DailyFX: Analyst picks

CURRENCY STRATEGIST
CHRIS VECCHIO

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

My dollar-yen short remains viable, despite cooling US fiscal tensions, as the Fed is unlikely to taper in October. US yields should remain under pressure (if not capped). Accordingly, I was able to enter into a long Aussie-yen position at ¥93.70 amid a turn in momentum; I had previously mentioned that a failed break to the downside set the Aussie-yen up for an explosive rally if US fiscal issues were resolved. The pair has now gained 4.16 per cent from its October low, after last week’s 2.06 per cent gain.

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 the Reserve Bank of Australia policy outlook, sparking a rebound. The recovery materialised, with the trade meeting its initial objective with last week’s close above $0.9640. The Aussie may extend gains, as a delay in the Fed’s “tapering” of QE after October’s budget fiasco weighs on the dollar and boosts risk appetite. I will remain long, moving my stop-loss to break-even. A close above $0.9714 exposes $0.9919 next.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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

An uneven risk theme and strong dollar sell-off developed last week, following the US debt standoff. Should there be a risk aversion move (and no hawkish comments like those from the Bank of England’s Spencer Dale), a sterling-dollar drop below $1.6125 would be well set. A bigger move would be below $1.5900. On a similar path, a euro-yen carry unwind below ¥133.25 looks good. For a true risk run, look for euro-Australian dollar to drop wedge support at Au$1.4100.