Analyst picks for 29 January 2013

QUANTITATIVE STRATEGIST
DAVID RODRIGUEZ

My pick: Sell Aussie dollar rallies
Expertise: System trading
Average time frame of trades: 2 days to 10 weeks

A strong sell-off in the Aussie dollar and Canadian dollar is a warning that investors are suddenly positioning themselves for weakness in commodity dollars (“commodity bloc” dollars are Aussie dollar, New Zealand dollar and Canadian dollar). As a result, I would look for opportunities to sell into any breakdowns. An Aussie dollar-dollar close below $1.04 would confirm my bearish bias, and I would look to sell the currency pair from its recent highs around $1.05.

STRATEGIST
ILYA SPIVAK

My pick: Short euro-Swedish krona
Expertise: Global macro
Average time frame of trades: 1 week to 6 months

I expect the Swedish Riksbank to keep rates on hold in 2013, and the European Central Bank to begin easing as a recession lingers. Therefore, I went short on euro-krona at Kr8.7315 in December. Although prices have recovered in recent weeks, it appears to be a corrective move, which has stalled just below Kr8.7182. I will continue to hold the short position, and may add to it at breaks below Kr8.6680, which will confirm a resumption of the bearish trend.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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

We have been seeing extreme volatility recently, while volume hits multi-year lows, and risk assets rise to new highs. This represents a strong contrarian signal to me, but I need confirmation before I enter into any trades. If we see a clear shift in sentiment, I will consider shorting both Aussie dollar-yen below ¥92.50, and euro-dollar below $1.34. For a less extreme trade, the correction in sterling-New Zealand dollar looks exhausted, and I may go long from NZ$1.8850.