Analyst picks for 2 July 2012

CURRENCY STRATEGIST
CHRIS VECCHIO

My pick: Short Aussie dollar-dollar and Aussie dollar-yen

Expertise: Fundamental and technical analysis

Average time frame of trades: 1 day to 1 week

Technical divergences are building and it appears we have completed five waves up in the Aussie dollar-yen and Aussie dollar-dollar, the FX market’s barometer of risk-appetite. As such, we expect declines which should be provoked by market participants not buying the Eurozone summit results. With QE3 off the table until the end of the year, the US dollar should start to perk up and attract new buyers with ease once European concerns return in the coming days and weeks.

STRATEGIST
ILYA SPIVAK

My pick: Long dollar-yen

Expertise: Global macro

Average time frame of trades: 1 week to 6 months

I bought dollar-yen at ¥78.96 expecting an advance after the Fed opted not to launch QE3 in June, helping to support US yields relative to their Japanese counterparts. The pair has already hit its initial target at ¥79.69 and I am now aiming for ¥80.38 as the next significant level. Prices are showing a bullish engulfing candlestick pattern above the bottom of a rising channel set from the 1 June low, hinting at an upswing ahead.

CHIEF STRATEGIST
JOHN KICKLIGHTER

My pick: Short Aussie-dollar and long euro-Swiss franc

Expertise: Fundamental and technical analysis

Average time frame of trades: 1 day to 1 week

Surprise policy commitments from the EU this past week generated a tremendous swell in volatility for euro and risk-based assets. Is this a trend shift? I took profit on Canadian dollar-Swiss franc last week, but reentered at SFr0.9270, as it’s generally risk neutral. My euro-Swissie will be a slow burn in a questionable euro recovery. For a risk view, I am looking for a distant Aussie dollar-dollar parity break. If it gets down there, it’s likely a trend.