Australian GDP the main event this morning
Another very quiet 24 hours in the FX market and all of the major pairs seem to be trading exactly where they were at the beginning of the trading week.
The AUD has been unable to move despite retail sales data and the RBA, so we shouldn't hold out too much hope that the GDP numbers today will move the market. AUD/NZD has made another mini-move higher and the next psychological milestone will be to close above 1.1000.
The EUR and GBP are in holding mode ahead of tomorrow's central bank decisions.
The JPY is still grinding lower in quite heavy trade but is also inside well-defined ranges against most of the other majors.
AUD/USD: No obvious trade ideas post-RBA
I see no point in getting involved in the AUD/USD now, with no movement at all after the expected RBA decision and statement. Short-term parameters at .9200/.9325 are still in total control and there seems little point in trying to guess which way the next 70 pip move will be.
AUD/USD: Large barriers still reported at .9200
Just reading through some of the option market information on Reuters and in the FXWW chat-room and it seems that the big barrier interest is still very much live at .9200 in the AUD/USD.
There will be plenty of bids ahead of this level and plenty of stops just below. These levels generally act like magnets so I wouldn't be surprised to see a gradual drift towards there over the next few hours.
USD/CAD: Still short but conviction starting to wane
The inability of the market to test levels below 1.0800 and the general USD-bullish sentiment in the market is lessening my conviction on my short USD/CAD trade. I will stick with it nevertheless for now as I got in at reasonable levels and my original analysis that a broad 1.0750/1.1050 sideways consolidation could ensue, looks to be coming to pass.
We are presently trading near 1.0900 which is exactly at the mid-point of the suggested consolidation range, making short-term trading pretty difficult at present. I will trade the edges of the range and stick with my bearish bias until proven wrong.
USD/JPY: Heavy turnover overnight, more sell orders ahead
- There were offers of up to $1 billion at regular intervals on the interbank platforms starting at 102.25;
- The fact that these offers were chewed up shows how strongly 'bid' the market was;
- More large sell orders are reported at 102.50, 60 and 65.
RBA main focus for today's Asian session
The local banks, who have studied RBA language for many years, seem convinced that today's statement will drop the reference to the AUD being at overvalued levels. This should generally be an AUD-bullish event but I guess that depends on what (if anything) replaces the missing sentence.
The AUD/USD is stuck in a sideways trading pattern although the AUD/NZD has broken higher, and perhaps the AUD bulls are happier to bet on the cross. Personally I don't like 'betting' on these risk events so I will wait until the dust settles later this afternoon and then make some trading decisions.
AUD/USD: No strong reason to be overly bearish or bullish in the short-term
The market remains generally pessimistic on the AUD in my opinion, with most traders that I speak with preferring to sell rallies rather than buy dips. The offers up around .9325/50 were very solid indeed with professional speculators happy to sell alongside option players (re-loading after buying ahead of .9200).
The short-term range is therefore pretty clear now at .9200/.9350 and I don't see any reason to be overly bullish or bearish whilst in the midst of this range.
My medium-term view remains the same, namely to buy bigger dips towards .9125/50 in expectation of the next bigger bounce but my confidence in this view is fading slightly due to the ever dwindling momentum in the market.
USD sitting at interesting intraday levels against other majors
- EUR/USD: Back trading around 1.3635/40 which was the major breakdown level. The market has been building shorts ahead of the ECB and we may see fairly tight 'nervous' trailing stops above this level;
- Cable did a lot of work around 1.6765/75 on the way down and purely from a price-action perspective, I'd expect resistance to be fairly firm near current level;
- NZD/USD has had a weekly close below important technical support around .8500 but similar to the EUR/USD, there are likely to be trailing stops back though there (I'd suggest above .8540).
Overall I prefer the long USD play still, but it may make sense to exit and re-enter, if some of the above the pairs start breaking higher.
AUD grinding higher on the crosses
Movements have been very sedate again today but the gradual rise in the AUD continues. Sell orders are reported in the AUD/USD at regular 10 pip intervals between here and .9350 but it seems that demand for the AUD crosses is counter-balancing this.
USD/JPY has drifted lower in quiet Tokyo trade with no major flows reported.
