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Sellaudusd

Short AUD/USDFundamental Opportunity With the RBA meeting minutes coming out next week and the recent data from the USA I am expecting this currency pair to head back down to recent support levels. The RBA kept rates on hold in the last meeting but I expect them to leave the door open to further rate cuts and the December rate hike for the US is still on the table giving us some divergence on this pair. Technical best price As you can see from the chart the AUD/USD pulled back to the 7615 level due to stronger than expected Chinese CPI data last week. Oil is also supporting the risk sentiment in AUD which gave it a boost. However both these aspects are temporary and I expect them to subside. The recent pull back also highlights the 50% and 61.80% Fibonnaci retracement from the latest drop away from the declining trend line so Market price is a good place to start at 7615. Trade Management I have kept the stop loss tight in case we retest the declining trend line where I will re-enter the trade if stopped out. For now the recent rejection is enough for me to enter at market on Monday morning I am looking to take profit on a retest of the 7440 low but will look to move the stop loss to break even at the 7500 support as well. You can see the weekly outlook video describing this trade on my website. Look out for updates on this post
Short
by FreeForexSignals4u
SHORT AUDUSD: EYEING CPI PRINT - SELL 1.0%YOY, 0.3%Q; RBA EASINGAM 2:30GMT Ausssie Inflation prints are released these are key for determining their August Policy Decision 1. IMO a 1.0%yoy CPI print shows a further 0.3% contraction in their yearly CPI, this should be sufficient to push the RBA to cutting their OCR by 25bps, similarly a 0.3%qoq CPI will be needed in conjunction to show that inflation is growing at a slow pace. 2. RBA Minutes that support this view of low CPI leading to a cut from July said - - On the margin RBA remained in line with previous meetings, adding little but still keeping it on the dovish side imo. Once again, as in previous minutes (and from several other central banks) RBA continued to communicate the necessity of "watching key data" to drive future policy decisions. Interestingly though, they also mentioned the negative impact of a strong AUD which in turn supports RBA doves out there as a cut is the remedy to stop a deflationairy currency in its tracks. Further, RBA notably were under no illusions regarding their inflation situation stating " inflation set to stay low for some time" - another encouraging stimulus for doves given inflation's important position/ weight for setting future policy. - As per the attached post, i remain dovish/ bearsh on aussie$, and i continue to expect a cut to 1.50% (25bps) this year given i expect their inflation to remain stagnant. Clear targets are 0.73 when probability of a cut is higher - though i would enter shorts regardless if AUD$ could find its way to its 12m highs at 0.78, though unlikely. - I like USD strength in the medium term too hence supporting the short Aussie dollar view RBA Minutes Highlights: RBA MINUTES: BOARD TO WATCH KEY DATA, WILL MAKE ADJUSTMENT TO RATES IF NEEDED; REVIEW OF FORECASTS IN AUG WILL HELP STEER POLICY - Inflation set to stay low for some time, employment mixed, retail sales look set to pick up - Stronger AUD would complicate economic rebalancing - Economic transition is now well advanced
Short
by QuantumLogicTrading
SELL AUDUSD - JUNE RBA MINUTES HIGHLIGHTS - DOVISH/ CUT POSSIBLEOn the margin RBA remained in line with previous meetings, adding little but still keeping it on the dovish side imo. Once again, as in previous minutes (and from several other central banks) RBA continued to communicate the necessity of "watching key data" to drive future policy decisions. Interestingly though, they also mentioned the negative impact of a strong AUD which in turn supports RBA doves out there as a cut is the remedy to stop a deflationairy currency in its tracks. Further, RBA notably were under no illusions regarding their inflation situation stating " inflation set to stay low for some time" - another encouraging stimulus for doves given inflation's important position/ weight for setting future policy. As per the attached post, i remain dovish/ bearsh on aussie$, and i continue to expect a cut to 1.50% (25bps) this year given i expect their inflation to remain stagnant. Clear targets are 0.73 when probability of a cut is higher - though i would enter shorts regardless if AUD$ could find its way to its 12m highs at 0.78, though unlikely. I like USD strength in the medium term too hence supporting the short Aussie dollar view RBA Minutes Highlights: RBA MINUTES: BOARD TO WATCH KEY DATA, WILL MAKE ADJUSTMENT TO RATES IF NEEDED; REVIEW OF FORECASTS IN AUG WILL HELP STEER POLICY - Inflation set to stay low for some time, employment mixed, retail sales look set to pick up - Stronger AUD would complicate economic rebalancing - Economic transition is now well advanced
Short
by QuantumLogicTrading
3
SELL EURUSD/ LONG USD, DXY: HAWKISH FED GEORGE SPEECH HIGHLIGHTSIMO FOMC George was largely bullish/ Hawkish $ on the margin; surprisingly coming out and stating for one of the first times that "Fed rates are too low" and "Not Raising Rates in June Was Due to Timing Issues" - these two statements imo hint that a hike coUuld be on the cards earlier than perhaps was expected (Dec), in-light of his opinion of them being too low and that the missed June hike was merely due "timing issues".. could these timing issue be corrected in July? Unlikely given the Brexit result (likely if the vote was bremain), but nonetheless this was more than encouraging. On the wider economy George remained upbeat, highlighting last weeks NFP report as "welcomed news", and in the medium term reaffirming that "pace of job market growth has been notable" and "economy nearing full employment. The only downers were his comments regarding business investment which he said was "weak" but after went on to assure that "outside of energy, business investment levels were better". Further, he cited that brexit issues were "longer run" uncertainties that the FOMC will watch. Federal Funds Rate Implied Hike/ Cut Probability curve updates: On the back of the strong 100k+ beat NFP print last week, going into this week we have seen an aggressive steepening in the Fed Funds implied prob curve across the tenors; Fridays steepening trend has continued into this week, where now a September/ Nov Hike trades at 12%/11.8% vs 5.9%/5.9% on Friday and 0%/0% on Thursday, with a Dec hike trading at 29.6% vs 22.5% Friday. - This aggressive steepening, especially in the front end (where probabilities have doubled), is likely a function of FOMC member Georges Hawkish comments today, the NFP print and the aggressive recovery in risk across the board in the past few days which have all collectively improved confidence, which in turn has eased sell-side pressure on UST rates - today 10y UST rates have managed to trade 4.4% higher on the day (tnx), with 30y yields also up +0.95% - this is the first real break of downside pressure we have seen in rates for the past month. Trading strategy: 1. The above combined has helped my broad long $ view with my favourite expressions short term being in NZD$ and AUD$ downside (See attached posts). In the medium term, EUR$ and $JPY dollar upside are my favourite trades for the risk-on element that will readjust the USD higher in the backend of this year (see attached posts); And the Monetary policy divergence + brexit uncertainty that should bring EUR$ to a lower equilibrium in the future also. Alternatively, this view can be aggregated as pictured into a long DXY play, where imo, it trades 3-4% below equilibrium - index should be near 100. FOMC Member George Speech Highlights : -Fed's George: June Jobs Data Was 'Welcome News' -Fed's George: U.S. Economy Has Proved 'Resilient' -Fed's George: Expects to See 'Fairly Steady Pace of Growth' -Fed's George: Consumers Strong, But Business Investment Weak -Fed's George: Outside of Energy, Business Investment Levels Better -Fed's George: Pace Of Job Market Growth Has Been Noteworthy -Fed's George: Economy Close to Full Employment -Fed's George: Labor Market Recovery Not Evenly Shared by Workers -Fed's George: Labor Pressured by Loss of Middle Skilled Jobs -Fed's George: Fed Policy Limited in Role For Long Term Labor Trends -Fed's George: Fed Rates Are 'Too Low' -Fed's George: Fed Should Raise Rates Gradually -Fed's George: Not Raising Rates in June Was Due to 'Timing Issues' -Fed's George: Brexit Issues Are Longer Run Items to Watch
