or the market isn't as short as we are led to believe.
Most local analysts have been saying that the general market has become too dovish re the RBNZ whereas the liklihood is that we get a very steady hand and very steady language (with general election next week and they won't want to influence politics).
If you want to be short NZD, then buying AUD/NZD dips seems like a safer play to me. If you want to be long NZD and fancy some volatility, then playing against the GBP or JPY should guarantee some heart palpitations.
Good luck :)
Poll rumours sending GBP all over place
The latest rumours on Twitter are suggesting some sensational new poll results putting the pro-independence side at 54%. Stops getting triggered in EUR/GBP above .8040.
AUD/USD: Longs in play
I must say it does look very heavy indeed but I've taken the plunge and bought in at .9150 and .9130. My intention is to double the position at .9090 and see what happens from there, but as always I will wait and see how it looks/feels down there.
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AUD/USD intraday outlook, Sept 10th
The breaks below .9230 and .9200 in the same session show just how powerful the bear move has been. We've seen a swift 200 pip fall as the AUD has re-aligned on the crosses. Intraday resistance will start at .9230 and there will be lots of willing sellers there (according to pro-market chatter). On the downside, there is very strong technical resistance between .9150/80 and this will attract buyers.
AUD/NZD has had a strong bullish break and any pull-backs towards 1.1100 should attract buying interest.
Overall, short-term bearish bias in place for AUD/USD but the medium-term structure remains bullish in my view. I'd suggest .9150/.9230 for the Asian session (and I'm looking to start re-building medium-term longs on any dips).
Market getting carried away with bullish USD calls
Now every so-called analyst is trying to out-do his/her peers with bullish USD calls. In the last 24 hours I've read that EUR/USD is headed for 1.22, Cable is going to 1.50, USD/CAD will be at 1.17 in 10 minutes, and USD/JPY should be closer to 150 than 105.
What a load of rubbish. The market is getting overly excited after a period of extreme doldrums but I don't see this continuing much longer.
- EUR/USD at 1.22 is probably the one forecast that I might buy into. The ECB have set their policy and it will only get easier in coming months, so there is no reason to be long EUR.
- Cable back to 1.50? Sorry, I can't see it. Once this referendum is out of the way and the uncertain period is behind us, then the GBP will be back in vogue again. I'm staying patient but I will buy when I think the time is right.
- USD/JPY: I wrote earlier this year that the 'trade of the year' could well be to wait for this pair to reach 110/112 and sell into that area. Of course we need to see how the market reacts when it gets there (and it probably will) but we now have an already long market getting longer.
- My bias remains towards buying AUD/USD around .9150 and/or selling USD/CAD around 1.1050/1.1100 and I remain committed to these levels for now.
USD/CAD: Consolidation phase soon to end
With all of the movement elsewhere, I find it hard to imagine that USD/CAD will continue to trade sideways for any significant length of time. I'm still firmly of the opinion that the next big move will be lower, back towards 1.02, but there are plenty of bulls out there who see this pair trading up to 1.15. I think we will soon find out. One slight worry for me are IMM reports that the market is slightly long of CAD but historically I've found the IMM and spot positioning in the CAD to be unreliable, so I'm cautiously ignoring this data.
For me, if we break back above 1.1050/1.1100 then I will stop trying to sell rallies and re-evaluate.
AUD/USD: Back to test important levels near .9270
The price action around this .9270 level has been quite bullish in recent weeks and when we look at the big moves in the EUR, GBP and JPY against the USD, it goes to show that something significant must be happening if this level can hold. That said, there will be plenty of stops below here and they will get heavier below .9230 I'm thinking.
I'm sticking with my buy-big-dip policy but I've been patient so far and will try to remain so.
On the day, I think buying near .9270 with a tight stop below .9250 makes sense, but I'd also keep profit targets reasonably tight near .9320.
Bears might consider a more aggressive policy if support levels break, but .9200 should prove a tough nut to crack.
"It's never too late to sell Sterling"
Well so the old market adage goes. The pound continues to look very weak and susceptible to further falls and until we start seeing decent 100/150 pip bounces, there seems little point in trying to pick the bottom. Plus, if EUR/GBP breaks above .8050, we could see some of the bigger macro players start to take their positions off. Looks like the best trade of the year was to stop myself out at 1.6530! Pity I wasn't clever enough to go short.
EUR/GBP: Buy short-term dips, sell medium-term rallies
I also do not like uncertainty, just like most traders, and a Scottisk vote to leave the UK would certainly introduce a huge level of uncertainty into the value of the GBP on FX markets. We have 10 days to go before the vote and we are likely to see some large swings dependent on poll results. I'm siding with the high street bookies, who are still firmly of the opinion that the end result will see Scotland remaining in the UK and the bookies usually get it right.
So, EUR/GBP is fundamentally bearish and overvalued in my view, so I expect this pair to fall heavily later in the year once the result of the referendum is confirmed. Until that point, I will sell any significant rallies but I'm also willing to buy short-term dips as the GBP longs in the market will be nervous. In other words, a great pair to be trading.
USD, AUD and CAD to remain well bid amid uncertainty elsewhere
The more aggressive ECB policy and uncertainty surrounding the Scottish referendum will continue to drive investors and speculators out of the EUR and GBP. The cap on the CHF will ensure no big flights in there whilst both the JPY and the NZD are also out of favour at the moment for differing reasons.
That leaves the USD, AUD and CAD as favoured destinations for the moment at least. GBP/CAD has been a huge mover which is unsurprising given the size of long positions that were reported there.
There is a holiday in China today which may curtail activity and there is only minor data on the economic calendar.
EUR/GBP: Resistance levels near .8035 holding for now
There was a nasty gap lower in the cable on the interbank open, with first prices quoted below 1.6200 after a close on Friday at 1.6325. There will be some very nasty 'slippage' reports this morning, but some profit orders will get pleasant surprises.
The next level to watch in EUR/GBP will be a series of daily highs at .8035.
GBP set for rocky Monday opening after latest Scottish polls
We can forget about Fibos and fundamentals tomorrow morning, it will be all about positioning after the latest surprising poll results on Scottish independence.
Bloomberg is reporting the results of latest polls putting the "Yes" campaign for separation from Britain now at 51% .
I'd expect to see some heavy stops in cable below 1.6250/70 and that will be the first level to watch, with .8035 in EUR/GBP another important level.
EUR/GBP: Shorts preferred for .7870 test
I prefer this pair in the short-term to others like EUR/CAD and EUR/AUD for the simple reason that cable has moved to some degree alongside the EUR/USD whilst AUD/USD and USD/CAD have moved slightly counter the main market trend. Hope that makes sense, but to an old cross trader like me, EUR/AUD and EUR/CAD feel a bit oversold in the short-term. I will wait on these and look for any intraday rallies to get short.
EUR/GBP on the other hand looks very heavy. If cable can reverse some of its earlier losses then we should easily see a test of recent cross lows at .7870 and even more, should that level break. I'm looking for EUR/USD to fall below 1.2850 and cable to recover back towards 1.6450, which would suggest the cross will then be trading near .7800.
Sounds like a plan at least, let's see if it's a good one!
Look for selling opportunities in the EUR crosses
Well done to all those patient EUR/USD bears who've stayed on this trade but for the rest of us it's pretty hard to jump on board the moving train.
I prefer to look for selling opportunities in the crosses like EUR/GBP, EUR/AUD and EUR/CAD. They have come a long way also but there is likely more to come with divergent CB policies now set in stone.
EUR/AUD for instance could be headed all the way back to 1.20 now? I'll have a closer look at these pairs throughout the morning.
TGIF and welcome back vol!