Analyst picks

DailyFX

CURRENCY STRATEGIST
CHRIS VECCHIO

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

I maintain my bullish call on Aussie dollar-yen, despite no landslide victory in the Japanese election. But now that fiscal authorities don’t have carte blanche, the impetus to stimulate the Japanese economy falls back to the Bank of Japan. So in the absence of round two of “Abenomics” coming fully to fruition, further dovish saber-rattling from the Bank shouldn’t be discounted. On the other hand, relief over Chinese growth figures and a pause in the Reserve Bank of Australia rate cut cycle could prove to be bullish for higher yielding currencies like the Aussie dollar.

STRATEGIST
ILYA SPIVAK

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

The reasoning for a corrective Aussie dollar-dollar recovery remains unchanged from last week: the latest data from the US Commodity Futures Trading Commission shows net speculative shorts stabilising near a record high, while priced-in Reserve Bank of Australia expectations show a 70 per cent chance of another 0.25 per cent rate cut in August. This means the Aussie may be more sensitive to counter-trend newsflow than otherwise. I will look to the bounce as an opportunity to get short in line with the larger downward trajectory.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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

Volatility completely drained this past week, leaving few trade opportunities other than short-term swings. To revive medium-term swings, a spark from one of two themes would be effective. Should risk aversion kick in, with US equities retreating from record highs, a euro-dollar break below $1.3000 looks good. Alternatively, should fears of a Federal Reserve taper abate further, the dollar can drop offering a pound-dollar break above long-term Fibonacci at $1.5277 or a Aussie dollar-dollar trendline break above $0.9300.