My pick: Long dollar-yen
Expertise: System trading
Average time frame of trades: 2 to 10 weeks
The dollar fell sharply against the Japanese yen and broader counterparts on the Federal Open Market Committee’s (FOMC) “no taper” call. But the fact that dollar-yen quickly recovered is telling. The pair remains in a large consolidative triangle formation, and the post-FOMC low now acts as important support. I will remain long on dollar-yen and would only close the position on a daily close below the ¥97.75 mark, as I think the Japanese yen may fall faster than the US currency through the foreseeable future.
My pick: Long Aussie-dollar
Expertise: Global macro
Average time frame of trades: 1 to 6 months
The Aussie dollar has launched a recovery as expected. Stabilisation in Chinese news-flow helped improve the Reserve Bank of Australia policy outlook, while the Fed’s decision not begin tapering QE at September’s meeting lifted risk appetite. This helped spark profit-taking on record-high net speculative short Aussie dollar positions, driving the currency higher. I expect this process to continue and will maintain the long trade, 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 euro-Kiwi, short Swiss franc-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
The US Federal Reserve’s decision to not taper its $85bn monthly asset purchase programme last week curbed a risk aversion build up, but it didn’t encourage a very robust risk rally. Should Australian dollar-dollar overtake $0.9500 on a risk run, I will look to re-enter. But if risk aversion sours, I prefer Swiss franc-yen breaking back below ¥108.75 and ¥107.50, as it has no yield to stand on. A poor risk conductor, I also like playing the euro-Swiss franc wedge bounce at SFr1.2305.