NZD/JPY: Strong technical support near 85.75/80
There is a possible double-top on the daily chart at 89.70 and it's neckline comes in at 85.80. There has been a marginal break already but best wait for confirmation one way or the other.
Obviously the usual risk-off Friday sentiment has been taken to a new level by the Obama comments and the typically gloomy RBA. The fact that the market ignored the China data shows just how its thinking. Looks to me that we might see more of the same once Europe starts trading.
AUD/NZD: Important intraday support at 1.0920
- There were reports large week of heavy stops below there;
- The renewed failure at 1.1050 has opened the possibility of a double-top with a neckline at 1.0920;
- Sentiment for both Antipodean currencies is mildly bearish and this is unlikely to change in coming days.
JPY crosses: Failure to rally after GPIF headlines suggests downside risk
- Yesterday afternoon's headlines that the GPIF would increase allocations to Japanese stocks only caused a brief flurry in the JPY crosses;
- The fact that most pairs are slightly lower today suggests to me that the market is turning bearish albeit very slowly;
- USD/JPY remains stuck in range trading mode between massive buy/sell interests;
- 'Risk-off' Friday is usually worth playing from the short side in the Yen crosses, especially during Asian trade, although moves are unlikely to be overly large.
ABS: Change in calculation method for Australian employment
This is courtesy of MNI via the FXWW chatroom:
The Australian Bureau of Statistics is making changes to the way it reports unemployed numbers in its monthly Labor Force survey that could have an impact on the unemployment rate in the months ahead. Starting July ABS will change some of the steps in the survey to better reflect the nature of job search practices in Australia and to better align it with international standards. The survey will include two new active job search steps: whether the respondent has had an interview with a prospective employer and whether the respondent has taken steps to purchase or start a business. The additions could lead to an increase in unemployment and in the labor force. Currently, such respondents are considered as "not in the labor force." In addition, two steps that currently mean the respondent is actively looking for work will no longer be sufficient for the classification. A change from the active to the passive job search category would decrease the number of people classified as unemployed, and push them out of the labor force, putting downward pressure on unemployment. The ABS says the change would "slightly increase" or "slightly decrease" the number of people classified as unemployed depending on responses.
AUD/NZD: Risk-reward favours bears after poor Australian jobs data
- Very poor headline unemployment rate, 6.4% is much worse than expected;
- Some of this explainable by an increased participation rate;
- The AUD has fallen by only about 30 pips thus far;
- AUD/NZD offers good risk-reward possibilities with strong technical resistance now at 1.1050.
USD/CAD: Sharp rejection of 1.1000
I remain very bearish on USD/CAD for the simple reason that the rest of the market is irrationally ueber-bullish. Pairs like GBP/CAD have been favourite positions for months with professional traders and if/when they turn there will be a massive clean-out.
Overnight price action has done nothing to change my view with a sharp and unrelenting 70 pip dip.
I'm already short and am looking for opportunities to add to the position (although not during Asian trade when it never moves).
NZD: Big support levels looming against USD and AUD
- AUD/NZD resistance at 1.1050 has proven very strong in recent times. I'm sure the market will have a serious test of it again and see if there are stops above there.
- NZD/USD has chart and Fibo support near .8400 and is likely to be very hard-fought. I will buy the first test and see what happens.
NZD jittery heading into jobs numbers after another big fall in milk prices
The NZ economy is heavily dependent on dairy and the continued fall in milk-product prices will be unnerving NZD bulls. ANZ have put out a note this morning on the dairy-market volatility and you can read more in the FXWW chatroom.
I've got my bids primed at .8410 in NZD/USD and we may well see this level tested if there's a poor jobs number in the next 1/2 hour.
Crosses still to fore but USD keeps edging higher
I'm still of the opinion that the market isn't convinced by it's own USD bullishness; AUD/USD is basically unchanged from yesterday morning and cable is slightly higher, whereas the USD made decent gains against the EUR and the CAD. That leaves us of course with some significant moves in the crosses.
AUD/NZD will attract some attention as it's bounced back towards 1.10 again and EUR/GBP will stay quiet until the European market re-convenes.
NZ jobs data will be the main risk event during this morning's trade.
USD/CAD: Edging into short position
I may as usual be a bit early getting into this trade but I feel that levels near 1.0925 offer excellent risk-reward and I'm happy to start dipping my toe in the water.
I'm not discounting the potential of levels above 1.10 so I'm staying small and agile; let's see what happens over the next few sessions.
