EUR/CHF: Longs re-instated at 61.8% retracement
I've had a very good run with this pair in recent times and I'm hoping it continues. My patience has been rewarded with a good technical re-entry level at 1.2275 (see chart in members) and now its a matter of waiting to see how the market develops. I'm guessing that there will be plenty of stop-loss sell orders somewhere tight below 1.2250, so I may reduce if EUR/JPY starts collapsing and drags EUR/CHF with it.
AUD: Big day on the data front highlighted by RBA decision
AUD/USD is still stuck in a sideways range trade between 1.0350 and 1.0550 (technicals updated in members) but we should be guaranteed some volatility today either from AUD/JPY flows or from economic data releases.
The RBA rate decision at 03:30 GMT is the main event, although few in the market are expecting any fireworks. Last I saw, the market was pricing in around a 20% chance of a rate cut and most of the interest today will revolve around the wording in the statement.
HSBC China services PMI is at 01:45 GMT and that might also cause some volatility if its markedly different from last time's reading of 51.7. Prior to that at 00:30 GMT we have Australian trade data and the house price index. All told, should be a busy day.
JPY positioning: Most of big Yen short positions are in Asia
That is according to the big Prime Brokers which means the yen crosses are susceptible to sharp moves lower if/when profit taking emerges in force during Asian trade.
I've updated the short-term EUR/JPY technicals in the members section and an initial 123/127 consolidation range looks likely, with plenty of volatility of course. Definitely prefer a sell-rally bias intraday.
EUR: Let the consolidation begin
Harry Hindsight will be screaming that it was obviously an interim top in the EUR but we're better off listening to the interbank dealer who described Friday's price-action in the EUR as being exhaustive; he's been proven 100% correct. EUR/JPY and EUR/GBP have reversed the sharp gains from Friday and I suspect that the EUR will now slip into an extended period of consolidation.
I do not believe that the EUR bull phase is over, merely that we will now see a long-overdue consolidation and a healthy retracement. Use Friday's highs as an interim top, pick some technical pull-back levels, and put your trading hats on!
USD/JPY: Forget Plan B, revert to Plan A
Too well bid, another big figure gets blown away, and maybe its the dip in EUR/JPY we should have been buying rather than selling the rally in USD/JPY.
Have a good day and I'll catch you tomorrow hopefully.
EUR/USD showing bit of weakness, might USD/JPY follow suit?
EUR/JPY has been the dominant force in recent months and with EUR/USD now showing some intraday weakness, the big question is whether USD/JPY will follow suit and give back some gains?
Recent highs at 92.95 are looming so if you're long (or a die-hard contrarian) it might be worth off-loading some for a 100 pip drop. (Tight stops as always in such a powerful trend of course).
Spanish jobs data might attract some attention
The "EUR is dead" brigade have gone quiet now and asset managers are plunging back into high-yielding peripheral EZ debt. Last year you'd have been considered mad to buy the stuff and now you're considered mad if you don't! Recent economic news out of the EZ has been less than dire, which is a definite improvement, and the market is now looking for reasons to buy the EUR.
That's why economic releases such as Spanish jobs data is always a chance to move the market. We are expecting a big improvement on last time, with the economy expected to have added 150,000 new jobs. Let's hope so, they've done it hard enough for long enough.
AUD/USD stop-loss orders above 1.0450
There has been talk all day of sizeable stop-loss buy orders in the AUD/USD, but no definite levels had been forthcoming. This could be one of the old market tricks by big hedge funds, spread chatter about big stops above the market so that they can sell at higher levels? I'm not really sure, I just find it hard to understand why anyone would have large trailing stops above 1.0450, which is where they are now touted.
Best leave the AUD/USD alone in my view, there are more interesting trades out there.
Cable: Still some buying interest 1.5660/70
Exactly the same as when we were down at these levels 2 weeks ago, there are solid bids reported below 1.5670 and stops starting below 1.5650. Definitely sounds like an option play?
Well-known Kiwi FX dealer says NZD well overvalued against the USD
This former FX dealer is of course now the Prime Minister of New Zealand, John Key. He still thinks AUD/NZD is within its normal market trading band.
I agree with you John, but unfortunately I think the market pays as much attention to me as it does to you; and that ain't much.
GBP/CHF: Worth a contrarian buy near 1.4200?
I certainly think this could be a potential winner but I am waiting for the short-term charts to show some sign of bottoming before I test the waters. The GBP is out of favour across the board but I think the market has gotten way ahead of itself in terms of GBP selling. Additionally, I think the CHF has still a long way to fall to start catching up with the JPY at least to some degree.
There is a significant daily low at 1.4180 and the Friday night low was at 1.4200. The risk-reward if we can pick the bottom on this pair could be very interesting indeed?
Mild profit taking in EUR crosses
Both EUR/JPY and EUR/GBP are a little lower today on modest profit taking. One interbank dealer reported that Friday nights price action in EUR/USD was exhaustive in nature but we will have to wait and see on that.
More eyes on Super Bowl than on FX market
I think we can expect a few quiet hours in the financial markets with plenty of dealing rooms more interested in the Super Bowl (and the ads) than on the markets.
Cable gossip; bids and stops
The last time we were down at this level, there were reliable reports of solid bids at 1.5660/70. I don't know if they are still there or not but there are some early stops being reported below 1.5650 which are worth noting.
AUD again trying to move higher as NZD surges again
We've had a lot of chatter in the last few weeks about China buying NZD and there definitely looks to be some fire behind the smoke with the Kiwi making some irrational moves. I can think of no reason why the market should suddenly fall in love with the NZD at these lofty levels, but that's what's happening. Thankfully I gave up trading it many years ago, it cost me more than enough money. After the EUR, the NZD seems to be in-demand currency #2.
NZD/USD is trading close to .8500 this morning and AUD/NZD looks like its triggered more stops below 1.2300.
The AUD is getting a bit of a tailwind from it's smaller neighbour and has traded back up above 1.0430 but the focus is definitely on the Kiwi.
Quiet start to interbank trading week
The AUD did try to move a bit higher in very early trade, with talk of trailing stops above the market. AUD/USD has traded a 1.0401/25 range thus far in early interbank trade and is now back at its opening levels.
Looks like there aren't too many big stop-loss orders close to the market with all of the other major pairings trading near their NY closing levels.
The EUR/JPY trend is the big talking point; the EUR is headed firmly higher and the JPY headed firmly lower, which is the classic cross-trade. I expect the Yen weakness to start easing at any time but the EUR strength may still have some legs.
Levels to watch on Monday morning
- AUD/NZD: Closed last week right on long-term technical support at 1.2310 (same old chatter still of China buying NZD).
- EUR/JPY: Barriers at 127.00, not sure of size.
- Cable: Recent support levels at 1.5675.
- EUR/USD: Technical support now at 1.3585.