Daily FX: Analyst picks


My pick: Long dollar-yen, short euro-dollar
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few weeks

Last week I was beginning to look at the dollar long against the euro and yen, but neither trade got off the ground. Now, attention turns to the July Federal Open Market Committee minutes tomorrow and the Jackson Hole Economic Policy Symposium on Thursday and Friday. As long as policymakers remain positive on US growth, US yields should remain supported over the week; and if any Fed policymakers hint at tapering QE3 in September, the US dollar will soar. Staying conservative, I’ll be waiting for euro-dollar and dollar-yen to break recent ranges before seeking an entry.


My pick: Long Aussie-dollar
Expertise: Global macro
Average time frame of trades: 1 to 6 months

The Aussie dollar’s corrective recovery looks likely to continue. Stabilisation in Chinese economic newsflow has reflected positively in the Reserve Bank of Australia policy outlook, with priced-in expectations no longer calling for further easing over the coming 12 months. Meanwhile, the latest data from the Commodity Futures Trading Commission shows net speculative short positioning started to unwind last week, having hit a record high. I’ve entered long at $0.9190 and will continue to hold the trade, aiming for an initial target at $0.9640.


My pick: Long Aussie-dollar, short euro-yen and euro-Aussie
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week

Conditions last week were messy, with a US equity collapse suggesting a critical risk turn. But volume was at a 15-year low and the dollar lost ground. This mix stalled my cable short and prevented the euro-yen short from triggering. There is still a high risk of market-wide deleverage – for which I like euro-yen below ¥129.50. If risk trends are stable and the dollar drops, I like an Aussie-dollar $0.9315 wedge break. Meanwhile, a risk-neutral euro-Aussie trendline break below Au$1.4450 is attractive.