USD/JPY: Looks to have plenty of topside
The market doesn't really want to care about the details, it likes being long USD and short Yen and now has some justification.
The high so far has been 93.80 and next technical resistance is at 94.35.
USD/JPY: initial reaction higher, cutting my shorts
I've bailed out of the remainder of my USD/JPY short position at 93.40 after the market's initial reaction to the BOJ. Act first, think later.
Looks like some hair-triggers in Yen market
USD/JPY went from 92.95 to 93.05 to 92.80 and back to 92.95 in a matter of minutes and it looks like many traders are leaning on their hair triggers!
The market is still slightly short of Yen but is afraid that the BOJ might introduce aggressive actions and they miss out on the next big yen sell-off, whilst also being afraid that the BOJ might disappoint and leave their USD/JPY longs way out of the money.
I guess you just can't win! Pick your poison and stick with it I say, although in reduced doses for now.
JPY: Time to reduce exposure ahead of BOJ
I've closed 1/2 my remaining EUR/JPY short position and have left my trailing stop in place for the balance above 120.40.
I've also taken off 60% of my USD/JPY shorts and will leave a trailing stop on the balance above 93.80.
I still think the risk is to the downside but hopefully we will get plenty of trading opportunities this afternoon.
BoE: Vote on further QE could be quite close
Tonights MPC meeting is expected to keep QE on hold at GBP375 billion but after a 6-3 vote last time, it might be even closer this time around.
The banking crisis in Cyprus might just be enough to persuade the committee to inject a bit more into the economy? I'm sticking with my bearish GBP short-term stance and will sell any cable rallies back towards 1.5250/80.
AUD/USD: Plenty of offers ahead of 1.0500
A local bank is reporting very heavy offers in the AUD/USD ahead of 1.0500, including option related sellers; high so far 1.0490. This mornings strong retail sales data (+1.3% vs +0.3% expected) has given the AUD some bullish impetus.
USD/JPY testing Tuesday's lows
No reports yet that the big bids from Tuesday towards 92.50 are still in play; perhaps they've cancelled ahead of the BOJ.
I'd still expect range trading 92.50/93.20 for the next few hours but I'm maintaining my bearish bias.
Big day ahead for EUR/JPY
The BOJ today, the ECB tonight, and the NFP tomorrow; now that's what I call acronym risk!
EUR/JPY has been steady below 120.00 for the last few sessions but that will surely change spectacularly over the next two days. Support levels start at recent 118.70 lows with a major technical target below there at 117.25 (38.2% retracement level).
I'm still short and have my trailing stop in same place above 120.40.
I have a feeling that we may see plenty of whipsaw action, giving us plenty of trading opportunities.
AUD: Modest bearish bias today
- US economic data overnight will weigh on risk sentiment:
- AUD/USD has possibility of double-top at 1.0500:
- AUD/JPY is back below 97.50 and looking heavy ahead of BOJ.
USD/JPY: Expect plenty of volatility today
Order boards will be heavily reduced and with the BOJ statement only a few hours away, we can expect plenty of volatility this afternoon.
I've added to my USD/JPY short from yesterday; if we break back above yesterday's 93.70 high then I'll exit the position but I'm hoping for some more last-minute Yen buying this morning which might see a 92.50 test.
I'm reading conflicting bank reports on what the BOJ will do; some saying that Kuroda will be aggressive straight away whilst others this that it may take some months for him to get into his stride. Whatever happens it should be interesting.
Keep positions manageable today and if unsure, take the day off and come back later.
Early Europe keeping it tight; no directional moves yet
Unless we get some unexpected breaking news, flows and orders are likely to dominate proceedings in Europe and I would expect the crosses to continue to dominate. There will be positional adjustment ahead of the BOJ tomorrow and corporate flows will also be heavy for the beginning of the quarter. I'm sticking with my long-JPY positions and elsewhere perhaps buying EUR or one of AUD,CAD or NZD against the GBP also looks like a trendy trade.
Gold and Silver still heavy as longs liquidate
The big downside level to watch in the Gold market is 1515, with plenty of Central Bank buyers ahead of there and heavy hedge fund stops just below.
Risk to downside for Yen pairs tomorrow post-BOJ
30 pip ranges in most of the major pairings is the sum total of Asia's efforts today and my hope that volatility would increase pre-BOJ was totally misplaced. It looks like the market is comfortable with its positioning level at the moment.
The market has waited expectantly for this first Kuroda BOJ policy statement for months now and the Yen has depreciated by up to 20% against certain currencies during this period. I'm not sure that the Yen has a whole lot more short-term downside and the risk in my eyes is that the BOJ cannot fulfil the market's excessive expectations. I may well be stopped out of my short EUR/JPY position before the event takes place but risk-reward would suggest to me that the main initial event risk for pairs like USD/JPY will be to the downside. Longer term bulls may take advantage of big dips but if the BOJ really disappoints, we could see levels near 88.50 in a hurry.
EUR/USD: Heavy bids reported 1.2760/70
The flow guy informs me that there is plenty of EUR/USD buying interest between 1.2760/70 from Eastern Europe and the Middle East, who I can only presume are booking profits on existing shorts.
Real money funds are still being reported as the primary sellers, with asset managers getting out of their EZ investments.
USD/JPY holding above 93.50 for now
The previous spike lows at 93.50 have been breached and the next technical resistance is at a prior hourly pivot near 93.90. Bulls will be hoping that yesterday's 92.60 lows mark the end of the pre-BOJ dip whilst bears will be hoping that the short-term bear trend is merely encountering another retracement rally.
Personally I think we may see deeper dips towards 90.00 before the up-trend re-asserts itself.
EUR/JPY is back near 120.00 and I have my trailing stop now above 120.40, which I feel is the correct level.
AUD/USD: Plenty of stops above 1.0510
The AUD/USD has again pulled back from 1.0500 but I wouldn't be getting too bearish just yet. There are plenty of stops reported above 1.0510 and the NZD/USD remains very well bid, which is certain to give the AUD/USD at least a little bullish impetus. I think we may get another test higher over the next few sessions but I'll happily sell any rally towards 1.0600.
AUD/JPY is consolidating near its 97.50 breakdown level ahead of the BOJ meeting, and the technical outlook is short-term bearish in my opinion. This favours rally-selling towards 98.50 for a move to 95.50.