Analyst picks for 11 December 2012


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

With the Fed expected to announce a extension to QE3 or a new QE4 (similar to QE2), the US dollar could be under pressure soon. I’ve moved up my stop on the long dollar-yen position to ¥82.05 (daily close) to lock in +140 pips. Given the euro’s deterioration and December seasonal trends (S&P 500 averages +1.72 per cent), I’m looking to sell rallies in high beta crosses (euro-Aussie dollar, euro-Canadian dollar, euro-Kiwi dollar) this week.


My pick: Short euro-dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months

Hints of European Central Bank rate cuts (which emerged in Mario Draghi’s press conference last week) were reinforced, as the Bundesbank slashed Germany’s 2013 growth outlook to a meagre 0.4 pe rcent from the 1.6 per cent estimated previously. This put the euro under pressure. I will look for a near-term pull-up to $1.2978, as Greece gets its bailout cash tranche this week and enter short, targeting $1.2830 initially. Once the trade is triggered, a stop-loss will be set on a daily close above $1.3126.


My pick: Long Canadian dollar-yen, dollar-yen, short Aussie-Kiwi
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week

The market has offered volatility this past week, but no consistency. This curb on trends will remain, given significant events in Greece and from the Fed. As such, a short on Australian dollar-Kiwi dollar from NZ$1.2650 will help avoid risk trends. If there is a fresh US stimulus, it could temporarily drive dollar-yen lower, and that is where I like an ¥80.50 entry. Closer to risk, I like the long-term Canadian dollar-yen potential from a ¥82.25 pullback.