USD selling picking up pace
- Chinese ratings agency Dagong downgrades the US;
- USD/CHF triggers stops below .9060 and is testing technical support near .9045;
- USD/JPY down 100 pips from this morning's levels;
- EUR/USD sees huge pick up in volume with real money buyers leading the way;
- AUD/USD is testing barrier protection ahead of .9600;
- USD remains a sell-rally proposition so be patient and pick your levels.
AUD/JPY slips as technical resistance holds and Chinese comments weigh
- Comments from the Chinese commerce minister that their economy faces challenges due to slowing demand certainly weighed on the AUD;
- Market ignored comments from ANZ that rate-cut cycle is over, suggesting that market might be long AUD in short-term;
- Trend highs and the 200-DMA are capping AUD/JPY at 94.45/65 respectively.
EUR/AUD: Backing off short-term resistance levels
Even though there is the possibility of a double-bottom on the hourly chart I am still in the sell-rally camp here (see chart). I'd look to keep stops above 1.4260. I still think levels below 1.40 are achievable.
USD edging lower after White House announced Obama statement
The USD made some very modest gains earlier after the debt-deal got through the US senate and moved on to the House. Those gains are now being given back, after the White House announced that President Obama will make a statement on budget issues tomorrow morning. This market is still best left alone in my view. Have a nice long weekend and come back on Monday!
ANZ changes RBA forecast; now expecting no more cuts
Interesting that some of the big local banks are starting to change their tune and are now looking at the next RBA move being a rate rise, albeit not until 2015.
These types of reports will continue to give the AUD a bid tone.
USD/JPY: Looks to have topside scope to 99.50
- The daily chart is still in a sideways pattern with scope for a move towards 99.50 (see chart);
- Some of the Yen crosses like AUD/JPY and EUR/JPY are nearing technical resistance levels;
- The market is still reporting some very large long positions amongst professional players but they have been very patient and resiliant;
- Range trading likely between 98.00/99.50 over coming days.
EUR/USD: Lack of momentum makes it very hard to trade
- Clever traders have been playing the 1.3460/1.3560 range;
- Possible topping formation (see chart) suggests that a break below 1.3450 will accelerate bearish momentum;
- Chinese buyers have been reported on dips over the last few sessions.
AUD/JPY: Technical resistance at 94.40/70
- Recent highs and the 200-DMA are looming nearby at 94.45/65 respectively (see chart).
- Temporary debt-deal in the US has improved risk sentiment.
- Lack of reaction to the deal shows that the market is light on positioning and unsure what to do.
EUR/GBP: Don't be in any hurry to book profits on shorts
Obviously I'm bearish and with a technical top in place near .8495 I don't see any reason to be panicking into profits. I'm guessing that there will be stops below .8425 and if we break below there then we should see .8375 pretty quickly.
No obvious trades as markets stay in doldrums
Nobody wants to trade ahead of tomorrow's deadline and I'm certainly not blaming them.
- EUR/GBP: Technicals favour further losses imho and we can expect some volatility post-UK jobs data in 40 minutes;
- AUD/JPY is threatening to form a double-top at 94.10, worth watching for sure;
- AUD/USD option barriers at .9550 and .9600 (bigger);
- Real money sellers in cable 1.6010/20 (at least they have been there for last 24 hours);
- USD/JPY range-bound between 97.90/98.60.
EUR/GBP: Shorts preferred with stops above .8505
This pair is less likely to be affected by any debt-deal silliness so we can start paying attention to the technical picture. The 5-wave down-move from .8770 to .8330 has retraced by 38.2% to .8500 and has now put in a daily top at this level (see chart). Selling any intraday rallies towards this level with stops tight above makes good risk-reward sense.
USD/JPY pops up on 'deal' rumours
USD/JPY is 20 pips higher as headlines hit the screens reporting that a deal to re-open the US government is hours away.
I'm still staying out of this, can't see any strong reason to get involved.
Fitch places US on Rating Watch
USD/JPY has dipped to 98.00 after the announcement. No big surprise here, we had been warned that regardless of a debt deal, the US credit rating was likely to come under scrutiny. Be prepared for the other agencies to do something similar.
Next support is being reported near 97.80.
EUR/JPY: Think I stopped out near the top
Certainly not the first time I've been stopped out near the top and probably won't be the last. My entry levels were sloppy and I paid the price for lack of conviction. Overall I still like the Yen crosses lower, as I think the current 'risk-on' stance in the market is reckless. My preferred pair to trade this view is EUR/JPY and if I were to consider trading the Kiwi again, then NZD/JPY looks like a reasonable alternative.
Cable finding plenty of support near 1.5915
There have been plenty of minor moves on the crosses but the big USD pairs remain relatively steady, waiting for the debt-deal announcement.
Cable is interesting, support at 1.5915 is starting to harden appreciably (see chart).
USD rallies are still selling opportunities
I'm staying out of the market until after the debt deal is announced tomorrow but I cannot see any reason to be anything other than very bearish for the USD. I'm presuming that some sort of debt-deal will be announced tomorrow, probably to tide them over for the next 6/9 months, and we may well see a spike in the USD immediately afterwards. Any spikes are selling opportunities in my eyes, as the underlying problems will not go away. The US has more debt than it can ever repay and the only way it can grow at the moment is by creating more debt. Capital is starting to avoid US markets, and once this trend becomes ingrained then the slope for the USD will be steep and slippery.
Then there's always the small possibility that we get no agreement and the US starts to default on its debt, loses on its investment rating etc etc. Who knows where that might end.
I've picked my side and I'm staying in the sell-USD-rally camp but I'll stay well away until the dust has settled.
AUD gets another small boost after RBA minutes
The latest RBA minutes suggest that the Australian central bank is still willing to cut rates but is in no hurry.
The AUD was on the rise prior to the announcement, with EUR/AUD taking out short-term support lines near 1.4265 (see chart).
AUD/USD is sitting just below recent trend highs at .9525.
AUD: Cross-pairs staying busy, well supported
- AUD/NZD triggered trailing stops below 1.1300/10 before bouncing; solid bids reported at 1.1280 from Prime Broker sources;
- AUD/JPY broke and closed above prior short-term resistance at .9340, now targeting recent trend highs near .9450 (see chart);
- AUD/CHF is also attracting attention amongst prime brokers and it seems that some bigger players are buying (most likely covering shorts);
- EUR/AUD has short-term support near 1.4270 (see chart).
There are plenty of reports still of heavy sell orders in the AUD/USD between .9525/50 but the crosses remain very well supported.