Sean Lee – Page 78 – FXWW.com

It's hip to be square

I think this is a very good time to have no positions in the FX market. These risk events like the current debt-deal showdown can evolve into all sorts of mayhem so it's much better in my risk-averse view, to stay out of the market.

I stopped out of my EUR/JPY position overnight, taking an 85 pip loss, and have no interest in getting involved again until the dust rises and settles again.

RBA meeting minutes are main item on economic calendar.

FX market staying very quiet in Asia

The AUD has recovered from earlier losses, which were caused by poor Chinese exports data over weekend;
Market has reverted to glass-half-full, now focusing on strong imports and domestic demand;
AUD/USD barrier still at .9500 with stops immediately above;
Holidays today in Japan, Canada and the US.

USD/JPY: Time for a bearish session perhaps?

Lack of progress in Washington will be bearish for USD;
Chinese data will be bearish for risk;
Technical picture is very undecided hinting at range trading outcome but there is a chance of an interim top forming near 98.60 (see chart).

I prefer to trade this pair from the short side today but keep stops fairly tight above 98.80.

AUD opens lower after poor Chinese export data and lack of progress in US debt talks

Chinese exports in September fell to -0.3% YoY (+6.0% expected);
Still no sign of a resolution to debt-ceiling talks in the US;

The Yen crosses are a bit lower and the AUD is -0.5% in early interbank trade. AUD/USD saw lows near .9410 and EUR/JPY triggered stops below 132.90 before steadying.

EUR/JPY: Hoping to exit short position near 132.75

Sentiment is quite bullish on the Yen crosses and my attempt at going short yesterday near 132.10 was a bit of a disaster. I averaged into the trade at the 61.8% retracement level near 133.45 and am now hoping to escape with an unbloodied nose near 132.75. I don't have a strong view here, simply trying to trade my way out and enjoy a nice relaxing weekend.

AUD/USD: Looks set to test topside sell orders

AUD/JPY buyers are driving AUD/USD towards recent highs at .9480 and at least 2 of the local Australian banks have been consistently reporting solid selling interest between .9480/.9520.

I'm still in range-trading mode for the AUD/USD in the shortish-term and prefer to buy big dips. This market was very bullish at 1.05 and very bearish at .9000, and now we are headed back towards the middle of this range. Some things never change in the FX market.

Edit: Now hearing that there is an option barrier at .9500 with large stops directly above there.

Headline driven market, with Toshins in background

There are a number of new Japanese investment fund issues (Toshins) which have led to quite solid demand for the USD, MXN and TRY against the Yen in the past 24 hours. Then of course we have the various headlines regarding the US debt deal which are hitting the newswires every couple of hours. No deal, deal, no deal etc etc. Hopefully the US politicians go to sleep soon.

I'm still short EUR/JPY and hoping for a dip or some inspiration.

Risk trades fall as Obama rejects short-term debt plan

USD/JPY is down nearly 40 pips on the headlines which have been coming over Twitter. Best wait for confirmation though.

Yen weakness looked impulsive; more to come?

I'm on the wrong side of this having sold EUR/JPY yesterday near 132.00. I'm hoping for some early profit taking out of Asia which will give me a chance to reduce my losses. Pairs like AUD/JPY still seem to have a lot of topside potential and I think its probably best if I stay out of the way of this market until I have a better feel for what's going on.

I certainly wouldn't be getting bullish USD any time soon, but we could see a healthy dose of risk return to the market, so the Yen crosses are the obvious target. If this happens, I'd expect USD/JPY to stay steady or even edge higher and the main gains to come through the components ie higher AUD/USD.

EUR/JPY: Small short in play

I was in sell-rally mode this morning in EUR/JPY and am dipping my toes in the water with a small short play at 132.10 (see chart).

The interbank guys in the chat-room are reporting very heavy turnover 97.70/75 in USD/JPY on the electronic broking system ($500 mio+ has already changed hands).

Looks like US budget impasse might be set for short-term deal

Thanks to FXWW888 for the link to the National Journal which may explain some USD strength in recent hours.

NZD/USD breaking below strong technical support at .8265

Horizontal support line at .8265 has been breached and looks like stops triggered below (see chart). Selling rallies for test of sub-.8200 makes sense to me.

No change in AUD after jobs data

The AUD still feels a bit heavy in the short-term at least, with plenty of selling interest between .9480/.9520 capping for now. The jobs data was fairly decent but the market has basically ignored it.

