Kuroda comments ensure USD/JPY opens higher
USD/JPY gapped higher on the Asian open, touching 104.40 in early interbank trade, after dovish comments from BOJ Chief Kuroda at the Jackson Hole symposium. He said that the BOJ may have to continue with aggressively dovish policy for some time to come.
The USD has also made strong gains against the EUR this morning, with the pair printing levels near 1.3185 in what looks like a stop-loss push.
Some good R/R trades for the USD bulls
Not my side at all, but there are some decent risk/reward trades for the USD bulls in both USD/CAD and NZD/USD near current levels.
- .8420/25 has been somewhat of a pivot in NZD/USD in recent times and this was the breakdown level earlier this week. I'd expect selling interest to be solid in and around this level;
- USD/CAD should find plenty of buying interest on the approach to 1.0900 after taking out some chart resistance earlier this week.
Buying $ against either currency with a 30 pip stop and a 60 pip profit target certainly seems to make sense (if you are that way inclined).
Trade of the day-AUD/JPY: Closes above important resistance but it is Friday....
Friday's are often risk-off trading days in Asia, but it would take a brave trader to go short AUD/JPY after it has now closed above previously strong resistance at 96.40. On the other hand, both AUD/USD and USD/JPY have flattered to deceive in recent times, threatening to break out of ranges only to slide back in again.
I'd suggest some patience here this morning, but if we do get some volatility in the cross, I quite like the idea of selling rallies towards 97.30/40 in expectation of a swift 100 pip turnaround.
AUD/NZD: Look to play 1.1025/1.1100 in short-term
The channel top in AUD/NZD at 1.1100 held nicely this morning and the bulls out there will be a little worried. I have the feeling that AUD/USD might have a serious test of .9200 later tonight and that should have some impact on the cross.
That said, the recent trend has been bullish in AUD/NZD so any dips to 1.1025 will attract buying interest.
FXWW industry updates for August
FX market volumes continue to be hit by major structural changes across the market.
- The big interbank players have basically ceased to take on any proprietary risk, leading to a big drop in volumes, and in many cases they have changed their market-making activities also. Most of the banks are acting now like pure broking operations only.
- Hedge funds and professional traders have quickly adapted their trading styles to the new volume-reduced trading conditions. It's now a case of taking your 50 pips and running.
- The retail market is also going through some upheaval. Volumes are significantly lower across all of the big brokers and many traders have left the industry due to lack of opportunity/profitability.
It is not all doom-and-gloom, especially for the aspirational trader. The retail market seems to be finally making the realisation that it's better to have a professional trader helping you out, rather than trying to become an expert in a difficult field. Those traders who are taking the time/trouble/expense to set themselves up as credible investment alternatives are finding a multitude of opportunities in the retail space.
My data suggests that successful signal providers are becoming more sought after than ever. In fact, prices are now starting to rise as many providers need to limit their number of followers (due to the obvious issue of slippage). Current prices seem to be topping at $100pm per follower, but I would not be at all surprised to see this price double or even triple for the very successful and credible providers.
The account management side in the retail space is still somewhat dis-organised but with more and more traders/managers now willing to take the necessary steps towards registration, I think we will see exceptional growth here also.
There are also plenty of opportunities in the institutional space and we are seeing interest from the biggest-of-the-big hedge funds to allocate funds to emerging talent. Finding the talent is always the tricky part. The big macro hedge funds are the new gateways to institutional investment funds and of course in order to increase, or even maintain, capacity they will need fresh traders coming through.
In short, we are seeing the beginning of a major shift in the FX industry on both institutional and retail levels. Both sides of the industry will concentrate on funds management roles, as dealers/traders drop out of the interbank and retail trading spaces. We will end up with a core of hedge funds and professional traders (probably numbering a few thousand) who will be the market makers and market movers of the future.
No point in fighting the change, just go along for the ride.
AUD/USD: Downside favoured for today
- AUD/NZD is sitting right at the upper end of a solid trend channel and should attract technical selling;
- AUD and CAD have lagged somewhat in recent days as the USD has rallied and both may be due for some 'catch-up';
- Momentum has been lacking but sentiment is generally bearish I feel and AUD/USD feels more likely to test .9200 before .9350.
I'd suggest trying to sell near .9300/10 keeping stops intraday above .9325/30.
Levels to watch in morning trade
- EUR/USD: 1.3225 is the 61.8% retracement of the rally from 1.2750 to 1.3990;
- USD/CHF: Previous highs and the 200-week MA near .9150;
- NZD/USD: Yesterday's breakdown level near .8410/20 should provide solid intraday resistance;
- USD/JPY: Highs on the daily chart near 104.10;
- AUD/NZD: Trend channel highs near 1.1095.
