AUD/USD outlook, August 14th
I'm still very firmly in the buy-dip camp and I believe levels near .9035/50 will give existing shorts a good short-covering possibility (see chart). We are currently seeing a short-term USD-bullish phase but I don't expect this to last very long. USD yields rallied, after decent economic data and Fed comments, whilst Gold fell after India hiked its import tax again.
AUD/JPY made a strong technical break above 89.00 and this should give some added bullish impetus to the Aussie (see chart). Next resistance lies near 89.70 and a clean break above there will add to the bullish case. EUR/AUD has formed a topping formation with resistance now at 1.4750.
I'd suggest a .9050/.9150 intraday range with an overall buy-dip bias whilst prices are above .8950.
Fed: Chances of September tapering on the increase
Comments from Dennis Lockhart, Atlanta Fed President, that he 'wouldn't rule out September' would seem to have increased the chances that we will see some very small tinkering with the Fed's massive QE program starting next month. Remember that Mr Bernanke will be stepping down in February so with his legacy in mind, and despite the 'helicopter Ben' moniker, he will probably be keen to have the tapering begin on his watch. The US economy has been on the improve but Fed officials will be very wary of reducing fuel levels just as the fire is starting to take hold.
The USD has made steady gains overnight but the market is still long, especially against currencies like the AUD, and I don't see any minor tapering having a big impact.
Levels to watch out for in overnight trade
- EUR/USD: Large bids rumoured near 1.3270 with stops directly below there at 1.3265 from interbank prop types.
- USD/JPY: Last time USD/JPY was near 98.50, China was selling.
- AUD/JPY: Significant break above 89.00 suggests a buy-dip strategy from here.
- AUD/USD: Any levels now near .9050 must be considered a good short-covering opportunity and only a break below .8950 will put the bears back in charge imho.
- GBP/USD: Heading higher pretty soon I think; patience needed and looking to buy exhaustive dips to 1.5280.
- USD/CHF: If you must be long dollars, this looks like your best option!
AUD/JPY, USD/JPY both break resistance levels
No point getting in the way of these moves, with the market always happy to sell Yen. Buying dips now preferred in AUD/JPY particularly.
China was selling USD/JPY near 98.50 early last week so keep that in mind.
USD/JPY: Prior support at 97.55/60 holds firm first time around
Remember how much trouble we had trying to break below here! Now we might have exactly as much trouble trying to re-take it! That's why it's called a pivot point!
AUD/JPY edging back toward 89.00 resistance levels
USD/JPY is proving quite resilient, sitting just below Fibo resistance at 97.40, and AUD/JPY is trading close to session highs near 88.85. Technical support in the AUD/USD at .9105 managed to hold firm and if USD/JPY can manage to beak above previous lows-turned-resistance at 97.60, then we could see a significant move higher in the cross.
Once again Asia has been very quiet today with only the Yen crosses showing any inclination to move.
AUD/USD: Modest technical support close-by at .9105
The 38.2% retracement of .8920/.9220 comes in at .9105 (see chart).
I'm hoping to re-buy my Friday sales near .9060/70 as I think any dips to .9035/50 will run into heavy demand from a still overly short market. Plus cross pairs like EUR/AUD are getting back up toward resistance levels.
USD/JPY: Technical resistance 97.40/60
The 38.2% retracement of the 99.95/95.80 move comes in at 97.40 and the previous strong support at 97.60 is now a strong resistance level (see chart).
USD/JPY bears can try selling a failure at the latter level with a tight stop.
AUD/JPY likely to be the key intraday mover
- Strong technical resistance at 89.00 in AUD/JPY.
- AUD positioning remains at extreme short levels, although un-wind seems to have begun against most other majors.
- Market remains bearish on JPY and will not need much persuasion to buy AUD/JPY under the right conditions.
I'd suggest waiting for any technical break to occur and then looking for dip-buying opportunities. Alternatively, AUD bears will find good risk-reward in selling a failure at 89.00 with a tight stop-loss.
August 13th: Silver continues its march higher, Yen slightly lower on FX markets
I've closed out my USD/JPY shorts for a tidy profit, preferring to play the USD-bear card through the AUD and the GBP. I might be reading too much into it, but it seems to me that the move in metals might be primarily a JPY play so I'll take my profit and get out of the way.
