European FX market open, Monday September 16th
FXWW European Open Briefing 16-09-2013
The USD isn't showing any signs of a bounce just yet but I haven't yet figured out whether it' simply lack of interest or something more sinister. The focus should shift to the GBP now that London is entering the fray and I'd suspect that we see a test of 1.60 during the session.
Lack of bounce in USD will be worrying dollar bulls
We saw a somewhat 'silly' and overdone sell-off in the USD earlier this morning on the back of news that Larry Summers would not be seeking the chairmanship of the Federal Reserve. Stops were done across the board, especially in pairs like USD/JPY and AUD/USD, but the lack of a decent retracement will be worrying USD bulls. It is a holiday in Japan which might be a contributing factor.
I'm happy to stay long cable and will look to sell USD/JPY rallies towards 99.40 with tightish stops.
AUD/USD: Traded to .9390 in illiquid stop-driven markets
This morning's price action is all about stop-loss orders. USD/JPY took out stops below 98.80 and again below 98.60 before immediately bouncing. Then it was the turn of AUD/USD with stops triggered above .9350 and .9370 with highs near .9390 being reported and some 'out trades' reported above .9400.
Asian market open, Monday September 16th
FXWW Asia Open Briefing 16-09-2013
Talk that Summers has withdrawn from race for Fed Chair has caused a dip in the USD across the board.
FX market grinding to a slow halt for the week
- Cable bids reported from Asian Sovereign names near 1.5770 and leveraged sellers seen 1.5820/25 in decent size;
- Corporate bids at 1.3260 in EUR/USD remain untested, with earlier lows at 1.3262;
- Stops now being reported in AUD/USD above .9280 and we may get a purge of intraday shorts pre-weekend;
- USD/JPY is unlikely to move too far with plenty of option expiries due again today on the 99 handle.
I still think that long cable is the best trade among the major pairs, certainly as long as the double-bottom neckline at 1.5740/50 provides support. The AUD looks vulnerable on the crosses but as mentioned above, we could get a short squeeze heading into the weekend.
We should be in for a very interest-tapering week and volatility is assured. Have a great weekend.
Taper or not, I'm not expecting a large USD rally
Economics and fundamentals aside, and purely looking at price action in the majors over the last few months, I am struggling to visualise a significantly higher USD like some have been forecasting post-Taper. This whole tapering saga has been well documented and heavily traded over the last few months and whether the Fed has already started, or will reduce QE by large or small amounts, we've had all scenarios played out in the market over the last few months. So what has happened in that time?
- USD/JPY is significantly higher but we can safely argue that this is more of a Yen move based on very easy BOJ policies;
- AUD/USD is lower but again we can argue that this is more to do with a weakening in the AUD from significantly overbought levels rather than a sudden burst into the USD;
- Metals are somewhat different and the significant reactions to any type of taper talk are certainly important;
- EUR and GBP have certainly had some swings against the USD but they haven't moved overall.
There will be an element in the market who will scream that tapering of any sort is bullish for the USD but I fail to see any strong evidence of this in the price action of the last few months.
Cable: Consolidating and looking constructive
- The sight of Asian Sovereign funds buying dips overnight will give us bulls added confidence;
- Bids expected to be heavy around 1.5770 but we can also expect trailing stops to be building below 1.5740;
- Option barriers reported at 1.5850, 1.5900 and 1.5950;
- With the 'taper' announcement moving ever closer, we may see some hefty flows in the next few sessions;
- I'm happy to stay long for now and to wait and see how the market develops. I will reduce my long position by 1/2 below 1.5740.
Asian market open, Friday September 13th
FXWW Asia Open Briefing 13-09-2013
- USD/JPY was stuck like glue to 99.50 with some big options rolling off;
- AUD/USD steadied after poor jobs data but still looks heavy on the crosses;
- Cable is consolidating below option protection at 1.5850 and above the double-bottom neckline at 1.5750;
- EUR/USD trading sideways.
