Analyst picks for 12 February 2013


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

Amid weaker economic data coming out of Europe and the Asia-Pacific regions, both the Aussie and sterling have weakened, and the dollar has gained strength. US treasury yields have subsequently climbed, and the spread between two-year and 10-year treasury yields has widened; this has given support to the dollar. On the other hand, euro-dollar weakness may present opportunities to take long positions on the currency pair, at prices between $1.3280 and $1.3300.


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

I expect the Swedish Riksbank to keep rates on hold in 2013, and the European Central Bank to begin easing as recession lingers. Therefore, I went short on euro-krona in December. As January’s correction faltered and prices turned lower, I added to the position last week at Kr8.6410, with a target price between Kr8.4994 and Kr8.5054. To manage risk, I have set a stop-loss that will be triggered on a daily close above Kr8.6942.


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

Last week’s short position on euro-New Zealand dollar worked well as volatility returned, hitting euro and sterling currency crosses. But this is not yet a systemic move. I am keeping an eye on US equity indices, to see if they fall under a wave of risk aversion. If this fire is lit, I may go short on dollar-yen below ¥92. I would also consider going short on euro-dollar below $1.3250. However, if “risk on” sentiment dominates, going long New Zealand dollar-dollar above $0.85 would be appealing.