Analyst picks




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

Credit crunch concerns out of China have dissipated, and GDP growth of 7.5 per cent in the second quarter proved to be a relief. As short-term fundamentals turn for China, it is important to consider that recent positioning data shows that speculative traders are the most bearish ever on the Australian Dollar; a short covering rally could be coming. I prefer to take advantage against the yen, as the Japanese Diet elections this week should cement Shinzo Abe’s power and pave the way for round two of Abenomics.


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

The Australian dollar has taken a heavy beating, but the case for a corrective upswing seems to be building. Speculative net-short positioning in the futures market is stabilising after hitting a record high, and traders are pricing in a 70 per cent probability of another Reserve Bank of Australia rate cut in August, hinting a correction driven by profit-taking may be on the horizon. I will look to enter short following a bounce, pending technical confirmation of ebbing bullish momentum.


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

The Fed tore through the markets and dollar-based pairs this past week, with its Federal Open Market Committee minutes. That is also likely to be the case this week. If the taper outlook is confirmed, I like a euro-dollar short below $1.3000 and full size below $1.2800. Either a dollar pullback or severe risk aversion is good for reviving the dollar-yen’s reversal below ¥98.25. Finally, euro troubles will likely sway the euro-sterling near its dominant trendline at £0.8750.