DailyFX: Analyst picks


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

I’ve started to tentatively look at long dollar-yen, now that the price has perked above the descending trendline from 22 May and 8 July highs. A weekly close above ¥98.80 would confirm a breakout from the symmetrical triangle that has formed over the past four months. With US non-farm payrolls on Friday, it is best to wait for fundamental confirmation that a September taper is still likely. If US non-farm payrolls come in under 162,000 (prior print), all bets are off; and my bias would flip to short dollar-yen immediately.


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

I’ve been looking for an Australian dollar recovery, as stabilisation in Chinese news-flow improves the Reserve Bank of Australia (RBA) policy outlook, with traders no longer pricing in further easing in the coming 12 months. Meanwhile the latest data shows net speculative shorts near a record high, hinting at vulnerability to profit-taking. This week’s RBA rate decision may be the trigger needed to catalyse the move higher. I entered long at $0.9190 two weeks ago and continue to hold the trade, aiming for $0.9640. A stop loss will trigger on a close below $0.8847.


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

There was considerable volatility this past week, but not much trend. That may change in the coming week, with a packed docket and the end of summer. Continuing with last week’s euro-yen short (from ¥131.70), I will now look for a short on a bigger break below ¥129.25. Risk aversion and heavy stop orders for Australian dollar-dollar below $0.89 make for a violent short opportunity. Finally, a euro-New Zealand dollar range break below NZ$1.70 is a mildly positive risk alternative.