USD/CAD M&A activity
Our hedge fund insider posted this in the FXWW chat-room on Reuters:
We should keep an eye on this M/A deal – William Ackman partnering Quebec-based Valeant Pharmaceuticals to buy Allergan Inc. for about $46bn. The cash portion, we reckon is about $14.5bn. This is not a done deal as yet but should be supportive. Allergan inc is a US healthcare and pharma company. Plenty going on in pharma M&A it seems... Market looking at 1.1000 usd/cad (yesterday's low) as a buy zone now...
EUR/GBP: Moving higher in early European trade
Most of the market's focus has been on the crosses in recent weeks and today is no exception. The AUD was the big mover during Asian trade, losing ground against all the other majors, and now it's likely to be the turn of the GBP ahead of the MPC in about 90 minutes.
EUR/GBP buyers have been notable over the last hour, reducing existing shorts no doubt, and more stops are eyed above .8230.
I'm happy to stay short for now, although mine is a more medium-term trade.
AUD/USD still hunting stops below .9290
The AUD is in sharp reverse across all the crosses and the stop-losses reported earlier in the AUD/USD below .9290 are currently being targeted. Support levels don't really tighten up until .9235/40.
EUR/AUD techs: Struggling to break back above the 200-dma
Since breaking below the 200-dma 3 weeks ago, EUR/AUD has been unable to break back above it. This level comes in today at 1.4844 which has been the high so far. Definitely worth watching.
AUD under pressure after CPI data
Stops in the AUD/USD below .9350 have been triggered after lower than expected CPI data.
Look for intraday rallies to be capped now below .9350.
More stops were reported below .9295.
Australian CPI and Chinese PMI on today's agenda
Absolutely nothing happened overnight so we must hope that the twin risk events of Australian CPI and Chinese PMI will get the market moving.
Prices in Australia are likely to show another marked increase compared with last year and if that is the case, we can expect to see the AUD/USD have another crack at .9425/30 resistance levels.
The HSBC version of Chinese PMI will probably show a small increase compared with last month but the sub-50 reading still indicates a contraction in the manufacturing sector.
AUD/USD: Edging higher on back of real money demand
The AUD/USD opened this morning around .9330 and has edged slowly higher on the back of demand from real-money funds.
Further gains are also likely to be hard-fought with hedge funds reportedly selling above .9360.
AUD/USD: Watch for stops below .9300
Overall I'm still very bullish on the AUD/USD but a quick look at the charts suggests to me that there will be plenty of trailing stop-loss orders below the 21-DMA and prior highs around .9300.
I'm staying patient and waiting for any deeper dips towards extra-strong technical support near .9150 (200-dma, bullish trend-line, break-up level).
USD/JPY: More sideways trading likely with medium-term bull trend still intact
USD/JPY has been going sideways for the last 3 months and I see no reason for this to change just yet. The bullish daily trendline held very nicely near 101.25 and that will be giving the bulls some renewed hope that another spike higher might be in the offing. But with the market still reportedly quite long, it's difficult to see where the momentum will come from. Some of the crosses like EUR/JPY and NZD/JPY are looking over-bought on a medium-term view and USD/JPY will not rise if the crosses turn bearish.
The wide range here is 100/105 and we are currently exactly in the middle of this. I'm leaving this pair alone.
EUR/GBP: Looking to build on short position between .8180/.8280
I'm quite bearish on this cross but as we know it can trade sideways for weeks on end before going on a run. I still expect Fibo support at .8160 to be tough to crack and it makes sense to reduce shorts on an approach to this level. Rallies are selling opportunities in my view and any approach now towards .8300 will surely attract plenty of sellers.
- I will continue to trade with a bearish bias;
- I will reduce shorts near .8180 and hope to increase again on rallies towards .8280;
- A break below .8150 will be the signal to me that the next bear move is underway.
Modest moves in crosses but market basically unchanged after long weekend
There has been very little movement in the FX market over the last 4 days with only some modest moves in the EUR and JPY crosses. Today is shaping up to also be fairly quiet in Asia, with little of note on the economic calendar.
I'm looking to build into a EUR/GBP short position over coming weeks, I'm also looking to buy deep dips in the AUD/USD, and I remain totally neutral on USD/JPY. I will run through the levels I'm watching in the individual pairs shortly.
Cable: Stops triggered above 1.6825 in thin trading conditions
Market conditions were always going to start thinning out today ahead of the long weekend and the first victim has been the stops above 1.6825 in cable.
I would not be buying any cable breaks in these thin conditions but it should give the GBP crosses an added boost across the board.
EUR/GBP: Fresh shorts in play
I had a really good run lower on this pair from .8540 to .8200 and even managed to turn long once the 61.8% Fibo at .8150 held firm. But everything is screaming at me now that we are due for a big move lower in this cross. If EUR/USD can break below 1.3650 and if cable can break above 1.6850, then we will see some fur flying in EUR/GBP.
Timing is everything as we know, but I'm attempting to pre-empt the test of .8150. I will look to add on a bearish break. Let's see what happens.
Plenty of action still in the crosses
For an old 'cross' trader like myself, yesterday was a very interesting day with the NZD leading the way during Asian trade, the GBP taking over during European trade and finally the CAD to the fore during the North American session. Day traders could certainly not complain about the lack of volatility!
We will undoubtedly see a few more pre- long-weekend flows but I expect the market to remain relatively quiet from now through next Monday.
For today, I still see some downside risk in the Yen crosses and I will happily sell any USD/JPY rallies towards 102.50 with fairly tight stops above 102.75.
The economic calendar looks pretty light but watch for Kuroda-san comments to hit the newswires this afternoon.
GBP/NZD worth considering a long trade on bullish break of 1.9520.
- GBP/NZD has just broken technical resistance near 1.9520;
- Cable looks set to break above important resistance at 1.6825;
- The GBP looks generally strong on all crosses;
- The NZD looks generally weak on all crosses with AUD/NZD having made a strong bullish break today.
GBP: Testing important resistance levels after very decent UK jobs data
- Unemployment rate now under 7.0%;
- Very important technical resistance in cable at 1.6825;
- Clean break will have market set on testing 1.7000;
- EUR/GBP testing recent lows and also looks set to test very important support at .8150.
AUD/NZD: Targeting technical resistance at 1.0940
We have taken out one large resistance level already near 1.0890 as NZ CPI and this morning's dairy auction weighed on the Kiwi.
The next big technical level in the Anzac cross is an important daily high at 1.0940 and there are sure to be stops above there.
I would not recommend buying this break as I'm hearing of very large sell orders just ahead of 1.1000.
USD/JPY: Still hovering above important support levels
I don't see much point in getting involved in USD/JPY at the moment. There is major support coming in near 101.25/50 with stops below there whilst resistance will be strong at 102.25/50 with stops above there.
I'm sticking with my modest bearish bias in the short-term but we need to be ultra patient and wait for the right entry levels.