USDJPY tests 115.00, Contained (Temporarily) By Exporter Offers

Earlier today in Asia, we saw the first test on 115.00 in USD/JPY, which was firmly held off by exporter selling. That said, many have been calling for a deeper correction before we test into the next major area, with longer term calls for 120.00 looking increasingly amenable given the pace of gains seen in response to the rise US mid curve yields. The 10yr is the focus for JPY traders traditionally, though the 5yr has mirrored gains, but with such an abrupt turnaround seen yesterday (near 10bps), some will say it is warranted, despite the oversold status in the JPY across the board.

selection_108The next target area on the high side is now 115.50-116.50, while on the downside, only a break back under 113.00 will be considered a deeper correction. US payrolls tomorrow is expected to be strong – as has much of the US data series of late (with the exception of personal spending yesterday – personal income beat f/cs) – so we expect the dip buying to resume, especially with the touted month end USD selling passing without any significance whatsoever. One potential risk to all the JPY pairs is any moderation in the equity markets, and we have to consider this with the Italian referendum this weekend potentially causing some profit taking over today and tomorrow.

EUR/USD dips below 1.0600 again; USD/JPY eyeing 113.00

Tentative moves in some of the key majors, with EUR/USD getting pressed lower into the mid 1.0500’s again in tandem with a USD/JPY move through 112.50.

Month end flow suggests some USD selling into tomorrow’s London fix, but broader sentiment remains that of using any USD dip to reload on longs. EUR/GBP buying also looks to have receded a little, having stalled comfortably ahead of 0.8600.

Buying of Europe (central bank) is usually transacted over a number of days, so we do not rule out sporadic spikes in the cross rate near term. Beyond this, the downtrend remains very much in place, but little room conceded on the upside as yet, so we still remain wary of a short squeeze either side of the Italian referendum. AUD/USD is still eyeing .7500+, with NZD/USD hovering below .7100.

Friday 20 Feb Trades

Bit of a rubbish day for me guys. Not helped by me being ill in the night so woke late, and missing any decent early morning positioning.

Hopped onto the AUDUSD far too late, but thinking ‘ the big boys’ would have a quick pop at liquidity above the market, so did that for about 8 pips, as sure enough they did after a slow tedious grind upwards.

AUDUSD

Bored of that I hopped onto USDJPY, as it pulled back and rejected the ‘inside low’ and traded it to the previous days low (red line) for about 20 pips.

USDJPY11

As you would expect that level got a reaction (and I was stopped out) but USDJPY in fact traded all the way down to the previous weeks low.

I know some traders on Twitter really cleaned up on the EURO trades, but I was determined to steer clear because of the Greece talks, its a thin line between whether trading or gambling, when active in the markets during major news events.