Analyst picks

DailyFX

CURRENCY STRATEGIST
CHRIS VECCHIO

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.

STRATEGIST
ILYA SPIVAK

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.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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.