AUD: RBA main event on today's calendar
- There would seem to be very little chance of any surprise in policy or language and we can expect more of the same.
- There have been no major domestic or international events in the last 4 weeks to change RBA direction.
- Interest rate futures markets are pricing in a long period of steady rates.
- Option players are still sitting in size either side of the AUD/USD market, with the main levels being .9250 and .9450.
I'd suggest sticking with recent history, and fading 40/50 pip moves in either direction.
EUR/CAD: Trying to break up but I'm looking for a 'sell' opportunity
I don't actively trade this pair so I don't have a strong feel for what the correct levels are to be entering the market, but I'm pretty convinced from the fundamental side that we should be selling any small relief rallies.
There is no way that the ECB can be anything other than dovish, given that German economic data and EZ CPI remains soft, and the Russian sanctions are likely to weigh even more heavily on a fragile economy.
The market has been trying its best to get bullish USD/CAD once again over the last few days but not only is momentum lacking, the market is also trying to jump on at the wrong levels.
So I think this will be another classic cross move with both legs headed in the same direction, in this case with EUR/USD and USD/CAD to both fall. Definitely worth watching closely.
EUR/GBP: Happy to trade either side at the moment
- The overall bias is still bearish but the market is caught short in thinning August markets, hence the rally at the end of last week;
- This pair has fallen a long way in a short space of time, so relief rallies are to be expected;
- I'm quite happy to try trading 50 pip moves either side of the current .7980 level, although I do maintain my bearish bias.
August is also the traditional holiday month in Germany and the UK, so we can expect volumes to be reduced even further. That usually means long periods of nothingness followed by straight lines silliness in either direction. Oh to have a clean view of the big Prime Broker's order book!
Buy NZD/USD dips, sell USD/CAD rallies, too-hard USD/JPY
- I had a sell order in USD/CAD on Friday, looks like it missed by 2 pips. I'm never sure how to react to such things :)
- I'm not 100% on the levels, it's not called the Loonie for nothing, but I'm very comfortable for now selling into this rally;
- NZD/USD based nicely near the 200-dma at .8450 and I still like the buy-dip play. There will be stops below there so don't discount a test of big chart support at .8400 and that's where I'd really like to be buying;
- USD/JPY has been range trading for ages and will likely stay that way. Those who were bearish at 101.00 turned bullish at 103.00; perfect recipe for range trading!
AUD/USD week ahead: RBA to stay very steady on language and policy
- We've been stuck in a .92/.95 range for the last 4 months and I don't see this changing any-time soon;
- The market seems to be trying to convince itself to turn bullish on the USD but most moves seem to turn into cross moves eventually (AUD/NZD, EUR/GBP) suggesting to me that traders don't have the stomach right now to take on any extended risk;
- AUD/NZD does look very soft to me and I'm looking for any shallow rallies pre-RBA preceding a dip back towards 1.0700ish;
- I've read some Elliot-wavers and momentum models calling a base in EUR/AUD, so that's also worth watching.
EUR/GBP: Volatility picking up, now worth trading again
I still prefer the bearish bias here but the fact that the cross stayed reasonably well bid despite some Portugese bank jitters does suggest that the market might be a tad oversold?
I'd expect short-term support now to be very solid near .7900 and there may well be trailing stops topside above the market so a push towards .7980 later during European trade would not surprise.
I think this is one pair where we can be quite open-minded and trade both sides of the market.
AUD/NZD likely to be the focus again this morning
There has been plenty of focus on the crosses over the last few sessions with AUD/NZD hogging the limelight yesterday during Asian trade and EUR/GBP taking over the mantle during the London session.
I expect the AUD/NZD to again be the main focus, with stops reported below 1.0925 ands of course some risk events most notably the HSBC version of Chinese manufacturing PMI. My AUD/NZD bias remains heavily bearish.
There is large optionality at .9250 in the AUD/USD and that level is likely to act like a magnet over the next 3 sessions. NZD/USD looks quite comfortable around .8500 and I'd expect the market to continue to consolidate around here.
AUD/NZD breaking down, looking to sell 30/40 pip rallies
This market has browbeaten me over the last few months so I'm not going to start chasing moves in ranging markets. A source at one of the Prime Brokers has confirmed that there are stop-loss sell orders below the market but unfortunately I don't have any exact levels yet. I will look to sell any intraday rallies back towards thios morning's opening levels near 1.0990.