Daily FX: Analyst picks


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

Dollar-yen has chopped sideways and opened the week lower on news that Larry Summers would not become the next Fed chairman. Weakness related to the move is likely to be short-lived, with the Federal Open Market Committee meeting around the corner; early-week price action will determine how long the dollar-yen trade is held. With signs of a double bottom forming, I took long Kiwi-dollar at $0.8165 on Friday, aiming for $0.8640845. If the Fed tapers in a modest, measured move ($10bn, no schedule for further decreases in QE3), Kiwi-yen would be a favourable long.


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

I’ve been looking for the Aussie dollar to rise, 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, net speculative shorts are near a record high, hinting at vulnerability to profit-taking. September’s RBA rate decision served as a catalyst for the move upward as expected, and I will stay long – having entered at $0.9190 on 11 August – aiming for $0.9640. A stop-loss will trigger on a close below $0.8847.


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

This week, the Federal Open Market Committee’s rate decision is on tap, and there has been a significant effort to price in a taper outcome. Is there still room for a risk and dollar adjustment? If risk does topple, I will look to sterling-yen to break below ¥155 and then ¥150 (only after the event risk). If it is a “sell the news” event, I’ll look for Australian dollar-dollar to break above $0.9350. Outside the direct blast radius, I’ll look for sterling-New Zealand dollar to break above NZ$1.9650.