EUR/USD is stuck like glue to 1.3600 and cable has made very modest gains.
AUD/USD: Sell orders reported starting at .9320
All of the AUD buying over the last 24 hours has been cross-related judging from interbank flow reports in any case.
AUD/NZD (Kylie :) ) has of course been the big mover but there has also been steady buying of AUD against the GBP and the EUR.
Local banks and Prime Brokers are reporting similar order book set ups, with offers reported to be solid near .9320 and staying that way at regular intervals through .9350.
Why the AUD/NZD is called 'Kylie'
GBP/USD is called 'cable' because the first physical connection between London and NY was a cable between banks establishing an exchange rate for the time. The Irish pound versus the USD was called the 'wire', as it was a smaller version of a cable. The EUR/USD is called 'fiber' in many retail spaces as it's a German version of a cable.
But now to the Kylie, which is a reasonably new one to me.
AUD/NZD= Aussie/Kiwi = Australian bird = Kylie.
I never promised it was going to be an educational day :)
USD/CHF: Building long position
I'm bullish and now long in USD/CHF. My timing might be off, that's where we always need a bit of luck. Looking at the technical set-up and the moves in equities and precious metals, I think there is a much greater chance of USD/CHF going up from here than going down.
The 200-dma is still capping near .8985 but I think this is just a slight bump in the road.
This is a medium term trade so I'm hoping to build this position between .89/.91 over the next few weeks and hopefully be in a strong position if/when it takes off.
USD set for further gains against the GBP, CHF and EUR #2
As I said earlier in the week, the USD looks set to make further gains against the big European currencies and these trades are starting to develop nicely.
Cable was the first mover and I'd expect any rallies now back towards 1.6775 to run into plenty of grateful sellers. I don't expect any major collapse, with the GBP likely to remain the strong against the EUR for example, but we could see levels around 1.6500 in coming weeks.
EUR/USD looks to have turned a corner and the regular daily closes below the 200-dma suggest that there is more downside ahead.
The big surprise could come from USD/CHF. Technically it looks like a base is trying to form and the sell-off in metals suggests to me that we could see some significant CHF weakness develop. I will post a bit more on this trade-building opportunity shortly.
AUD/CAD: Technical resistance near 1.0110
There is a 38.2% retracement level of the 1.0260/1.0010 fall coming in near previous lows around 1.0110. If an hourly top forms, bears can consider shorts with tight-ish stops.
AUD/USD: Expect 21-dma at .9301 to provide some resistance
The market has obviously been caught badly short on the AUD across the board, despite reports to the contrary from various Prime Broker positioning reports. AUD/NZD buying has picked up after the clean break above 1.0925 and only AUD/JPY is failing to join in.
That said, the 21-dma often works as a good medium-term pivot and we may well see option players starting to sell if this level once again provides a top.
GBP staying under pressure in early London trade
Many European financial centres are closed today but that's not stopping London traders from hitting the GBP again on the open. Maybe its the old adage again, it's never too late to sell sterling :)
GBP/AUD has fallen sharply again today and GBP/JPY has dropped sharply in the last 30 minutes of trade.
Cable looks heavy and rallies now towards 1.6765 are likely to run into heavy selling interest, although levels near 1.6650 are surely likely to attract some dip buyers.
AUD/NZD testing important resistance levels above 1.0900
We've seen quite a sharp swing in the AUD after the mixed Capex data and AUD/NZD flows are to the fore.
There is vital technical resistance levels in the cross around 1.0925 and a clean break above here will surely embolden the NZD bears.
GBP: Ongoing impact of cancelled Pfizer/Astra deal
As usual in the FX market, there are plenty of unknowns. Did Pfizer buy a large amount of GBP as a hedge whilst it was offering to buy AstraZeneca. Now that the deal has been cancelled, does Pfizer need to unwind this hedge?
Market sources are not reporting any such selling as yet anyway. I think some of the more well-connected speculators are setting themselves up with short positions in the hope/expectation that some big GBP sales are in the offing.
Add in to the mix that the market is very long of GBP across the board and you can get a sense of the potential which the GBP bear speculators are chasing.
I'd look to play a 1.6665/1.6765 range in the short-term and stay on your toes, there could be some sharp moves about to happen (although not during the Asian session).