Analyst picks for 18 September 2012

CURRENCY STRATEGIST
CHRIS VECCHIO

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

The Aussie dollar-dollar failed to break out on Friday, with an inverse hammer pattern forming on the daily chart at the descending trend line. Given the Fed’s dollar debasement programme, we have switched our bias to bullish, barring a collapse in Chinese growth. Another failure at Au$1.0600 would mark a double top pattern and signal a push for a test of Au$1.0250/70, an ascending trend line from the 1 June and 6 September lows.

QUANTITATIVE STRATEGIST
DAVID RODRIQUEZ

My pick: Long dollar-yen
Expertise: System trading
Average time frame of trades: 2 days to 10 weeks

I think that the US dollar may decline further across the board. However, one place where I see limited downside is in dollar-yen, which has traded almost tick-for-tick with US treasury yields. But the 2-year note, at a mere 0.24 per cent, I can not see further downside. With that in mind, I will go long at the ¥76 low with the initial target of ¥80. A minimum one-to-one risk reward ratio implies that entries are valid at ¥78 or below.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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

The long euro-Canadian dollar and euro-Swissie positions from last week have worked well, but I’m dubious of the euro’s strength. I am also sceptical of risk post-QE3 and I am waiting to see if Aussie dollar-dollar reverses in its wedge below Au$1.05. Despite the Fed’s actions, I still like the long-term implications for dollar-yen and have a long from ¥78.50 with another trade at the ¥79.50 break. Non-risk related, I’ve range-traded sterling- Canadian dollar and I am now looking for a Ca$1.5780 break.