Crazy Horse – New Year FX Markets

Crazy Horse to me is my favourite Sioux Indian hero, being very much fascinated by the Battle of the Little Big Horn as a child.

As we welcome the Chinese year of the Horse, the crazy, wild horses have over run the marketplace.

The AUD takes centrestage and we need not ask why with the currency strengthening 1.25% against the USD so far this week, only upstaged by the JPY and the Turkish lira.

The Reserve Bank hawkish yesterday in their statement causing much damage as AUDUSD stop losses were triggered to 0.8942 and sending a new mixed signal today saying the AUD fall is not over.

Like me, I suspect most Asians are usually long the AUD. We cannot help it. We love the place, to holiday and some of us even wish we could live there. Yet its been going downhill since October last year and the trend does not look likely to be reversing anytime soon, not especially when we have the 100 day moving average crossing below its 200 day, telling yesterday’s move to shut up because we are still heading to 0.85 against the USD.

AUDUSD Weekly Chart

audusd 5 year

Layman traders like the majors – the liquid, most traded currency pairs in the world. Then there are the major crosses like the EUR/JPY, a combination of the 2 most traded currencies against the USD, then we have the crosses, that are not really for the faint hearted including some inscrutable pairs like the EURAUD which I will never look at again for the life in me.

The AUD/NZD is a favourite antipodean play as is the EUR/GBP. The JPY crosses are also a huge favourite for the carry that they present in particular, the AUD/JPY and EUR/JPY.

Thus it is not to my credit that I am sharing these trade ideas for crosses, having stolen the inspiration from a venerable market Sitting Bull, another iconic Indian warchief.

AUDJPY weekly chart. Downside target 85.


GBPJPY weekly chart. Downside target 160.


EURJPY weekly. Downside target 135.


The timing for trading JPY crosses is vital because of the bleed that comes with the daily carry – interest rate differential between the JPY and the other currency. Holding JPY at close to 0% against paying the AUD 2.5% cash rate is an expensive trade if you are short.

And so, these will be my Crazy Horse trades to reckon the start of this crazy Horse year.