NZD: Still some selling interest around
Liquidity in the NZD is pretty poor at the best of times and once the market gets sniff of some corporate-type interest, it tends to head the other way in a hurry. Real money players had the chance to sell above 84.00 earlier this week but they held off, leaving sell orders above the market, which was a bit silly as this is probably business which needs to be done before the end-of-the-year. Now the market has started running away from them and what you don't want to be doing is hitting bids in thin illiquid trade, especially when the market has turned off medium term highs.
Offers now reported above 84.00.
EUR/JPY: Should meet resistance now near 111.50
EUR/JPY has held firm near 111.00 after the Greek FinMin's reported comments that Greece could still leave the EZ triggered stops below 111.50. This level should now form the first line of resistance.
EUR/JPY getting smashed on pre-BOJ profit taking
To say I'm an unhappy chappy would be an understatement this morning, with the long-awaited purge of long positions seemingly getting underway (after I stopped myself out). Trailing stops were triggered below 111.50 in ultra-thin markets, sending this pair 80 pips lower in double-quick time. The comments from the Greek FinMin may have set the wheels in motion but its the trailing stops which are having the real effect.
Day ahead in the FX market, Thursday December 20th
- Main event later today will be the BOJ rate announcement and statement:
- Professional speculative market is very short of Yen so may see short-covering if BOJ disappoints:
- EUR staying strong across the board with EUR/JPY consolidating near 112.00 whilst EUR/AUD and EUR/GBP make decent gains:
- EUR/USD should find willing buyers on any pull-backs to previous highs at 1.3170:
- Cable stalled again near 1.6300 and this level is attracting plenty of selling interest:
- AUD/USD looks to have more downside risk after the break back below 1.0510:
- USD/JPY continues to trade in a bullish fashion, currently consolidating near Monday's highs at 84.40:
- RBNZ business confidence and China's leading indicator are the highlights on the Asian economic calendar.
AUD/USD: More stop-losses on downside and lack of Sovereign buyers
AUD/USD broke below previous-highs-come-support at 1.0510 and quickly triggered decent sized stops below 1.0490. There are more stops awaiting at regular intervals starting below 1.0450. They may well come into view quite quickly as, with holidays looming, reserve-manager and other Sovereign bids are not expected to appear.
EUR/JPY: Retail positioning not nearly as extreme as in professional market
Just reading through the retail positioning information from retail brokers like Oanda and Axi Trader and it seems that the retail market is quite evenly positioned in this pair whereas the professional market is reporting extremely long positions amongst Hedge funds and CTAs.
It looks like the retail market has quite a few stops positioned above 112.00 (me included :( ) and they may well get targeted?
I'm heading out to dinner so if you could just do me a favour and whack EUR/JPY about 300 pips lower, then my dessert will taste a lot better :) I'll log back in a bit later if anything happens. Catch you later++
FXWW Survey: Trade of the year 2013
I've started collating all data received so please feel free to send me your prognostications and we should have a survey finished by mid-January.
If I receive any well researched and articulated pieces, I will post them directly into the members section (with thanks to Milan who is the first :) ). You can click through and have a read and if you don't have a password, just let me know and I'll send you one.
Big levels to watch for during the European session ahead
- AUD/USD: 1.0510 was the previous high which has held firm for two tests over last few days; watch for large stops below 1.0490:
- USD/JPY: 84.40 was the interbank high on Monday morning and has again proved to be solid resistance so far today:
- Cable: 1.6300 has been a high on the daily chart on two separate occasions and should attract both selling interest and stop-loss orders:
FX market is usually very quiet 'between the years'
Most corporate players will have completed all their FX requirements for the year, as will most of the big asset players as well. Sovereigns were quite busy on Monday doing their year-end square-up and they did the remainder yesterday. In short, most big 'real' players will shut up shop for 2 weeks, leaving the market at the mercy of the speculators (which is why I think the big open positions like Yen shorts might be susceptible to some sharp squeezing if no other sellers emerge).
The FX market will remain open but you can expect wider spreads, less liquidity and more slippage. Factor this into your trading equations.
Cable: Quite a few medium-term bears about
There were rumours in the market that China has selling interest between 1.6250/1.6300 and also that option players will be selling in size near 1.6300, and perhaps this is what is affecting medium-term opinion. I've been running a bear strategy for a few months now, playing a 1.63/1.59 range, and it's worked reasonably well but I haven't been able to properly pull the trigger this time; perhaps it's just too close to Christmas. I think if we get a clean break above 1.6300/25 then the bulls will re-take control and the danger turns to the topside. Until that happens, risk-reward is with the bears, selling below 1.6300 for a return to levels below 1.6000.
EUR/AUD technicals: Targeting trend-line resistance near 1.2725
The break above 1.2540 has given short-term bulls some added impetus but it seems unlikely that this current move will have enough momentum to cleanly break above trend-line resistance near 1.2725. Support should be very solid now near 1.2460/15 and buying dips in the short-term is the preferred trade here.
AUD/USD: Stops below 1.0490 coming into view
EUR/AUD buying seems to be the main factor at play and AUD/USD is now trading at recent hourly lows near 1.0510 (the previous high) and is targeting hefty stops below 1.0490. Unless a big buyer emerges very soon, I think we can start writing these tickets up!
EUR/JPY: Adding to shorts though it's looking riskier now
My small sell order at 111.50 was triggered and I'm still expecting (hoping) a top to form somewhere very close to current levels. Risk is on in expectation of a fiscal cliff deal getting done very soon and we contrarians need to be careful else we might get blown away. I'll stick with the strategy for another while and see what happens around 112.00/25,
FXWW survey: Trade of the year 2013
I'll be running a survey amongst hedge funds, interbank prop traders (the 3 that are left!), and professional traders to find out their forecasts for the Trade of the Year in 2013.
If you would be so kind and give this some serious thought in coming days and use this thread to post your thoughts. I will compile all the data in mid-January and it should make for some very interesting reading.
Thank You.
Cable unmoved after CPI comes in on expectations
Seems a bit silly to be commenting that something hasn't moved but I'm really just looking for a good excuse to say goodnight and see you later tomorrow morning, as I'll be starting a bit late.
EUR/USD: Still stuck in tight consolidation range
EUR/USD is stuck between 1.3140/80 at present, and has been for the last 24 hours. Central banks have been active on both sides of this pair and in cable, probably doing their end-of-year square-up, and this has helped to keep the short-term ranges in place.
A break above 1.3180 should be good for at least a 50 pip rally and similarly a clean break below 1.3140 will also trigger trailing stops.
Any trader who put themselves in range trading mode on January 1st 2012 will probably be retired already!
EUR/JPY: Hedge funds selling
Two hedge funds, one out of Singapore and the other out of Zurich, seen selling EUR/JPY in recent trade. The pair is about 15 pips lower in the last hour despite fairly favourable conditions after reported fiscal cliff progress.