NZD/USD: Exiting also for tiny loss
The market got within 5 pips of my initial profit target at .8520 before crumbling, but such are the vagaries of the FX market. I don't believe strongly enough in this trade to take any extra risk so rather than try to start trading in an uncommitted fashion, I will take a very small loss and look elsewhere.
Thankfully my profit target in USD/CAD did get hit last Friday so I will concentrate on the pair where I'm having most luck. I expect some 1.0930/80 consolidation before one final push up towards 1.1050. I'll start getting more aggressively short if that level roughly holds again.
GBP/USD: Exiting longs for tiny loss
I bought a small cable position last night to see if a Fibo support would hold at 1.6612. I still like the idea of buying the dips in cable but with USD momentum looking bullish across the board, I'll take my 10 pip loss and wait a bit longer.
Elsewhere, USD/CAD looks like it might test 1.1000 so I will remain patient there.
USD picking up bullish momentum
NZD/USD has taken out .8400 (and I will look to exit my long position on any rally back towards .8420).
The USD is looking strong across the board with USD/JPY also attracting some interest and cable testing 1.6600.
AUD/USD turning bearish intraday, says Citi
With AUDUSD closing at .9302 (below yesterday’s low) we completed a bearish outside day. We would now expect AUDUSD to test the recent lows of .9239, with a break through that level suggesting further losses towards .9203 – .9211, the lows from May.
USD still looking strong; levels to watch today
- Cable, 61.8% retracement of 1.6250/1.7190 comes in at 1.6612;
- USD/CAD, daily highs at 1.0980;
- NZD/USD, important support at .8400;
- EUR/USD, chart lows at 1.3290;
- USD/JPY, recent highs and optionality level at 103.00.
NZD still heavy despite slight improvement in dairy prices
NZD/USD is sitting just above important support at .8420 and AUD/NZD is still hanging on to the topside of a trend channel (comes in today around 1.1095). Most of the focus in early Asia will be on NZD/USD. Here's the RBS take on the dairy auction.
Overnight the GDT dairy auction prices showed some tentative signs of stabilisation. The TWI declined by 0.6% with four products registering declines and three improving. Importantly, wholemilk powder showed the first signs of stabilisation in two months, bouncing off recent lows to be up 3.4% to US$2,804/t. There was improvement across all contract periods, except for February. However, the slope of the curve was only slightly upward pointing and combined with a 12% fall in skimmilk powder prices only portrays of bargain hunting and consolidation as opposed to a strong recovery. A bounce back is required if Fonterra’s current farm-gate milk price of $6/kg ms is to be achieved as there is still a material gap between this and the prices achieved in the last two auctions.
Cable: Technical support at 1.6612
Cable has fallen sharply after the lower than expected CPI numbers.
The 61.8% retracement of the rally from the previous pivot at 1.6250 to 1.7190, comes in at 1.6612.
I will try buying there and see what happens.
USD/CAD: Holding off on 'sell-rally' for now
The USD is starting to generate some short-term strength again so I will hold off on re-selling USD/CAD for now. If prices break above 1.0920 then we could see an upswing in momentum so I will be patient and bide my time.
AUD/NZD taking out important resistance levels
AUD/NZD is threatening to break cleanly above important technical resistance levels and it seems that the market is now betting on a bearish outcome from the dairy auction.
NZD/USD looks likely to test important support at .8400 but much will depend on what happens to the cross here.
Now I'm disappointed that my initial profit target at .8520 missed by 5 pips :(
NZD trading with heavy tone ahead of risk events
Firstly we have the RBNZ inflation expectations later this afternoon and later today we have the much-watched dairy auction which is so important for the NZ export industry.
The NZD market is trading with a bearish bias at the moment and the really big NZD support levels are still at .8400 in NZD/USD and 1.1060 in AUD/NZD.
I'm happy to stick with my long NZD/USD trade for now. One of the agriculture analysts that I like to follow is expecting dairy prices to stabilise and perhaps even increase a bit, given the reducing stockpiles in China. That said, if NZD/USD prices break significantly below .8400 I'll most likely look to exit the strategy. Let's deal with that if/when it happens.
RBA meeting minutes unlikely to hold any surprises
I'm pretty sure that the RBA meeting minutes will not hold any surprising debates/suggestions and therefore should have little or no impact on the AUD.
AUD/NZD still seems like it holds the near-term key to both currencies fortunes and it will take a break outside of the solid 1.0920/1.1060 range to get momentum moving in either direction.
AUD/USD is also 100% in range-trading mode but I remain firmly in dip-buying camp and am still hopeful of buying at levels near .9150 (sometime in the next few years :) )
Good luck today.