Analyst picks for 1 October 2012


My pick: Long Aussie dollar-dollar
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days

A falling wedge (reversal pattern) may be in the works off mid-September highs. But a weekly close above $1.0350 this week must happen so that this can be fully initiated (it appears there was a false breakout on Thursday). If initiated, a retest of $1.0600 is expected. With the Reserve Bank of Australia and European Central Bank set to meet, and with Spain close to a bailout, I believe risk-appetite will be supported, therefore helping the Aussie dollar-dollar.


My pick: Stay short Aussie dollar-Canadian dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months

I sold Aussie dollar-Canadian dollar at Ca$1.0441 on 14 August to gain exposure to disparities in US and Chinese growth expectations – with the former expected to accelerate while the latter slows this year. I added to the position at Ca$1.0370 on 24 August, as the down move resumed after a rebound. Prices stalled below resistance at Ca$1.0258 after another shallow bounce. I will look for confirmation of bearish resumption on a daily close below Ca$1.0183 to increase exposure further.


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

The end of the third quarter and Spain’s budget offered fireworks last week, but not a clear trend. Heading into the new quarter, follow-through may be easier to ensure. Given the shudder in risk trends this past week, I like the potential in a deeper euro-dollar decline below $1.2825. Though correlated, I also like sterling-dollar reversing a seven week rally. A dollar-yen long I’m carrying over from ¥77.60 isn’t risk dependent and targets ¥78.75 first.