Asian market open, Wednesday August 28th
Thanks to Milan in the chat-room for this FXWW Asia Open Briefing, I'm sure he won't mind me nicking it :)
Heavy flows reported in major pairs
- EUR/GBP back at its pivot near .8600;
- Heavy bids in USD/JPY near 98.00 have been soaking up selling from the crosses;
- Asian Sovereign funds buying GBP/USD and GBP/SGD;
- USD/SGD breaks a multi-year bearish trendline;
- USD/TRY posts record highs and USD/AXJ also makes large gains;
- RBI seen selling USD/INR in recent trade to stem the Rupee losses;
- AUD/NZD Fibo support at 1.1465 continues to hold firm.
AUD/JPY still sliding as focus remains on emerging markets
Asian currencies are continuing to slide against the USD and regional stock-markets are uniformly in the red. This risk-aversion sentiment is encouraging sellers of AUD/JPY, now over 1.1% lower on the session. The EUR/USD and cable are remaining remarkably calm despite the movements in other markets.
TRY hits fresh lows against the USD
USD/TRY has hit fresh highs near 2.0060 which might spark further risk aversion amongst the major pairs. AUD/JPY bore the brunt in Asia but maybe we see some action in the CHF crosses during European trade.
USD/JPY: Bids proved solid near 98.00
Despite the relatively heavy selling in AUD/JPY and the presence of stops below 98.00 in USD/JPY, the bears were unable to trigger them and bids proved very solid near 98.05/10. We might get another test in early Europe but range traders are still likely to have the best of it.
Cable bids are reported to be very solid starting at 1.5560 and again at 1.5545 and 1.5520.
Not real sure either way on AUD/USD; the AUD looks vulnerable still on the crosses but the USD isn't looking too crash hot either.
AUD/JPY triggering some stops in early Tokyo
Finally a bit of movement and it's come from AUD/JPY and NZD/JPY. The break below 88.60 has set off a flurry of AUD/JPY selling and the break below .900 has changed the landscape for the AUD/USD as well.
USD/JPY: Likely to stay quiet but downside risks in short-term
The August holidays are in full swing and we can expect another very quiet session in Asia. USD/JPY is still in sideways mode overall but risk-reward favours the bears at current levels. The market may have gotten a bit too aggressive above 99.00 last week and I would not be at all surprised to see trailing stops triggered below 98.00 in coming sessions. A clean break back above 99.20 will greatly improve the bullish argument.
AUD/USD: Looking mildly constructive on short-term charts
The AUD/USD hourlies (see chart) is showing a mildly constructive pattern of higher-lows and higher-highs. Risk-reward for the intraday trader would seem to favour dip-buying with stops below .9000.
AUD/NZD support levels start at 1.1465 (see chart).
Levels to watch for during European trade
- USD/JPY should be pretty toppy now on any approach to 99.00; bids reported to be solid at 98.10 with CTA-types stopping out below 98.00. I'm short from this morning at 98.70 but will be happy with an intraday 60 pip profit as I don't see much more in it.
- EUR/GBP is once again approaching the pivotal and magnetic .8600 level; selling should increase as we near there. I'm still running a very small short position here.
- AUD/USD has oscillated around .9030 all day and I expect to see a range of .8950/.9150 for the coming sessions.
- EUR/USD should gravitate towards optionality at 1.3450.
- Cable is toppy for now at 1.5625/50 and will need some fresh news to encourage the next attempt on vital technical resistance at 1.5750.
Big interbank broking platform takes steps to rein in high-frequency traders
Interesting to note that much of the activity was on the AUD/USD; more from Reuters.
FXWW-Reuters chatroom
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Staying very quiet in Asian trade
- Early stop-loss run has been completely reversed in USD/JPY;
- London holiday today is giving traders added incentive to do nothing;
- All markets are staying very quiet and likely to stay that way until NY opens later today.
NZD steady after disappointing trade data
AUD/NZD could well be the pair to watch today with Prime Brokerage sources referring to decent sized stops above 1.1600. Despite this, the NZD has held up reasonably well after worse-than-expected trade data. NZD/USD edged lower towards .7800 but hasn't moved since.
EUR/JPY grinding higher, eyeing important resistance at 132.75
This pair has proved to be very resilient in recent times and we are likely to get a test of important technical resistance at 132.75 in coming sessions (see chart). For now I would tend to stick with the range edges and sell into strength but if EUR/USD were to break back above 1.3450 again, and USD/JPY could re-take 100.00, then the outlook in the cross would look a lot different!
USD/JPY: Prefer to sell intraday rallies
USD/JPY had a really good chance to go higher on Friday with a big technical break encouraging buyers from all directions. The fact that it's now lower is a telling sign and the really obvious trade today from a risk-reward perspective is to sell intraday rallies with stops clearly above Friday's 99.15 highs, looking for a move back below 98.00.
AUD/NZD looking like a buy-dip proposition
There is still some trend-line resistance close by in the AUD/NZD but the break above 1.1550 suggests that we will see a stronger retracement towards 1.1750 Fibo levels (see chart).
Intra-day I prefer the buy-dip strategy towards 1.1500.
NZ trade data later this morning.
USD eases lower as US yields top out
USD/JPY has been the main mover this morning, dipping to lows below 98.20 in early interbank trade before recovering back towards 98.50. The other majors have been fairly quiet with the EUR/USD trading towards 1.3400 and AUD/USD steady near .9040.
The main factor at play in the market has been the reversal in US yields, with the 10-year turning pretty hard from levels near 2.95% to close on Friday closer to 2.80%. Many traders had tried buying a bullish technical break in USD/JPY on Friday and will probably be stopping themselves out now on the yields reversal.
Elsewhere, Silver had another big spike higher on Friday and the wild volatility in the metals has been quite ferocious over the last few months.
I'm expecting a quiet day today with only NZ trade data on the economic calendar. Good luck+
Cable: Looking to exit longs on test of 1.5750
There is major resistance at 1.5750 in the cable and I'm not sure if we will get that much of a spike post-GDP data, but its possible. I'll be happy to book profits if it happens and settle back then for the weekend.