Analyst picks for 3 September 2012

CURRENCY STRATEGIST
CHRIS VECCHIO

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

We remain short on the burdened Australian dollar, which is set to see a wave of disappointing data over the coming days. The Reserve Bank of Australia (RBA) meets today, second quarter GDP figures are released on Wednesday, and labour market readings are released on Thursday. We feel that a rate cut is unlikely, but the RBA is stubborn towards China. This will only exacerbate issues faced by the Australian economy in the coming weeks.

STRATEGIST
ILYA SPIVAK

My pick: Stay short Aussie-Canadian dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months

I sold Aussie-Canadian dollar at Ca$1.0441 to gain exposure to expectations of slower Chinese growth against accelerated US economic expansion. I added to the position at Ca$1.0370 as the downwards move resumed. Prices have since met our first and second objectives (Ca$1.0281 and Ca$1.0184, respectively) and now approach the third target at Ca$1.0086. Our next target is Ca$0.9989. A stop-loss will be triggered on a close above Ca$1.0283.

QUANTITATIVE STRATEGIST
DAVID RODRIGUEZ

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

I will continue scaling in and out of Aussie-dollar short positions as long as price remains below its multi-week highs of $1.0550. I’ve been a long-term Aussie-dollar bear, and recent CFTC data showed that futures speculators recently hit their most net-long positions since the currency set a record high in 2011. Our proprietary Speculative Sentiment Index shows that retail traders are on the opposite side of the trade, and there are strong opportunities to short the currency.