Analyst picks for 5 February 2013


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

The euro is appreciating rapidly; the European Central Bank is the only major central bank that is reining in its balance sheet. The most noticeable divergence has been with the Bank of Japan, which is expanding its balance sheet aggressively. Therefore, euro-yen looks set to continue its move higher. And against this background, the US economy is improving too, which is providing support for the dollar against the yen.


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 recession lingers. Therefore, I went short on euro-krona in December. As January’s correction faltered and prices turned lower, I added to the position last week at Kr8.6410, with a target price between Kr8.4994 and Kr8.5040. To manage risk, I have set a stop-loss that will be triggered on a daily close above Kr8.6942.


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

My short positions on Aussie-yen and euro-dollar entries did not trigger last week. But I believe the yen and euro are still at extremes. As such, I am looking for a trend reversal before I take a short position on dollar-yen below ¥90. To take advantage of the overbought euro, I will take a short position on euro-New Zealand dollar from NZ$1.6250. And if the rise in risk appetite continues, a long position on New Zealand dollar-dollar from $0.85 is appealing.