Hedge funds buying AUD/USD in recent trade
Many thanks to FXWW303 for the insight; hedge funds have been noted buyers of AUD/USD in recent trade from levels near .9185.
Quiet start to interbank trading week
- I still like the buy-intraday-dips play in AUD/JPY after Fibo support at 88.65/70 held (see chart);
- I also like the sell-rally strategy in EUR/GBP now that we are below the previous pivot at .8600;
- USD/JPY should trade sideways between 96.75/98.50 in coming sessions with plenty of opposing factors at play;
- AUD/USD will trade sideways .90/.93 pre-general election and then break higher, in my biased opinion;
- Cable is a buy-dips play, market is caught structurally short;
- EUR/USD is a waste of trading time in my view, much better opportunities elsewhere.
USD/JPY outlook August 19th: Conflicting forces at play but bear-strategy favoured
- Big players remain very long of USD/JPY;
- Crosses are mixed with AUD/JPY and GBP/JPY looking bullish but EUR/JPY and CAD/JPY running into quite heavy selling interest;
- Higher US yields should be favouring USD/JPY bulls but the fact that it can't maintain rallies, despite the Fed/BoJ policies, is a damning bearish indicator;
- Big option plays should ensure tight-ish range trading over coming weeks;
- Positioning, price-action, and Chinese selling, suggests to me that selling rallies is the better strategy here.
AUD/USD outlook, August 19th: Consolidation before more gains
- I'm still of belief that a base is in place near .9000 and will only change this view below .8950;
- Strong moves in metals will benefit AUD but sell-off in global equity markets is a bearish factor;
- Wouldn't be at all surprised to see some extended .90/.93 consolidation pre-Australian general election;
- AUD/JPY made a bullish technical break and retraced to a 38.2% Fibo;
- EUR/AUD has a topping formation in place whilst it stays below 1.4750.
Factors to watch in FX market, week starting August 19th
- Market starting to price in QE tapering at September Fed meeting, with $10/$15 billion reduction from current $85 billion;
- US bond yields at 2 year highs but USD/JPY not reacting bullishly;
- Global stocks fell heavily last week, yet the AUD managed gains across the board;
- Emerging currencies are still being sold on the tapering prospect, with INR reaching record lows against the USD;
- Metals continue to rip higher with Silver over 20% higher in last 8 trading days;
- Jackson Hole symposium is on this week but none of the really big central bank Governors are attending.
EUR/GBP: Small short position in play
I'm chronically bearish on this pair but have found it very difficult to get the timing right. I'm dipping my toes in the water again and have taken a small short position at .8535. There are large stops reported below .8500, let's see if they tempt the interbank dealers late in the week.
AUD up on China stimulus rumours
AUD/USD is rallying on the back of market rumours that China will announce a stimulus package tonight.
AUD/NZD: Spikes up 50 pips on NZ quake reports
The market tends to reacts first and think later when it comes to earthquakes in New Zealand. AUD/NZD was trading around 1.1300 and spiked up to 1.1350 before settling back at 1.1335.
Cable: Very important resistance at 1.5750
If we were to get a weekly close above 1.5750 that would raise the prospect of a double-bottom formation and would have the bulls in total control (see chart). Buy dips, or buy a break, that's my strategy in the cable.
AUD/JPY: Small longs in play as Fibo support holds again
- Momentum funds have been selling USD/JPY this morning but stops below 97.00 remain safe for now.
- Japanese banks have been noted buyers of AUD/USD in recent trade near .9125/30.
- 38.2% Fibo support in AUD/JPY near 88.70.
I've taken a small long intraday position near 88.75 with a tight stop below 88.50, looking for 90.00 later tonight. It's always a bit risk on Friday's to be long of these 'risk trades' but the risk-reward is too compelling in this case.
Edit: Looking now to book intraday profits 89.15/20, then rinse and repeat :)
Edit #2: Done at 89.15, now happy to buy dips back to 88.70 with thigh stops below 50.
AUD/USD outlook, Friday August 16th.
- Risk aversion brought on by lower equity markets inspired heavy selling in AUD/JPY and AUD/CHF.
- Surge in metals should provide good support for AUD.
- AUD/JPY nearing technical support, as mentioned below.
- AUD/USD likely to trade in volatile .90/.93 range in coming week as market swings from USD-bearishness to risk-aversion. I'm looking to play as close to edges of this range as possible.
- Not much on today's economic calendar apart from Guy Debelle speech. Look to metal and equities for leads.
Cable: Still heading higher
You all know my extreme views on cable by now, based on recent price action and overall GBP levels on the crosses, I think we are headed much higher. As always with the GBP, timing is vital and we can be made to look very foolish by 3-to-4% pull-backs, but I'm pretty confident that we will not see levels below 1.50 again and that we will be trading close to 1.70 by Christmas.
That doesn't help us much today; resistance is likely to be very solid near previous weekly highs at 1.5750 whilst support levels will now kick in around 1.5535/50. Buying dips is the play here in my view.
AUD/JPY: Looking to buy intraday dips to 88.70
After a strong technical break higher in recent days we are currently seeing a retracement (see chart). I favour buying intraday dips to the 38.2% level at 88.70, with tight-ish stops looking for fresh short-term highs.
Metal moves suggest USD weakness ahead
Twice this week Silver has posted a daily gain of 5%+, this is a serious signal and not to be ignored. Gold is following at a more sedate pace, but is still over 5% higher on the week.
The USD hasn't actually moved much this week at all, except against the GBP, with most of the other majors losing ground earlier in the week and regaining those losses yesterday. However the FX market risk in my opinion is for some heavy and steady USD losses in coming weeks. The metals are giving us the direction.
I'm not really all that sure about the Yen and am leaving it alone, I'm still ueber bullish cable for a move to 1.70+ and I remain a base-picker in the AUD/USD for a move back to 96 cents.
Good luck today and TGIF.
Blog back on Friday
I'm travelling tonight and tomorrow but will be back on-line on Friday, hopefully with some 'cheap' AUD/USD and cable on board.
European currencies range-bound in Asia: USD/CHF squeezing shorts
- USD/CHF has been a significant mover over the last few days and the short squeeze could pick up momentum above .9400 (see chart).
- Cable is retracing off its recent highs but I'm still in dip-buying mode. Support on the day at previous highs near 1.5390 but I prefer to wait for levels closer to 1.5280. Recent highs near 1.5550 are the obvious resistance levels.
- EUR/USD ground slowly higher and is now grinding slowly lower. Sorry, I've got no strong views here at all.
AUD/NZD back below 1.1400 after better-than-expected NZ retail sales data
The economy over the ditch is doing alright it seems, with people having some spare cash probably thanks to the property boom. AUD/NZD is back below 1.1400 and there isn't much in the way of decent short-term technical support until 1.1330/40 (see chart).
USD/JPY: Underpinned by covering on crosses and rising US yields
- Significant optionality reported near 98.50 which should prove magnetic but will also be tough to break through.
- Rising US yields will be encouraging the dip-buyers to return to USD/JPY.
- Certain crosses like AUD/JPY have made significant technically bullish moves in last 24 hours.
- But, prime brokers still reporting sell-rally interest in pairs like GBP/JPY.
Looks like we should get some range trading here, broadly between 97.80/98.60 I'd suggest.