Bye Hungry Ghosts, Hello Central Banks
I have been told that yesterday was the last day of the Hungry Ghost month. And what a hungry ghosty month it has been.
Currencies have decoupled from the rest of the markets and are off on their on tangents. The correlations we are used to have all but evaporated and it is almost impossible to spot near term trends.
Like Retired Trader says, the entire month of Aug has been relentless stop loss hunting powered by those who have access to the fx order books, sparing only the currencies that people have lost interest in.
Today we have the ECB, BOE, Riksbank and BOJ. 2 days ago, the RBA caused quite a stir.
BOJ is unchanged and USDJPY is holding.
I am thinking, with all the event risks ahead (Still Waiting For A Crash ? You Will Have It 4 Sep 2013 tradehaven.net) after these policy meetings going into the FOMC on 17-18 Sept, we will have to declare a winner and no surprises that the USD will be the ultimate safe haven currency of choice.
We are in an upward trend channel for the DXY.
My dear friend Hongkie Babe thinks that if 82.53 breaks, then we will see higher from there. 81.90 remains the support.
DXY Dollar Index Spot
Weights
EUR Euro 57.6%
JPY Japanese Yen 13.6%
GBP British Pound 11.9%
CAD Canadian Dollar 9.1%
SEK Swedish Krona 4.2%
CHF Swiss Franc 3.6%
I remain bullish and will look to sell the EUR opportunistically, bearing in mind it is strongly supported at 1.31.
The USDJPY is looking bullish on the Ichimoku but I have my doubts.
GBP looks the most vulnerable today, according to Citi.
“GBP likely holds the highest risk of a pain trade now as it goes into the BoE meeting, being currently overbought against EUR, CHF, CAD and SEK. CitiFX Strategy’s expectations for a sterling reversal are low given recent data but as it seems, few expect a dovish Carney. ”
As for AUD, which does not belong to the DXY or the ADXY, Citi Tech thinks 0.99 ??
” CitiFX Technicals has also decided to go long AUDUSD at 0.9155 with an initial target of 0.9575 and a possible extension to 0.99 (stop loss at 0.8990). The pair has broken good resistance (55d MA and trend line) and is setting up for a potential double bottom which would target 0.9575, says our analysts. The stretched 55-200d MA gap dynamic further supports a move higher”
Looks like my AUD trade has headwinds.(Australia : Elections and RBA 3 Sep 2013 tradehaven.net) But I am still looking to sell into the weekend.
The Hungry Ghosts have left us high and dry. I am going for full blown risk off in the weeks ahead.