AUD/USD: Technical support at .9280
The 38.2% retracement of the big rally from .8890 to .9520 comes in near .9280 (see chart).
EUR/GBP: Major selling flows expected during European session
Our resident hedge fund insider @FXWW888 has been updating us via the FXWW-RM chat-room on all the latest news surrounding the big EUR/GBP selling flow which is due to be completed later today. Gossip has it that not all of the EUR4 billion has been completed.
Overall downward pressure on EUR/GBP is likely to stay in place, in my biased opinion, but I prefer to sell rallies rather than breaks regardless of what the flow info is.
EUR/CHF: Recent lows holding for now near 1.2215
- June lows at 1.2215 hold for now (see chart);
- Political turmoil in the US and Italy are heaping on 'risk-aversion' pressure;
- PBs report that their clients are mainly long of this pair;
- The market expects SNB bids sooner rather than later.
USD/JPY techs: Well-watched trend-line now offers support near 97.40
Depending on which charting package you use, you will have this previous trend-line coming in somewhere between 97.20/40 (see chart).
With risk-aversion at heightened levels and no-one too keen to buy the USD, I would keep stops very tight indeed if you are tempted to buy.
EUR/JPY lower in early interbank trade
- The budget impasse and likely government shut-down in the US has heightened risk aversion across all markets;
- USD/JPY gapped lower on the open, taking out stop-loss sell orders below 97.75;
- EUR/USD also lost some ground as political turmoil returned in Italy;
- EUR/JPY fell to test trend-line support near 131.35 but has recovered slightly.
Cable: Still think we could see 1.6250/1.6300 on a spike
Comments from the Bank of England governor, Mark Carney (Reuters story), saw the GBP spike higher across the board. The trend remains bullish and although momentum has been waning, I still believe that we can reach my target at 1.6250/1.6300 in cable before any extended consolidation/retracement begins. Some of the banks are starting to report GBP longs at quite significant levels so I will definitely book profits on any exhaustive spikes.
I remain bearish EUR/GBP and am considering shorting EUR/USD if/when cable gets extremely overbought. No firm levels in mind just yet, best to wait and see.
AUD/JPY turns lower on triple threat
1. It's risk-off Friday
2. Japanese FinMin Aso not thinking of lowering effective corporate tax rate
3. China has restricted imports of Australian chilled beef products.
AUD/USD is stalling ahead of reported real-money fund buyers at .9330 and AUD/JPY is threatening hourly support levels near 92.00.
EUR/USD: Range trading looking very likely
- Corporate sell orders very solid above 1.3525 overnight;
- Sovereign bids expected to appear below 1.3460;
- EUR still looks weak on the crosses especially against GBP, CHF and AUD although EUR/JPY showing some signs of strength.
I'll be very surprised if we challenge either end of a 1.3460/1.3525 range during the Asian session.
AUD/USD: Still sitting above previous pivot
- Strong technical support at .9315/50 (see chart);
- End-of-month flows usually tend to favour the USD;
- Friday is often risk-off in Asia, another reason perhaps to sell the AUD/USD;
- Real money bids have been reported at regualr intervals below .9350.
I've got no very strong views but feel this .9315/50 support band must be respected. I will maintain bullish bias whilst this holds.
USD/JPY: Gravitated toward major option expiries at 99.00
- Reasonably large option expiries at 99.00 ($1 billion+) ensured that prices gravitated toward there;
- 4-hr chart shows consolidation pattern with a break of 98.20/99.20 to give us the next momentum burst (see chart);
- End-of-month flows usually tend to favour the USD.
EUR/AUD: Booking half profits, free trade from here
It was a fairly straight-forward set-up again in EUR/AUD; technical resistance at 1.4450/60 and real-money bids in the AUD/USD below .9350.
I've taken 1/2 my position off the table and will leave a stop on the balance above 1.4490, basically a 'free trade' from here, just as we like! I'm starting to like EUR/AUD again :)
USD/JPY up as Nikkei recovers on corporate tax cut talk
USD/JPY is testing 98.80 and the Nikkei is back to flat after being -1.3% earlier.
GBP: Not ready to take a pounding
Cable has rallied back towards 1.6100 but still remains inside recent ranges. The trend remains bullish and I expect to see a test of 1.63ish in coming days. I'm not sure if momentum is strong enough to take it straight higher to 1.65+ and I'm prepared for some 1.58/1.63 range trading over next few weeks.
EUR/GBP looks like a very clear-cut sell-rallies play to me. I'm building a longer-term short position for a move toward .77 minimum and I see all 100 pip rallies as selling opportunities.
(Sorry about that headline pun, pretty sad and so early in the day :) )
USD/JPY: Trend-line support looming near 98.20
- We have a thrice tested trend-line coming in near 98.20 (see chart);
- Short-term sentiment is bearish with market turning against the USD but also unexpectedly risk-averse post FOMC;
- Market reports suggest that the big macro funds remain quite long of USD/JPY.
If you want to be long USD, this pair seems like the obvious choice but we have a decision to make; is the recent stagnation near 100.00 a sign of consolidation or a sign that the market can't go any higher? I'm not sure, but as year-end nears and this pair still fails to break higher, those big long positions will start getting trigger happy.
