AUD: Looking to book some profit on intraday rallies ahead of risk events
- Plenty of risk events later today so I'm looking to reduce my AUD/JPY long position on any rallies towards 89.75;
- AUD/USD is in short-term holding pattern .8960/.9015 but the big levels to watch are still .8890/.9070;
- Bit surprising that AUD/NZD edged lower despite a stronger AUD everywhere else;
- EUR/AUD could test lower end of consolidation range towards 1.4350 now that we've had daily close below 1.4750 pivot;
- RBA widely expected to stay on hold and keep language unchanged;
- Retail sales and China non-mfg PMI might add some volatility.
EUR/USD: Expect support to be solid at 1.3165/70
A quick look at the daily chart shows why some traders are happy to start buying near current levels (see chart) and a PB source reports that bids are very solid near 1.3165/70. Much of the EUR selling in recent sessions has been cross-related with both EUR/AUD (positional adjustment) and EUR/GBP (M&A chatter) falling quite heavily. If the cross selling dries up then we should expect a short-term recovery in the EUR/USD.
- If support levels at 1.3165/70 are tested and prove to be solid, then I think the risk-reward associated with a quick long swing play would look very compelling.
- If the cross-selling persists and support levels can't hold the first test, then I'd leave it alone for now.
Asian market open, Tuesday September 3rd
Here's Milan's market overview FXWW Asia Open Briefing 03-09-2013.
It should be a busy day again for the AUD and I'm happy to stay long AUD/JPY for the moment but will be looking to reduce as the risk events near. USD/JPY will have it's eye on major optionality near 100.00 and EUR/USD is sitting on important technical support levels near 1.3170.
USD/JPY breaks out of wedge formation
The well-watched wedge formation on the daily chart has now broken (see chart) and the obvious technical play is to buy dips back towards the break-up point with stops below.
There will be heavy optionality at 100.00 which will prove magnetic I'm sure but I will use any intraday spikes to sell into for a quick 50/70 pip swing trade.
AUD/USD: Needs to consolidate above .8980/85 for double-bottom possibility
The short-term charts are trying to form a reversal pattern (see charts) but prices need to cleanly break through current levels and then consolidate above .8980.
EUR/GBP: Breaks below recent daily lows
But there is more technical support at .8465/70 (see chart). I'm still running a small short position here and am looking for any signs of a medium-term breakdown before adding to risk.
AUD/JPY leading the way higher today
You know my views well by now on this pair, I'm bullish and I'm long and I'm being helped this morning by some quite heavy buying by professional leveraged accounts. I'm expecting this AUD buying to continue as the election date nears (the market is very short) and the technical set-up in USD/JPY looks quite bullish to me (although we may simply get some extended sideways trading).
AUD/JPY is itself looking technically constructive but needs to break cleanly above 90.10 to get us excited about a double-bottom (see chart).
AUD/USD: Still finding decent support near .8900
- On the last two visits to .8900, dealers have been reporting 'good names' on the bid;
- Technical picture still looks bearish whilst below .9070 and a test of trend lows at .8845 looks quite possible;
- Don't expect anything from RBA tomorrow;
- AUD/JPY stuck between .8625/.9015 and needs to break out of this range for fresh momentum;
- EUR/AUD had false break above 1.5000 and is back at short-term pivot near 1.4750 with more consolidation expected;
- AUD/NZD looks to have posted an interim base at 1.1200 and I favour a test of first Fibo near 1.1760.
EUR/USD: Solid technical support starting around 1.3180
The short-term trend is bearish but there is some technical support at 1.3180 (see chart) where a 38.2% retracement level and the 50-day MA sit. Bulls might find some decent intraday risk-reward opportunities near there.
USD/JPY: Radiation reports could have some effect today
This is what @FXWW303 wrote in the chat-room a little earlier: "The BBC report on Tepco's inaccurate readings of radiation at the Fukushima plant is damaging for Tepco's shares, Nikkei and doll yn. www.bbc.co.uk/news/world-Asia-2391950 readings at Fukushima are in fact 18 times worse than what Tepco has been reporting due to their equipment maxed out at 100 millisieverts an hour whilst in fact the readings now show 1800 using better independent equipment.
