Asian open April 3rd: Plenty of risk events today to keep us awake
No real change anywhere overnight with the NZD continuing to weaken (great call yesterday from 888) and the EUR also under modest pressure ahead of the ECB. The Yen isn't bouncing at all which suggests more losses ahead which all means to me the AUD is likely to stay well supported with the market needing to buy something! I'm still bullish short-term for the CAD, given the lop-sided short positioning there, and I'm still of the view that cable will range-trade in a broad 200 pip range between 1.6470/1.6670.
Australian retail sales and China non-manufacturing PMI are the risk events on Asia's economic calendar with the ECB later today of course.
GBP: Prefer to play from short side during European trade
Obviously some of the crosses like GBP/JPY are looking bullish and others like GBP/NZD are starting to show some bullish potential but weighed against this are the bearish tendencies for the GBP against the EUR, AUD and CAD.
I wouldn't expect too much from today's European session but I'm looking to trade a 1.6575/1.6650 range with a bearish bias.
Levels to watch in the NZD crosses
- EUR/NZD: Initial resistance at a 38.2% retracement level near 1.6105;
- NZD/USD: Resistance now at the .8640 breakdown level with support levels fairly light until .8500/20;
- NZD/JPY: Has been on a vertical trajectory but should now struggle to break above 90.00 whilst support levels start at the previous 88.30 highs;
- AUD/NZD: Needs to break cleanly above 1.0750 to increase bullish momentum while support should be super strong now at 1.0660.
CAD/JPY: Very important technical level at 94.10
A clean break above 94.10 would suggest a double-bottom pattern with lows at a 38.2% retracement level at 90.75.
Bears can sell with a very tight stop and bulls can consider buying breaks with a trailing stop-loss.
NZD/USD: Might be due for a downside correction
FXWW888, our resident hedge fund trader in the FXWW/Reuters messenger chat-room, is suggesting that the Kiwi might be in for some downside pressure today.
Interesting level here 8640 in NZD... close below there on daily sets up key day reversal... bearish divergence on the dailies also. Dairy product prices had the biggest drop in almost 20 months at Fonterra's latest GlobalDairyTrade auction as whole milk powder fell to its lowest level in more than a year. The GDT price index dropped 8.9 per cent to US$4,124 a tonne from US$4,563 per tonne two weeks ago, the fourth straight decline and the lowest since August 2012. Some 39,653 tonnes of product was sold, up from 39,008 tonnes two weeks ago.
Cable: Still favour sideways consolidation 1.6470/1.6690
- The GBP still looks susceptible to losses on the crosses;
- EUR/GBP Fibo support at .8250 held very well on all occasions;
- GBP/AUD and GBP/CAD are also still showing signs of weakness.
I'd suggest playing the 200 pip range in the cable between 1.6470/1.6690 with a bearish short-term bias from current levels.
AUD/USD: Sideways consolidation favoured before more upside
We saw plenty of profit takers emerge on 2 separate occasions yesterday near .9300 and this looks to be a short-term high. I'd expect to see a test of strong technical support levels near .9150 whilst this consolidation period is ongoing.
Risk sentiment is strong, as seen by the record high close on the S&P, and we are likely to see further AUD/JPY buying in the short-term at least. Japanese start-of-fin-year flows are likely to be quite strong.
Play the .9150/.9300 consolidation range in AUD/USD with a strong bullish bias imho.
USD/JPY: Testing daily highs at 103.75, stops likely through this level
I saw one of the more experienced and successful intraday traders go long this pair yesterday near 103.25 with a very reasonable target at 103.85. He obviously believes that there are stops above a recent daily high at 103.75 which will be targeted. Looks like he's read this market perfectly.
I have no strong views on USD/JPY. The JPY crosses especially CAD/JPY, AUD/JPY and NZD/JPY all look to have scope for more gains but overall I'm not that keen on the USD side of the equation at current levels.
AUD/USD again fails ahead of .9300 post RBA
We saw a brief attempt to break above .9300 after the earlier Chinese PMI data and now we've had another try/fail after the RBA rate decision and statement.
The RBA said nothing new, but the market had expected nothing new. Now it comes down to how the short-term market is positioned and it smells as if too many might have joined the AUD bull case at the wrong levels.
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EUR/USD: Another range-trading pair
- Crosses remain mixed with EUR/GBP now in neutral, EUR/JPY turning bullish and EUR/AUD definitely bearish;
- Resistance between 1.3825/50 should be very solid;
- Support should be similarly firm near 1.3650.
Overall looks like a perfect set up for a typical FX market range trade.
Cable: Closing above 1.6650 but I'm still in 'range-trading' camp
The fact that we are closing above previous resistance at 1.6650 is another technically bullish indicator, after the 61.8% retracement held at 1.6470. Overall the bullish bias is threatening to return but I think we may get a few more days of range trading before any big moves eventuate.
Resistance is at another daily high near 1.6715 and I'd look for support to develop near the 55-dma at 1.6565. Play the edges of this range with a mild bullish bias.
AUD/JPY: Testing previous daily highs at 95.70
This pair will again be very busy with Tankan, RBA and Chinese PMI affecting risk sentiment.
If you've missed the up-move so far, I don't see much point in jumping on board now with previous daily highs at 95.70 now providing resistance. Buying big dips is the obvious play.
Intraday support levels start around 95.25.
Noisy markets ahead of very busy Tuesday
There are plenty of risk events on today's economic calendar.
- The start of the new Japanese financial year brings with it the Tankan report and we are also likely to see plenty of corporate flows;
- The RBA will deliver it's latest rate decision and statement with little change expected;
- Chinese PMI will affect risk sentiment and the Anzac currencies.
I'll run through the main pairs shortly with AUD/JPY still leading the way. Good luck today.
EUR/USD: Market turning bearish, I prefer to range trade
- EUR crosses are mixed with EUR/JPY turning bullish, EUR/GBP back to neutral, and EUR/AUD now quite bearish;
- The most recent technical signals for EUR/USD have been bullish in my view although we are at reasonably elevated levels on a medium-term perspective;
- I'd suggest playing a 1.3650/1.3950 range in coming weeks with a neutral bias.
Asian weekly open: Usual stop-loss hunts underway
- Fairly quiet start to the interbank trading week but we are seeing some stop-loss hunting in the cable, now trading at 1.6660;
- USD/JPY is at 102.90, EUR/USD is at 1.3765 and AUD/USD is .9240;
- Relatively minor economic data in Australia, New Zealand and Japan probably won't affect the market too much;
- Flow wise, we might see some very last minute end-of-financial-year transactions out of Japan.
Cable: Ranges still intact- looks 'toppy' in short-term
- Medium term bull trend in control but short-term resistance at 1.6650 is also very solid;
- EUR/GBP looks to have run out of short-term bearish momentum;
- Technical support in the cable is confirmed at the 61.8% retracement level 1.6470.
- Be patient, wait for short-term stops above 1.6650 to be triggered and sell into that rally for a 200 pip dip to re-test technical support.
USD/JPY: Probably another false move
- The market remains very bullish on USD/JPY but market positioning is also still quite long;
- End-of-financial-year flows are now done and we will see the new-financial-year hedging start as early as next week;
- I maintain a modest bullish bias but I think the 100/105 range will remain untroubled for some time to come;
- Day-traders will like this pair but position traders like myself will find better value elsewhere.