No change in my view, maybe bit lower in short-term for AUD/USD with .9335/50 a possibility but I prefer to buy that big dip given my bearish USD bias.

USD/JPY: Heavy offers 97.60/75 cap for now

Yellen appointment helped USD and risk-trades sending USD/JPY higher;
Budget impasse still a worry and it's still too risky in my view to contemplate medium-term USD longs;
EUR/JPY feels to me that it could be in for a 300/500 pip dip and I'm looking to sell any rallies 132.20/50 for a test of 128.00.

Plenty of intraday bids 97.00/10 and sellers between 97.60/75 should ensure range trading for much of the Asian session.

Australian jobs data main risk event this morning

AUD/USD short-term chart looks moderately bullish although its not at attractive levels for buying (see chart);
If bullish, prefer to wait and see if initial technical support levels hold near .9400/10 or preferably wait for stronger levels near .9335/50;
Risk-reward would seem to favour the bears in short-term, with recent highs above .9500 still capping;
AUD/NZD has looked bullish for days but the failure to re-gain 1.14 will surely be worrying the bulls and stops below 1.1300 could come into view;
GBP/AUD broke below support at 1.6860/70 but failed to test further levels near 1.6800.

I still think the safest way to play AUD/USD is to wait for big dips and buy into them but intraday players might have more joy selling short-term rallies.

Cable: Patience required for dip buyers

Apologies to those who I've confused between my postings here and in the chat-room; I will try and ensure that this doesn't happen again.

I remain very bearish on the USD and my pair of choice for trading this view is still the cable. I was lucky enough to bail out of my medium-term longs at trend highs near 1.6250 (just for record) and am keen to buy back on dips. Remember the market always feels terrible on the way down but by Christmas I feel that sub-1.60 levels will have become a distant memory.

If the move from 1.6260 to 1.6010 was the first wave of a typical 3-wave retracement, then I would expect this second wave to run out of steam near 1.5870. This is where I will start buying (unless it's in vertical collapse for some reason). The really strong technical support is at 1.5700/50 and that's where I expect any falls to run into a brick wall of support.

I think it's reasonable likely, given present momentum, that 1.6050/70 will cap in the short-term and that we will see a test of that first level at 1.5870, but as always, be sensible and wait and see what the market looks like when it gets to your level.

Free trial in Reuters chat-room

We are getting very close to the time when we will start charging for access to the FXWW chat-rooms on Reuters Messenger (I've cut n pasted some early morning chatter below, but it's been a quiet day). We currently have 2 rooms open, the main room which is limited to professional contributors, although all can read it, and the Techs room which is open for all to chat in. There will be plenty of other rooms opening soon.

If you'd like to avail of this trial period, let me know below in the comments section or sign up for FXWW membership at the bottom of this page.

""EurAud is worth keeping an eye on folks (1.4365)...currently not having a problem holding on to 1.43, but if 1.4280 (100 DMA) area gives way we should see an acceleration towards Fibo support at 1.4225 and below that, if it were to come about, it could get a little ugly . I ll attach a chart

7:10:45 pmEur Aud.PNG (27.5 kB)

7:12:29 pmWeeklies also pointing lower, but dont expect instant gratification on this..selling rallies with a SL above 1.4560 looks to be a plan though...

Oct 8

Milan Cutkovic FXWW Pty Ltd

8:02:21 pmAsian offers in AUD/USD at 0.9450 and 0.9475

8:49:08 pmBoE LTRO headline is BS obviously

8:49:14 pmGS Our forward / money market desk pointing out that this is NOT new information.. and is part of their standard operations. Done every month, standard 3mths tenor.

8:53:06 pm(MS) Cable dropped 50 pts on this headline to a low of 1.6020. However, given this was a scheduled operation we are a little surprised by the mkt reaction hence don't be surprised to see cable retrace this move in due course

9:22:32 pmSummary of GS Traders' Strategies:
EUR: Staying very flexible within the range and in reactive mode. Support at 1.3520 and more broadly 1.3453 (August high) with resistance at 1.3620 ahead of the cycle high at 1.3648.
JPY: Currently flat USDJPY - we will however look to buy dips now towards 96.50, with a stop below the Aug lows of 95.80.
GBP: EURGBP continues to hold just below the 0.8480 level but we remain tactically short looking for 0.8380 region once more
AUD: Content to remain short while the levels hold (0.9530) but feel like a more developed move lower will need a fresh catalyst. 0.9460 the immediate resistance above followed by 0.9530, below looking at support zone from end of last week of 0.9360/80.
CHF: Swiss crosses are trading independently of the data with the other side of the equations driving price action for now.

