Analyst picks for 18 December 2012


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

I closed a long dollar-yen position at ¥84.15, booking a gain of 4.3 per cent. Given the results of the Japanese elections, I then flipped the position, going long on yen. The futures market shows that traders are currently the shortest they’ve been on yen since July 2007, making the short position very crowded. With the euro fundamentally weak and the Aussie at yearly highs, I find that both Aussie-yen and euro-yen look favourable as potential short positions in the near term.


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

I am looking to enter long on Canadian dollar-yen to capture the impact of the Fed’s easing on Canada’s economy and the Bank of Canada’s monetary policy, coupled with the election of Shinzo Abe as Prime Minister of Japan. Abe wants to push the Bank of Japan into open-ended easing, with an inflation target of 2 per cent. I will look for a pullback from resistance at ¥84.95, and position for attractive buying opportunities near downside barriers at ¥82.88, ¥81.26 and ¥80.00.


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

Last week’s long position on Canadian dollar-yen, and short position on Aussie dollar-New Zealand dollar have worked well. My focus is now on potential corrections in overdrawn moves. Going short on Aussie-dollar from $1.05 seems appealing. I also like the idea of going short on the New Zealand dollar-yen, which I believe is one of the most overextended currency pairs. And on the back of the yen’s structural shift, I like a long position on dollar-yen, after the pair has pulled back to ¥82.50.