Asian market open: AUD/JPY moving higher in early interbank trade.
FXWW Asia Open Briefing 01-09-2013
Many thanks again to Milan for his excellent overview.
AUD/USD is a bit higher in early interbank trade, currently around .8940 and USD/JPY is also a bit higher, trading now around 98.45 from a close on Friday near 98.20. Decent PMI data out of China over the weekend have helped the cause.
Today is a US holiday which might keep things subdued but the market should start returning to 'normality' tomorrow. Good luck today.
Test view from the chat-room.
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MSCI World -1.75% in August
Hope John from the chat-room doesn't mind me nicking his post!
"MS..MSCI World fell a modest 1.75% in August.
This means index huggers will need to reduce their local ccy hedges, ie. sell AUD vrs MSCI, ect.With rebalancing.
US Equity markets were the worst on ground, losing 2.65%, while Canada was best with a 1.9% gain, Australia chipped in with a .65% gain.
So I would expect to see USD buying vrs CAD & AUD.
Combine with the reduction in hedging we should see decent AUDUSD selling & USDCAD buying at todays London 4pm fix.
AUD/JPY: Balancing act between reducing risk for weekend and staying on risk-reward trade
I really like the risk-reward on being long of this pair. The technical set-up looks promising (double-bottom just above a major Fibo), the positioning set-up looks favourable (AUD shorts at significant levels), and the up-coming Australian election makes it highly likely that we will see short-covering kick in sooner rather than later.
But as always on a Friday, there is the nagging doubt about being long a typical 'risk' pair heading into the weekend. However unlikely it might seem, there is always the possibility of an opening gap lower on Monday when risk management is out of my control. That's never a good position to be in. If in doubt, I always reduce ahead of the weekend. Even if I have to buy back in 30/50 pips higher, it's worth it just to keep control of my position. With a bit of luck we will see some sort of a rally over the next 12/15 hours which will allow me to book some healthier profits.
EUR/USD: Should be well supported at 1.3200
- Sell-off yesterday was driven by Asian central banks rebalancing reserves after heavy intervention in USD/AXJ;
- Very heavy bids reported yesterday near 1.3200/10 and again near 1.3180 from Sovereign wealth types;
- EUR has turned a bit soft again against the GBP and is giving back some ground against the AUD but;
- EUR/CHF has seen some heavy buying by well-connected players over last 24 hours.
JPY outlook: Time for the bears to take over again?
- Wedge pattern in USD/JPY won't hold forever (see chart) and I expect it to break higher;
- EUR/JPY also in sideways consolidation whilst potential double-bottom in AUD/JPY (see below);
- Heavy risk-aversion has led to plenty of JPY buying in recent days but once this abates we should see plenty of Yen selling.
Risk-reward favours being short JPY against the major of your choice IMHO.
AUD outlook: Risk-aversion, looming election and a double-bottom
- Potential for a double-bottom in AUD/JPY just above major Fibo support at 86.25 (see chart). Obviously still much work to be done as it needs to break and hold above 90.10 but I really like the risk-reward here;
- Market still in risk-aversion mode and eyeing Syria and emerging markets;
- AUD/USD needs to break below .8845 trend lows to reinvigorate the bears or back above .9070 to threaten the down-trend;
- I expect AUD short-covering to pick up pace as the election date nears.
Asian market open
FXWW Asia Open Briefing 30-08-2013
I still like USD/JPY higher; AUD/USD likely to trade between .8840/.9070 in coming days but remember that the election is only 8 days away and with Labor definitely going to be tossed out, this should lead to AUD short-covering; keep an eye on EUR/CHF as there were strong hints yesterday in the chat-room that the big players have started to buy again; prefer buy-dip strategy in EUR/USD and cable but the going will be very slow.