Analyst picks for 13 August 2012


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

Shorts were added to my existing Aussie dollar-dollar position, raising the average to $1.0585. The commodity currencies (the Australian, Canadian and New Zealand dollars) appear to be carving out tops, as per recent patterns on the four-hour charts. Meanwhile, a weak Japanese second quarter GDP figure raises the likelihood of further aggressive action by the Bank of Japan, making the yen vulnerable. I’m long on dollar-yen from ¥78.22, and will look to add on a break above ¥80.65.


My pick: Short Aussie dollar-Canadian dollar (pending)
Expertise: Global macro
Average time frame of trades: 1 week to 6 months

I initially entered short on Aussie dollar-Canadian dollar at $1.0619 in late February, as a way to gain exposure to relative Chinese and US economic growth expectations. The US economy is expected to accelerate this year, as China slows. Profits on the position were booked on 6 June at $1.0197. I believe the fundamental theme remains sound and will look to re-enter short on a daily close below $1.0439, signalling that the correction beginning in late May has run dry.


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

Volume completely disappeared from the markets last week and, with it, the chance of large swings. If these low speculative liquidity conditions persist, I will keep looking to sterling-dollar’s well-worn range between $1.5725 and $1.5525, and a smaller range between $1.5700 and $1.5580. Sterling-yen and euro-dollar are other range possibles. Yet, if liquidity returns, I’ll be watching for an Aussie dollar-dollar reversal, and will stick with my euro-Swiss franc long in the meantime.