Good luck today and TGIF, even if it is Friday the 13th!
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Look to sell AUD crosses in short-term
The underlying economic story for the AUD remains questionable and this morning's jobs data reiterates that. The AUD has had a really nice rally from 86.50 to 93.50 against the Yen but it looks like we might now settle back into some consolidation rather than break immediately higher. AUD/USD resistance at .9350 has been confirmed and the heavy corporate buying of EUR/AUD below 1.4300 has also taken its toll.
I now prefer to sell the AUD on the crosses in the short-term and GBP/AUD looks like the ideal vehicle.
Still prefer to stick with bearish USD play
Some of the levels are getting a bit trickier for instance in USD/JPY and AUD/USD, where it's hard to justify being short USD at current levels. But pairs like cable are pretty crystal clear in my biased view, and recent price action has given me no reason to change my view.
- USD/JPY; market is very bullish but as can be seen from recent retail and PB data, the market is also long. I'd be patient and look to buy exhaustive dips or alternately buy intraday when the Yen crosses turn bullish.
- AUD/USD; it's very hard to get bullish at .9325 just ahead of major technical resistance at .9350. Overall this goes higher I think but best wait for some exhaustive dips.
- Cable; going higher! 1.63 first on way to 1.75. GBP is oversold on long-term view of crosses. Sentiment starting to turn, driven by improving data. That's my view.
- EUR/USD; sorry too hard! Sideways still most likely outcome but I prefer long to short (marginally).
NZD higher after RBNZ flags rate rises
The key words in the statement were "OCR increases will likely be required next year" and this has led to a sharp spike in the NZD/USD from .8075 to .8135.
Asian market open, Thursday September 12th
FXWW Asia Open Briefing 12-09-2013
- Possible double-bottom on cable with neckline at 1.5750, looks very constructive indeed and my initial t/p target is at 1.6300;
- EUR/USD has moved higher supported by dip-buyers in crosses like EUR/AUD and EUR/GBP;
- USD/JPY has disappointed the bulls again by moving back below 100 and I still prefer the buy-big-dip play here although the levels are a bit unclear;
- RBNZ shortly.
Good luck today.
Plenty of action in GBP before and after jobs data
A big hedge fund started buying cable about 10 minutes before the jobs data and you can draw your own conclusions there. Stops were tripped above 1.5770 after the numbers were released but EUR/GBP bids below .8390 helped stem the GBP rise.
Possible double-bottom on daily cable chart with a neckline now at 1.5750.
FXWW-Techs room now available on RM
Apologies for my silence today but I've been stuck in IT land trying to get some of our latest developments going live.
The FXWW room has so far been confined to a few professionals chatting and most others listening. We are setting up side-rooms which allow everyone to have their say. Obviously the FXWW standard is 'capable trader' so we will not be catering to beginner and their questions, but who knows maybe we get one of those in place soon as well.
For now, the first of the side-rooms, FXWW-Techs, is now open so if you 'right click' on 'other rooms' and search for FXWW-Techs. All are welcome to comment but please keep it professional and relevant.
Cable: Still eyeing important resistance at 1.5750
- Important resistance looming at 1.5750 in cable (see chart) as clean break-and-hold would raise possibility of a double bottom;
- Sterling is being underpinned by improving economic data and much improved market sentiment;
- I'm comfortable to stay long GBP against the EUR and the USD in the realisation that these are medium-term plays.
USD/JPY: Buying dips looks like safest play
I'm really not sure what to make of USD/JPY, the market is long but then the market does get it right occasionally! We saw some big flows overnight and fresh highs made above 100.25, so there seems little point in fighting the trend. I'd suggest a dip-buying strategy intraday, looking for levels near 100.00 as optimal entry points.
AUD/USD technicals: Pivotal resistance near .9335
The daily chart is showing that prices are again re-visiting a previously pivotal level at .9335 (see chart). A clean break above there will bring the first Fibo at .9510 into focus.