Daily FX: Analyst picks

CURRENCY STRATEGIST
CHRIS VECCHIO

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

I remain long on Kiwi-dollar from $0.8165, though I will cut the trade indiscriminately should US and Italian political issues boil over. The pair suffered mightily in mid-2011, when US and Eurozone issues swelled; and there is little reason to think that high yield FX won’t suffer amid a steep drop in US equities once more. Similarly, dollar-yen breaking the post-Fed lows at ¥97.75/¥97.90 would suggest a deeper retracement towards ¥95.85, and more importantly signal a deeper risk-off move across all asset classes, not just FX.

STRATEGIST
ILYA SPIVAK

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

The Australian dollar launched a recovery as expected, as improving Chinese news-flow helped boost Reserve Bank of Australia (RBA) policy expectations. The Fed’s decision not to taper QE, meanwhile, lifted risk appetite. This helped spark profit-taking on record-high net speculative short Australian dollar positions, driving the currency higher. I expect this process to continue through this week’s RBA meeting and will maintain a long from $0.9190 entered on 11 August, aiming for $0.9640. A stop-loss will trigger on a close below $0.8847.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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

This past week was an ambling period of congestion in the aftermath of the Federal Open Market Commitee’s decision not to taper. Moving into the future, the focus will shift back to more pressing items like risk trends. Volatility is extremely low, and a pick-up would translate to “risk aversion”. On that front, I like sterling-dollar breaking trend below $1.6000 and a short-term New Zealand dollar-yen break below ¥81. For the alternative, a euro-dollar break above $1.3575 fits the strongest dollar counterpart.