9:23:04 pmLeveraged names selling AUD fading this move

9:28:15 pm-----------------

9:28:16 pmGS G10 FX flows from Trading - a flurry of activity initially triggered by the misreported headline over the BOE LTRO (always part of their standard operations), taking cable down to 1.6019 but quickly back up above 1.6070.Aud then takes out last weeks highs triggered a wave of model and leveraged stops / short covering (we have been net buyers of 250 ish in last 10 mins ) with further stops above 0.9500 although we continue to hold shorts - we look to re-assess above 0.9520 now.

BAML: seeing longer term names lookign to enter shorts between here and .9500

TODAY

Oct 9

FXWW 888 FXWW Pty Ltd

5:54:23 amgood day people

Oct 9

Jim Langlands AXICORP FINANCIAL SERVICES PTY LTD

6:16:09 amGday mate.... not much to go on after the brief spikes up/down....looks like being another tedious session ..in Asia anyway..

Oct 9

FXWW 888 FXWW Pty Ltd

6:21:35 amHey Jim- yes very tedious.. not much point getting too involved here.. just a matter of waiting for some resolution of this fiasco one way or the other

Oct 9

Jim Langlands AXICORP FINANCIAL SERVICES PTY LTD

6:23:24 amYep indeed mate, what a debacle! and you are right, I can t see too much point in being involved at all in FX land, although I think the S+P and Dow are picking up steam for potentially soemthing quite substantial on the downside...

6:24:26 amWhich I assume, if that is correct, then it might be the catalyst for the move south in Usd/Jpy that the market is hoping for.....

Oct 9

FXWW 888 FXWW Pty Ltd

6:32:19 amyes that looks to be the way of it

6:35:02 ammeantime feels like the world has put on long vol strategies to capture big directional move in usd one way or the other and are bleeding here- trying to job what ever movement there is to recoup some premium..hence why we're trapped

Oct 9

Jim Langlands AXICORP FINANCIAL SERVICES PTY LTD

6:39:21 amYep that could be the way of it....and it looks to me asthough the bleeding is going to continue....the charts are hopeless at present...against the dollar at least ...some of the crosses are more interesting though....I still like the look of the Aud on the crosses, although a bit clueless on everything else, although the EurJpy looks heavy still

Oct 9

FXWW 888 FXWW Pty Ltd

6:48:28 amyup agreed

Oct 9

Sean Lee FXWW

7:41:39 amhttp://www.fxstreet.com/economic-calendar/

7:48:48 amQuiet a bit of movement in pairs like GBP/AUD yesterday; looks like traders are looking to non-USD pairs for some trading opportunities

8:03:44 amBofAML intro: " Washington worries are manifesting in different ways. The Nov 7 US Treasury Bill traded up to 35 basis points (from close to zero last week), though corrected to 26bp after good indirect bidders at the auction. Our equity team saw material demand for Japan equity puts. However, they also saw demand for S&P500 equity calls and VIX Puts. Private Clients continue to be the stalwart of the US equity market and our data shows private clients have now been net buyers for 18 of the last 19 weeks, and have purchased a cumulative $13bn of US stocks YTD. FX has been more sidelined, though in Liquid Insight, Ian Gordon makes the case to stay short the USD in the near-term, particularly against the yen and short CAD against non-USD G10 currencies. Continuing with the bearish USD theme, FX Quant Trader continues to signal a stronger USD via several signals. In Canada we also revised our interest rate forecast, now looking for the Bank of Canada not to hike until 1H2016 due to limited growth.

Oct 9

Jim Langlands AXICORP FINANCIAL SERVICES PTY LTD

8:17:44 amKeep an eye on the S+P guys. It has broken some decent support today and looks very heavy. It has dragged the Nikkei futures down by about 140 points, which in turn is breaking some important support areas and could be what helps send US$/Jpy down towards the 95.80 initial target if we can get under the 200DMA...I ll attach a S+P Chart...tic...

