Analyst picks for 8 May 2012
CURRENCY STRATEGIST
JOEL KRUGER
My pick: Looking to buy dollar-yen
Expertise: Technical Analysis
Average time frame of trades: 1 day to 1 week
We like the idea of looking to buy this pair, either on an upside break or into a deeper setback. This is a market that looks to be on the verge of a major structural shift, since record lows in the fall of 2011. The pair looks like it is attempting to find a fresh higher low above ¥75.55 ahead of the next major upside extension back through ¥84.20. We recommend looking to either buy a dip to ¥78.50, or on a daily close above ¥81.00. Look to hold for a move to the ¥92.00 area. Exit below ¥75.00.
STRATEGIST
ILYA SPIVAK
My pick: Short euro-dollar (pending)
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
April’s Eurozone PMI figures point to sharply contracting growth. While the ECB opted to hold off on stimulus in May – as inflation remained stubbornly elevated at 2.6 percent – the argument against a looser posture will become more difficult. Energy prices accounted for elevated CPI, and the recent slide in oil prices hints this may change dramatically in May’s inflation data. I will look to sell euro-dollar on a daily close below €1.3025, as ECB rate cut expectations build, targeting €1.2865 and €1.2674.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Euro-dollar breakout $1.3275 or $1.3000
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
Although we could potentially pull more from last week’s New Zealand dollar-yen break short, we still are not in follow-through favourable markets. As such, I booked for just under 100 pips. In its place, I am looking to the next possible breakout: euro-dollar. Clearing either $1.3275 or $1.3000 carries significant potential. I would prefer a bearish bias. In the meantime, I’m still waiting on the SNB with the euro-Swiss franc long and the Dax’s three-month head-and-shoulders pattern.