Analyst picks for 17 July 2012


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

We remain short on Aussie dollar-dollar from $1.0265, and short on euro-yen from ¥98.55, as we seek fresh monthly lows in these pairs. The euro-yen is of greater interest as it is the cleaner technical setup, with a measured move on a short-term head & shoulders pattern yielding a drop to ¥95.60. We look to buy dips in the US dollar as well, with the Federal Reserve’s third round of quantitative easing (QE3) a long way away.


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

The Australian dollar continues to reflect broad-based trends in risk appetite. I am expecting this week’s semi-annual Congressional testimony by Federal Reserve chairman Ben Bernanke to further scatter hopes for QE3, weighing on growth-linked assets and sending Aussie-dollar lower amid renewed risk aversion. I will look for confirmation on a daily close below $1.0115, with a short position triggered to initially target the parity level.


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

Risk trends lurched lower last week, but to hit the next gear we need a big push. The backdrop supports risk aversion, but it is sentiment that sets the pace. The epicentre of a secondary push would be euro-dollar dropping below the midpoint of its historical range at $1.2135. A more immediate and less sensitive risk exposure is a Aussie dollar-Canadian dolar short from the former trendline at C$1.0400. I continue to carry forward euro-Swiss franc as we await Swiss National Bank capitulation.