Daily FX: Analyst picks

CURRENCY STRATEGIST
CHRIS VECCHIO

My pick: Closed (half) short Aussie dollar-dollar
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few weeks

The swaps market suggests a 91 per cent chance of a 0.25 per cent rate cut; so focus is on the policy statement. Reserve Bank of Australia (RBA) governor Glenn Stevens will be dovish, reiterating what he said last Tuesday – that the inflation outlook remains dampened and isn’t at risk for overheating “short of a very, very large depreciation, which we haven’t yet seen”. Don’t fight the Fed applies here: don’t fight the RBA as it talks down the Aussie – it clearly doesn’t think the 15 per cent drop since mid-April is enough yet.

STRATEGIST
ILYA SPIVAK

My pick: Short euro-dollar at $1.3270
Expertise: Global macro
Average time frame of trades: 1 to 6 months

Last week, the European Central Bank said it intends to keep rates at current or lower levels, setting their bias as firmly dovish, while the US Federal Reserve appeared on track to begin tapering in September. That seems likely to shift relative yields in favour dollar. Prices broke support at a rising trend line set from mid-July, acting as a trigger for a short position from $1.3270. My initial objective is $1.3188. A stop-loss will be activated on a daily close above the 31 July high at $1.3344.

CHIEF STRATEGIST
JOHN KICKLIGHTER

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

Heavy event risk this past week again failed to resuscitate the dominant risk-based fundamental drive. Moving forward, I’m watching overextended moves, clear technical levels, and short-term catalysts. With the Reserve Bank of Australia on tap, an Aussie-dollar correction above $0.9000 could be a quick move with $0.9300 break should dollar plunge. A rejection of the long-term dollar-yen trendline at 100 may carry it to a ¥97.50, 50 per cent Fibonacci break. And the long-term euro-sterling trendline break would confirm above £0.8750.