THE TIPSTER AUSSIE DOLLAR TRADERS CAUGHT ON THE HOP
THE Aussie dollar-Japanese yen pair remains a key measure of investor risk appetite and both sides of the currency pair have been in the news recently. Last week, the Bank of Japan surprised markets by announcing additional easing. This followed news of the country’s unexpectedly large fall in GDP. Traders were also caught on the hop as the Reserve Bank of Australia kept rates on hold when a 25 basis point cut was factored in. Both central bank moves have helped to lift the Aussie dollar and weaken the yen. The pair managed to consolidate above a key Fibonacci level of ¥83.15 and is now testing resistance around ¥86.00. GFT quotes ¥85.420-¥85.435.
We have seen euro-Swiss franc continue to flip-flop between SFr1.2050 and SFr1.21 – can the second bailout for Greece be enough to see this pair break out to the upside and target SFr1.25? Forex.com quotes SFr1.2069-SFr1.2071 for euro-Swiss franc.
In recent session, sterling-dollar has remained capped by the 200-day moving average at the $1.5920/30 area. A convincing close above the 200-day MA could target $1.6080. Weak support can be found at $1.5730, with key support below at the 55-day MA at $1.5610. CMC Markets quotes sterling-dollar at $1.57769-$1.5778.
Euro-dollar has been flipping like a beautifully cooked pancake between the $1.3000 and $1.3300 levels as politicians go back and forth with bailout terms. Now that it has been agreed the single currency has returned to test the $1.3300 level, but failed at its second attempt to breech it. This has formed a double top over the short term and could be a signal for lower prices to come. Capital Spreads quotes a price of $1.3210-$1.3211 for euro-dollar.
The recent decision by the Bank of Japan to ease monetary policy seems to have the desired effect of weakening the yen, which remains especially important in light of the recent record trade deficit. The yen needs to continue to weaken through the ¥80 level for the easing to be seen to have done its job, CMC Markets spread on dollar-yen is ¥79.738-¥79.745.
Aussie dollar-Canadian dollar is perhaps an interesting way of playing the idea of differing growth expectations between China and the US – Australia and Canada being major suppliers to these two superpowers respectively. The story in 2012 so far has been one where the Aussie has gained in strength as Chinese data continues to point to the strength of this economy. But the trend has faltered in the past few days as the idea of a resurgent Uncle Sam takes hold. Further good US data, coupled perhaps with additional weaker Chinese news, might put the ball back in the Loonie’s court, suggesting further downside in Aussie dollar-Canadian dollar. IG Index’s price on Aussie dollar-Canadian dollar is Ca$10.633-Ca$10.639.
The US dollar has not had the best of starts to the year, with the notable exception of its performance relative to the yen. The Loonie has gained 2.5 per cent against the greenback since 1 January and the trend is strong and suggesting further downside to come. Look to sell any bounces in dollar-Canadian dollar around Ca$1.0030 as there is a confluence of trend, Fibonacci and moving average resistance around there. Spread Co offers a spread on dollar-Canadian dollar of Ca$0.9953-Ca$0.9957.