The other major pairs are within 30 pips of where we left them yesterday and I think we can prepare ourselves for a very quiet session.
BOJ meeting minutes and Australian business conditions are the only releases of note on the calendar. Good luck today.
EUR/USD: Should be very well supported on dips to 1.3250/80
Just reading some reports from Deutsche and Goldman Sachs and both have pretty much the same view; most market interest lies elsewhere and we can expect sideways trading to dominate. Bids are plentiful below 1.3300 and particularly between 1.3250/80 whilst the range tops are also pretty clear at 1.3400/25.
Must say for a change that I cannot disagree with anything I'm reading in their reports.
Cable: Prefer to buy intraday dips to 1.5430
The main factor still for me in the cable is the impulsive nature of last week's move from 1.5200 to 1.5500; if a market moves this fast then its showing it's weak side. But as always, getting the timing right is the hardest part about trading the pound and with EUR/GBP still stuck around .8600 and with GBP/AUD looking decidedly s/t bearish, it doesn't quite feel like the time to be piling into large Cable long positions.
Initial support lies at 1.5480 but I prefer to be patient and buy deeper dips towards 1.5430 (see chart).
Gold: Big buyer in thin pre-Tokyo markets
Reuters are reporting that a big buyer emerged in very thin pre-Tokyo Gold futures markets and this is what caused the nasty spike higher. Silver has been an even bigger mover, up over 3% already and now through technical resistance at 21.00. Next resistance in Gold is at $1350.
USD/JPY below 96.00 after GDP data
It's unusual for USD/JPY to move too far on domestic data, so the fact that it fell 30 pips is more of a reflection on market sentiment and positioning than on any fundamental reflection on the Yen.
GDP rose for the third straight quarter, albeit less than expected, and Abenomics does seem to be having an effect.
Gold and Silver march higher in early Asian trade; could be USD/JPY bearish
It looks like renewed attention on the European debt situation and bank stability has helped to encourage some Gold and Silver buying, which in turn has triggered topside stops in thin markets.
Silver is +2.5% and testing resistance levels near 21.00 and Gold is back above $1330.
Risk-off and USD-negative; this should prove to be USD/JPY bearish once Tokyo opens. Presently trading near 96.30 with next technical support at 95.80.
NZD/USD: Decent risk-reward for bears today
This is not a pair I trade, having lost enough for this life-time on the NZD :( , but I do think there is decent risk-reward for the intraday bears.
AUD/NZD is in recovery mode and looks likely to test 1.1500 if not 1.1550, whilst AUD/USD looks toppy near .9210. Selling NZD/USD near .8050 with a tight stop looking for .7950 looks like a reasonable (and cheap) proposition.
AUD/USD: Partial profits booked on long position as .9200/20 resistance must be respected
If you remember back a couple of weeks, it was the break below .92 cents which accelerated the renewed bear push and I remember it well as I just managed to get out of my previous long position at this level. Luckily I bought back in near the lows and it would be very remiss of me not to book some partial profits now that we are re-testing these levels.
I see three potential short-term scenarios from this point:
- We top out near .9200/20 in short-term and get a re-test of the .9035/45 break-up point (my favoured option at this stage).
- Bulls show more strength and we see a solid march to .9300 before losing momentum.
- Either of these resistance levels hold and the bears break back below .8950 (the most unlikely option in my biased opinion).
Another factor to keep in mind is that, as of last Tuesday, AUD shorts were at 3-year record levels and once the short-covering begins, it will have some prolonged strength.
Monday August 12th: Quiet start to early interbank trade
Morning all. AUD bulls are a having a better time of it over the last few sessions and the AUD/USD in particular looks to have put an interim base in place. The AUD also made decent gains against the EUR and the NZD and there is a definite topping formation in EUR/AUD (see chart) which will give more strength to the AUD bull case. I'd expect this positional adjustment on the crosses to continue for a few more sessions.
Most movement today in Asia will again be led by the AUD and the JPY. Japanese GDP and IP data might get the Yen moving but it's more likely to be stop-loss hunting which gets the market excited. The technical downside target for USD/JPY is still 95.00 whilst AUD/JPY will run into very strong resistance near 89.00/30 (see chart).
Good luck this week.