Prepared by Ken Veksler, Senior Manager, Trading & Advisory
A great night to be an Australian mortgage holder as deputy RBA Governor Battelino commented in no uncertain terms that thanks to the greed of local Australian banks the job of the RBA in raising rates has effectively been done….
Well sort of. What he did really say was that due to the local institutions hiking rates over and above recent official rises the OCR has now moved into “fair value” or a normal range and that there should now be a leveling out of further moves by the RBA.
This was enough to send the AUD into a tail spin and the cross that I have been bearish for some time on tripped stop orders sitting below the 0.9000 handle and was further helped on its way with disappointing GDP data. Needless to say “Merry Christmas” for me. Looking ahead for this pair I see small squeezes higher that are on a corrective path but I remain bearish and target 0.8780 before the end of this week.
Right enough of my unadulterated happiness, let’s look at the central bank mania that is today. We’ve started off with the Swedish Riks bank which has left rates unchanged and release a more dovish comment this morning than expected but to little avail to the EURSEK cross which at the time of print remains relatively unmoved. Next on the agenda is the Norges bank which promises to hold a surprise 25bps hike, and if failing to deliver on that will undoubtedly provide hawkish commentary that will serve the purpose.
Otherwise we have the FOMC tonight which should leave us breathless… Well not really, our man Ben most likely will not deviate from recent language and continue on the low rates for an extended period rhetoric…. Either way I remain a dollar bull and look for further upside out of the greenback. We also have EZ CPI and UK Unemployment, both of which should ensure that the respective crosses remain capped on small corrective moves higher.
With regard the majors I see the following today;
EURUSD: Capped at 1.4570/80, and I’m a cautious seller into those levels, but warn punters out there to be wary of ugly stops sitting just above.
GBPUSD: Sell, sell, sell…. 1.6350 is the level today if you even see it there and I continue to target 1.6150/00
USDCAD: Play the range, if aint broke don’t fix it. Sell into 1.0650/80 and take them back around 1.0580
USDJPY: Look for a nasty squeeze into 90.30 and from there sell your grandmother, this thing is going lower and I look for 89.30 as the first target followed by clean outs of weak stops into 88.80
AUDUSD: Refer above but the short message is SELL!
AUDNZD: I remain short 25% of my original position and now firmly target 1.2470/50 for limit orders.
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