My pick: Short Aussie-dollar, sterling-dollar on rallies
Expertise: Fundamental and technical analysis with risk
Average time frame of trades: A few hours to a few days
While the dollar-yen trade remains an obvious buy on a signaling bias, the other strong opportunity to buy the dollar is against sterling. The sterling-dollar should continue its decline towards $1.42 over the next several months, and remains a “sell on rallies” as long as $1.53-50 holds to the upside. The first level lower before a bounce occurs should be $1.4780-800. Gold remains a hedge against dollar weakness – watch the spreads between the two year and 10 year Treasury yields for direction.
My pick: Stay short euro-kroner and sterling-dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I sold euro-kroner at Kr8.7315 expecting the Swedish Riksbank to shift to a neutral policy stance in 2013. I added to the position at Kr8.6409, as a corrective rebound that began in January faltered. Positioning now warns of a bounce, which I will treat as an opportunity to add to the trade. I also sold sterling-dollar $1.5662, as prices broke multi-year trend line support set from early 2009. My latest revised objective has been overcome and I will look for a push below $1.4860 to expose $1.4777.
My pick: Long sterling-dollar above $1.51
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
Stimulus programmes are warping common correlations found through risk trends. I still believe participation will drag until markets adjust to fundamentals. For trades, I am carrying forward my New Zealand dollar-dollar short on the $0.83-wedge break. On the stimulus track, the pound has moved well before the Bank of England, so I like trend reversals on sterling-dollar above $1.51 and sterling-New Zealand dollar above NZ$1.84.