Short
by QuantumLogicTrading
3
SHORT AUDUSD TP 800PIPS: BREXIT, RBA, FED & USDJPY HEDGEShort AUDUSD is in my top 3 FX Trades for several reasons: 1. AUD is considered a riskier G10 currency cross, so AUD trades weaker in risk-off markets, or when equities/ SPX trade lower (you can see the high correlation with SPX at the bottom of the graph). - With Brexit concurring last week, global risk has increased, this is especially the case for AUD due to commonwealth connections. Therefore AUD is likely to come under pressure in the future as risk-off sentiment continues to dominate, as the US Election nears, Global growth worries continue (Japan, Europe, China) and Brexit/ uncertainty about further Euro Area exits continues to intensify - we can see Gold and US Treasuries continue to gain supporting the risk-off view and thus supporting selling AUD. Also, risk-off encourages $ buying as a safe haven deposit on the Brexit backdrop. - Further, going into earnings season next week, historically risk currencies (AUD) perform poorly as investors seek safer assets to hedge against earning surprises, thus this helps AUD selling and USD buying. Plus, most investors will want to hold some $ cash in order to fulfil their earnings based equity trading, so this also helps the short AU trade by increasing $ demand relative to AUD. 2. The RBA Meeting on Tuesday the 5th is likely to be dovish, as 1) Brexit risks are weighed in on again, after supportive/ dovish statements from RBA members following the Brexit decision and 2) AUD Macro Environment has performed poorly since the last meeting and the May Rate cut e.g. Retail sales 0.2% vs 0.3%, Unemployment flat at 5.7%. - However, I dont expect an RBA rate cut, as they cut last just 2 months ago in May by 25bps to 1.75% and their GDP print was firm at 3.1% v 2.8% yoy and 1.1% v 0.8% with Unemployment also stable (yet to see inflation), so I expect them to provide reassurance to markets with a strong dovish tone, with possible hints to a August rate cut - citing Brexit and looking forward to their end of July Inflation print as a gauge for further rate cuts. Nonetheless the dovish rhetoric should be strong enough to put pressure on AUD and tip the scales south supporting the AU short. 3. From a USD demand point of view, last week we saw USD lose 160pips against the AUD as Brexit Uncertainty negatively hit the Feds Rate hike cycle expectancy, flattening the curve in the front end which ruled out any hikes until Dec or 2017, fewer hikes = less USD strength. - However, since the beginning of the week where brexit risks ruled out hikes in the near term, the end of the week managed to turn rate hike expectations around as Brexit likelihood decreased/ shifted into 2017. This helped the Fed fund futures curve recover/ steepen somewhat in the front end, with the implied probability of a hike increasing from 0% to 5.9% for both September and November, whilst the probability of a hike in December also steepened significantly from 13.3% to 22.3% with the probability of a 50bps hike being priced for the first time at 1.1%. This trend of Fed Hike recovery is likely to continue as long as Brexit risks remain subdued, so we can expect USD to begin to price stronger in the coming days/ weeks. 4. Technically, AUDUSD trades 100pips away from a key handle at 0.76xx which is a double top and may provide the ideal short area. Further, higher than that at 0.78xx is the 12 month high which is also potentially a great level to get short from as a double top 5. Volatility - 1wk, 2wk and 1m (-1.52, -1.57, -1.60) AUDUSD Risk Reversals all trade with a downside bias indicating put/ downside demand is higher than upside, so the option market net expects AUDUSD to come down over the above tenors. - Out through the 5th, 6th, and 7th (post RBA) we see large notional OTM put options and open interest at 0.7365, 0.7440 & 0.7445 which supports the view that the RBA will be dovish and that AUDUSD is likely to hairpin around the 0.76xx double top level.
Short
by QuantumLogicTrading
4