8:18:06 amS+P daily.PNG (29.0 kB)

8:18:46 amThat is a daily chart

Oct 9

Sean Lee FXWW

9:01:22 am[Screenshot0] | [DesktopObject0] NZD/USD few spreads lower after retail sales data

Oct 9

FXWW 888 FXWW Pty Ltd

9:51:12 amWHITE HOUSE MAY ANNOUNCE YELLEN AS FED CHAIR AS SOON AS WEDNESDAY

10:27:19 amJanet Yellen record gives pointer to Fed policy if Obama picks her as chair: FT 29 Sept:
http://www.twitlonger.com/show/n_1rphu31

10:33:39 amfair to say this is a fairly muted reaction in the USD

10:40:33 amNAB:
AUD order book sees continued Corp supply 9480-9600 with a cluster of resting now around 9500, not one topside SL as specs continue to abandon risk, downside a few s/term SL 9380-9410 with Corp demand now centred around 9280-9330

10:44:23 amDB Spot Trading Morning Report:
http://www.twitlonger.com/show/n_1rphugv

10:53:26 amBoJ MP meeting mins http://www.boj.or.jp/en/mopo/mpmsche_minu/minu_2013/g130905.pdf

11:47:16 amThis came out a little while ago - but seems to be being passed around interbank at moment...
http://www.pimco.com.sg/EN/Insights/Pages/Taper-Time-Mining-That-Is.aspx

11:56:41 amAs one HF sales desk suggests...'Once summers was out of the picture for fed, the usd had a decent selloff - which pretty much was market repricing for yellen' - their explanation for the lack of response to the yellen news

11:58:42 amCouple of banks telling me they're seeing growing interest to buy AUDNZD this morn

Oct 9

Sean Lee FXWW

12:02:05 pmTxs 888, you getting any sense of where big positions might be in HF land?

Oct 9

FXWW 888 FXWW Pty Ltd

12:05:04 pmmy sense is they're pretty short USDs

Oct 9

Sean Lee FXWW

12:06:40 pminteresting, might be some hefty cable longs out there then??

Oct 9

FXWW 888 FXWW Pty Ltd

12:06:48 pmim the other way - so might just be me talking my book tho :)

Oct 9

Sean Lee FXWW

12:07:18 pma trader talking his book?? never

Oct 9

FXWW 888 FXWW Pty Ltd

12:07:35 pmha happens every now n then

12:08:51 pmGBP not so sure, but i'd imagine so.. reasonably comfortable with their longs but looking to lighten on a 162 handle

12:11:51 pmI don't have cable exposure... just short eurgbp after blip up the other day - but will mostl likely cover circa 8400-10

12:13:05 pmisnt really the kind of market to go looking for big moves

12:18:57 pmSMBQ DEUQ and TMSQ seen buying usdjpy above 97.20

12:21:46 pmThats Sumi Tokyo, Deutsche Tokyo and Tokyo-Mitsubishi Tokyo- for those unfamiliar with reuters codes

12:29:09 pmBoA: FOMC – 3 Scenarios:Our US strategists highlight that within the FOMC Minutes today, the crucial questions will be which factors were the most important to cause the delay in the onset of tapering in September;
A) If the effect of rising yields on mortgages was paramount, then we could expect a longer delay in initiating tapering, until the broader economy lends greater support to the housing market.
B) If the reason was primarily the weakness in the latest payroll number, then the market would respond by being more volatile around the important data releases.
C) Finally, if the fiscal conflict was the primary reason, it would be reasonable to assume that tapering would occur soon, given the central expectation that the shutdown and debt limit will be resolved by mid-month.
Another crucial question that would be answered in the SEP section would be the narrative on how long QE would be expected to last.

12:33:11 pmJP Morgan: Asia Pac Morning Commentary:
http://www.twitlonger.com/show/n_1rpi296

12:36:58 pmMizuho
- light stops 97.30, heavier stops 40-60
-downside light bids 96.80-65, stops below 96.60

12:38:09 pmBank of Tokyo:
Our order book topside SL and offer mixed from 97-low to 98-low level and well offered around 98-mid level. Downside also SL and bid mixed from 96-high to 96-mid level and new bid orders came in 96-low to 95-high levelDaily ichimoku cloud is 98.109-98.675 and tankan line stay 97.798 today. Top of monthly ichimoku cloud is 100.041 this month. This top of monthly ichimoku has been working well as a resistance these 5 or 6 month..

12:52:09 pmUSDCHF up thru 82 cd be interesting

12:52:47 pm9082 obv

USD staying soft in early Asian trade

Once again it's been quiet during the Asian session and the only announcement of note has been that Janet Yellen will likely be announced as the new Fed Chairperson sometime later today. The USD is slightly lower across the board but this is more due to higher Yen crosses than any specific USD sentiment.

I'm looking to buy any intraday dips in cable back towards 1.6070.