AUD/USD: Large option expiries driving end-of-week sentiment
- AUD/USD failed again near .8980 after the RBA policy statement;
- 2 billion expiry later tonight at .8940 and another 1 billion at .8900 ensured that the sellers didn't wait too long;
- We can expect the market to remain range-bound until these options roll off.
EUR shorts squeezed but little change otherwise
The post-ECB price action has seen weak trailing stops taken out in all of the EUR crosses and the only trend in EUR is a non-trend. The market is intent on being bearish but cannot seem to generate any momentum. Does this mean we are due at some stage for a massive sentiment-turning rally? Don't know yet but it's starting to look that way.
This morning's main risk event will be the RBA monetary policy statement. AUD/USD looks to be short-term constructively bullish whilst above .8930 but Citi bank issued some research overnight suggesting that the bigger speculative players are close to neutral positioning. I still really like AUD/NZD higher to test 1.1000 in coming sessions.
USD/JPY is too hard for me and Cable is still bullish in my biased opinion.
Good luck today and TGIF.
AUD breaks higher after retail sales and trade data
The continuation pattern on AUD/USD has now broken bullishly and buying dips to .8935 now makes good sense.
AUD trade and retail sales data today
I bought back into AUD/NZD on yesterday's dip and am hoping that the next leg higher will take us towards 1.10. Today's economic data might be the next trigger to convince those increasingly stale shorts to run for cover? Guess we will find out at 11:30 this morning.
The AUD/USD looks to me to be establishing a continuation pattern on the hourly chart with parameters .8900/35; I expect a bullish break.
Cable: Still like buy-dips play whilst 1.6220 holds
Obviously the GBP bull trend is getting reasonably mature but on a long-term view it remains reasonably cheap against a number of the other majors and so I'm happy to stay in dip-buying mode.
It's hard to see any clear value trades at current levels but cable support at 1.6210/25 has proven to be pretty solid so I like the buy-intraday-dip play with stops well below 1.6220. Some talk of bids near 1.6260/70 so lets see what happens at that level.
Weak stops taken out overnight in EUR/USD and EUR/GBP
No major developments overnight and most of the main currency pairs are close to yesterday's levels. The retail market in particular was sitting a bit short of EUR and tight trailing stops were triggered in EUR/USD above 1.3535 and in EUR/GBP above .8325. I have no strong view on EUR/USD but I'm happy to sell any 50 pip rallies in the cross.
The focus will be back on AUD, NZD and JPY during Asian trade. Let's see if we can't find at least 1 reasonable trade opportunity!
AUD/NZD: Using dips to re-establish core long
The AUD is losing some ground this morning, especially on the crosses, with media speculation re RBA policy the main driver.
AUD/NZD has dipped back below 1.0820 and I'm using this as a buy-dip opportunity. I don't expect the cross to trade much below 1.0800 in the short-term.
Buy GBP, AUD dips; sell NZD, CAD rallies
- EUR/USD is at 1.3515 again today! Can't see any reason to trade this pair;
- Cable support above 1.6220 now confirmed and this level should be very important in the short-term;
- I'm overall bearish still on EUR crosses and bullish on the GBP crosses;
- Extreme positioning is still the most likely factor to drive the market in the short-term;
- AUD/NZD is putting in a base imho. I booked a nice profit on my long position yesterday and am looking for dips to 1.0800 for a re-entry;
- If you prefer the straight USD trade, then maybe look to sell NZD/USD near .8275;
- JPY is too hard at the moment and I'm avoiding it. Market sentiment is bearish but the macro market is already positioned very short;
- USD/CAD looks set to go to 1.17ish in the medium-term but I prefer to buy any exhaustive dips towards 1.0850.
AUD/NZD: Initial profit target reached
My target at 1.0900 has been reached and I've booked initial profits on my long trade.
Now looking for dips back towards 1.0750 to re-enter longs.
AUD/NZD: Prefer to play from long side today ahead of RBA
- Like I mentioned below, current moves in the FX market are being driven by positional liquidation;
- The market is short of AUD/NZD and there is no major technical resistance until 100 pips higher at 1.0910/20;
- With the RBA decision due early this afternoon, might we get a short-squeeze?
I prefer to play the cross from the long side ahead of the RBA.
NZD/JPY worth watching closely during Asian trade
The big market positions built up over the last several months have been JPY shorts, GBP longs and NZD longs. We saw 2 of these taking a hit overnight and today might be the NZD turn?
NZD/JPY is currently testing it's 200-dma near 81.40 and we will likely see more trailing stops below there.
AUD/NZD needs to cleanly break above 1.0950 before the NZD bears get scared.
GBP crosses hit hard as trailing stops kick in; GBP/JPY technical support at 164.00
GBP/JPY was the main mover yesterday driven by a carnage of trailing stops across the board; USD/JPY stops below 101.70 were indeed sizeable, Cable stops post-data were also significant and of course the cross then started falling like a stone once it cleared 167.50.
Be aware that there is solid technical support in GBP/JPY near 164.00 (38.2% retracement and 100-dma).
EUR/GBP joined in the stop-loss fest but still remains in a solid medium-term downtrend.
Cable support should be very firm at 1.6220 but a break below there will unleash more trailing stops.
FXWW Chat-room browser access
If you wish to access the FXWW chat-room through your browser you can do so using the Chrome browser; click on this address
The username and password is the same as that used in the Reuters Messenger software.
Anyone who registered last week will receive their details in coming days and of course if you wish to avail of the 'still-free' service then register in the blue registration box at the bottom of this page.
Chinese holiday and Super Bowl should ensure quiet trade this morning
USD/JPY has recovered some ground and is back above 102.00 but I think it's safe to say that today will be very quiet. I'm not hearing much on the order front although this isn't unusual as many of bigger orders get cancelled before the weekend and replaced throughout the day.
Market chasing downside stops in JPY crosses
There is still an air of risk-aversion in the financial-markets air and with positioning still overly JPY short, it's no surprise to see traders chasing after trailing stops in the JPY crosses. USD/JPY is still managing to hold above 101.80, with the help of central bank and semi-official bids, but it's safe to assume that there are plenty of stops sub-101.65/70.
Elsewhere the AUD looks reasonably solid on the crosses, making decent gains against the EUR and the NZD.
AUD/NZD: Reduce longs on rallies to 1.0900
Don't get me wrong, I'm long and think that we go quite a bit higher in the longish-term, but the down trend has been strong and will fight back when the conditions are right. There is strong technical resistance around 1.0900, (a 38.2% Fibo, the 55-dma and a previous high), and I would expect resistance to start forming near there.
I will look to reduce longs near 1.0900 and re-buy on dips.
USD/JPY: Market expecting semi-official bids near 101.80.
Last time that USD/JPY traded under 102.00 there were reports in the market that semi-official players like Kampo were on the bid. I can't confirm it yet, but the market stalled again at 101.80 last night which suggests that they might still be there. Will try and verify.
Risk trades hard to call at the moment
It's no surprise to see the 'euphoria' regarding the Turkish rate rise quickly evaporate and now we are back in no-man's land in many of the JPY and CHF crosses. These have all been very hard to call in recent weeks and I'm staying away from them until the picture gets clearer. The one bias I'm holding is to buy dips in GBP/CHF but I'm not entirely comfortable with entry levels so will wait a bit longer.
AUD/JPY will command most of the interest during Asian trade and although very wide, I'd look to trade as close as possible to the edges of an 88.50/90.50 range.