THE TIPSTER
IN the FX markets it is currently a case of betting on hung parliament fears in the UK or troubles in the Eurozone. Greek debt concerns continue to cause weakness in the euro, which has plunged towards the £0.86 level. From here the pair could go either way. If you’re expecting further downside for the euro then sell in to rallies around £0.8720 – Spread Co offers euro-sterling at £0.8686-£0.8688.
On the other hand, if the Greek debt crisis comes under some form of control and the hung parliament fears materialise then any euro weakness could prove to be short-lived and any reversion has the potential to happen quickly. IG Index is quoting the euro-sterling 8,800 call, which expires the day after the election at 19/27. However, the euro is expected to remain weak against the dollar. Euro-dollar hit a new 12-month low around the $1.3300 level. There are few euro bulls left and so bears will look to test lows around $1.3200 and then onto the major $1.3000 level. Capital Spreads quotes $1.3315-$1.3316.
The Aussie dollar climbed to two-year highs against the yen earlier this week but once again found resistance around the ¥87.50 level. Those looking to short Aussie-yen should wait for a break of the ¥85.50 level, those looking to go long should wait for a pull back to the ¥82.00 level or a break of the ¥88.00 level. Spread Co offers a spread of ¥86.68-¥86.72.
Last month’s hike in Australian interest rates has seen a rise in Aussie-dollar but the series of declining highs since mid-April suggests momentum may be waning. The recent slide in commodity prices could signal further losses away from the US$0.9310 area and test support at US$0.9170. Sell on rallies back to US$0.9310 with a target of US$0.9100. CMC Markets’ spread is US$0.9248-US$0.9250.
A play for the brave would be to sell Aussie dollar to buy Indian rupee. The Indian central bank will look to aggressively move rates higher when the Australian rate cycle looks like it has peaked. Currencies Direct has a forward price of R41.06.
Jessica Mead