That doesn't help us much on intraday basis, but my best suggestion is to wait and see what happens at trend-line support near 98.20. If it is fiercely defended, then the bulls still have some ammunition left and we can try buying with tight stops. If it breaks and gaps lower, then the momentum will shift and we should be in rally-selling mode.
EUR/AUD: Back at selling zone again
This pair treated us well on Monday and our patience has been rewarded with another chance to enter at good technical levels (see chart). Sell rallies 1.4450/60 and keep stops fairly tight above 1.4485/90.
Chat-room commentary
Here are some earlier bits n pieces from the FXWW chat-room on Reuters Messenger. The very lengthy free trial will soon be coming to an end and we will be contacting members individually to see if they wish to continue with the paid service. Those who've been following 888 on Twitter will also be contacted to see if they wish to continue with the service.
9:40:43 am
NAB:
AUD odabook I see decent weakness now 9360-9310 by specs and real money, with more significant demand now 9250-9280 as Corp Int rests there, topside supply 9410-50 mix of Corp and spec with short term weakness just sitting above and then better selling all the way up to 9650 as has been our book make up over the last few months, for choice today look for 9360-9420 to cap with slight improvement in USDs matched by better sentiment, so look to fade moves towards those extremes with a risk that weakness under 9350 might trigger first
http://www.twitlonger.com/show/n_1rp18ui
http://www.rba.gov.au/publications/fsr/2013/sep/html/contents.html
Sean Lee FXWW
![[Screenshot0]](https://collab.thomsonreuters.com/collab-soa-chat/file/fm/Q0hBVC9GTTEvMjAxMzA5MjUvc2VhbkBmeHd3LmNvbTEzODAwNzQyODk0NDM/Screenshot0-1.png){kind=link}
FXWW 888 FXWW Pty Ltd
Topside jap says they have stops 99.20-35..then offers 99.40-50....
but at this rate most of this is moot given we stuck in 55-75
Sean Lee FXWW
FXWW 888 FXWW Pty Ltd
Sean Lee FXWW
FXWW 888 FXWW Pty Ltd
Sean Lee FXWW
FXWW 888 FXWW Pty Ltd
https://www.research.hsbc.com/R/20/Ap0qSajIAtoi
Sean Lee FXWW
FXWW 888 FXWW Pty Ltd
The softness in risky assets has been partly attributed to the risk of a government shutdown in the US (our economists have upped the probability from 15% to 30%). The first hurdle is the Continuing Resolution bill that needs to be approved before 1 Oct. By attaching the defunding of Obamacare (a popular demand) to the CR bill, the Republicans hope are hoping to make the threat of a government shutdown less politically dangerous and therefore more credible. There are two ways a government shutdown can happen next week: 1) the ongoing Senate filibuster by Ted Cruz delays the CR - but this is unlikely as many Republicans are against Cruz's approach, 2) the bill sent back to the House (sans Obamacare defunding) is not approved before the Oct 1 deadline - possible but will still be politically costly and a bargain remains likely. However, the current CR bill will be far from the end of the story - particularly since a shortened version of the bill (till Nov 15) is being proposed - and the debt ceiling debate is even closer (mid-Oct). This fight will continue even if the CR bill is passed before Oct 1.
http://www.twitlonger.com/show/n_1rp1cr9
Anjaney Kumar Punjab National Bank
Sean Lee FXWW
![[Screenshot0]](https://collab.thomsonreuters.com/collab-soa-chat/file/fm/Q0hBVC9GTTEvMjAxMzA5MjUvc2VhbkBmeHd3LmNvbTEzODAwODA1MzM3ODE/Screenshot0-2.png){kind=link}
Anjaney Kumar Punjab National Bank
FXWW 888 FXWW Pty Ltd
Milan Cutkovic FXWW Pty Ltd
Cable: Still very much in buy-big-dip club
I think we could see prices fall as low as 1.5750/1.5800 on a stretch but I'm strongly of the opinion that any big dips are buying opportunities. Cable has never been the most obedient technical pair but this has started to change with the increased number of retail traders (who tend to be more technical than market oriented). There's a possible double-bottom with a neckline at 1.5750 and that's where the longer-term bulls will be lining up I'm sure.
That said, any 300 pip rallies will run into strong resistance as the market simply doesn't have any impulsive momentum at present. I know its not very aggressive, but the safest play is to avoid the noise and try to trade as close to the edges of a 1.58/1.63 range as possible, with a definite bullish bias.
NZD still losing ground against the JPY and the AUD
This morning's trade data
(New Zealand (NZD) Imports (AUG): $4.52B, Expected: $4.30B, Previous: $4.62B
New Zealand (NZD) Trade Balance (AUG) (m/m): $-1,191M, Expected: $-743M, Previous: $-774M
New Zealand (NZD) Trade Balance (AUG) (y/y): $-2.06B, Expected: $-1.62B, Previous: $-1.69B
and a long-NZD market are conspiring to squeeze some positions especially on the crosses.
- NZD/JPY has started retracing and we could see prices back towards a 38.2% retracement, and previous daily highs, near 80.40 (see chart). I favour buying a bounce off this level.
- AUD/NZD looks like it might try to post a double-bottom at 1.12 so bears should be cautious.