DailyFX: Analyst picks

CURRENCY STRATEGIST
CHRIS VECCHIO

My pick: Short dollar-yen, waiting on Aussie-yen direction
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few weeks

Dollar-yen remains highly volatile and susceptible to further instability thanks to US fiscal deadlock – at a bare minimum, a short-term resolution to lift the debt ceiling might not even reopen the government. I was looking for Aussie-yen to lead with a break above ¥90.65 for further risk aversion. But now signs are pointing towards a breakout higher, as the momentum profile strengthens (short-term moving averages increasing above longer-term moving averages). If US debt fears are quelled this week, Aussie-yen would be my choice for an explosive rally.

STRATEGIST
ILYA SPIVAK

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

I entered long Aussie-dollar at $0.9190 on 11 August, expecting stabilisation in Chinese economic growth expectations to drive improvement in Reserve Bank of Australia policy expectations and spark a corrective rebound. It is developing as expected, with the move through $0.9405 – a horizontal pivot that has acted as a significant support and resistance since November 2009 – opening the door for an advance toward my initial target of $0.9640. I will continue to hold long, with a stop-loss set to trigger on a weekly close below $0.8847.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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

The markets have been in a fog due to the US debt ceiling standoff. Full-scale risk aversion has many options, but it is difficult to spark. Alternatively, few pairs are “cheap”, with a lot of room to run if risk appetite soars. I like a bigger bullish reversal from Australian dollar-dollar above the $0.9500 Fibonacci (April to August). Less risk obliged, I am keeping my sterling-dollar head-and-shoulders break from $1.6000, and like to add should it clear channel support at $1.5900.