South Korea keeps base rate unchanged at 2%

Gold fall may indicate an end to “Armageddon” trade

Financial markets are still in operation 18 months after the big GFC melt-down and it looks like some players are finally starting to exit their so-called Armageddon trades, the primary one which was long Gold. Other trades, which probably seemed like good ideas at the time, were stockpiling copper and other commodities. Good luck getting out of those!

The ultimate trade in the FX markets has been to be long the AUD and other commodity currencies against the ‘old-economy’ currencies like the EUR, GBP and the USD. They say that a currency pair always looks it’s absolute worst and most bearish right at the bottom. I must say that GBP/AUD looked very very bad yesterday. I wonder?

AUD/USD order book: bids close by, stops below

Corporate bids are reported at .9100 and just below. Stop-loss sell orders are now building below .9080 and again below .9060. These may come into play fairly quickly if the market can get through the ‘figure’ bids.

AUD/USD looking bit heavy around .9130

The jobs data was slightly disappointing but that will be totally forgotten about tomorrow. If the market is truly long, then we should see a move lower from here towards .9060/70. If it cannot break below .9100 I would consider that to be a bullish indication of a market which doesn’t want to go lower. Let’s wait and see.

Australian unemployment rate 5.3%

But less new jobs have been created, 400 as opposed to 15,000 expected. AUD/USD a bit lower around .9130.

(edit) The good news in the data is that there were 11,400 full-time jobs created and 11,000 part-time jobs lost and this is a reversal of the trend from the last 12 months.

AUD/USD technicals: longs preferred but prices sit mid-range

As you are probably well aware, I’m bullish and long the AUD/USD, but I expect to see some drawn-out bullish consolidation before a major move higher can commence.

The daily chart has support/resistance now at .9005 (20-day MA) and .9325, recent congestive chart highs. The 100-day MA sits at .9060 and watch out for a bullish cross of the 20-day/100-day MAs which is likely to happen early next week. This is often a trigger for medium-term systematic trading models to enter the market.

Hourly support is initially at last nighs low around .9130 (also a previous high) and below there the bullish hourly trendline around .9100. Resistance of course is at last nights .9190 high.

Japan Q4 GDP +0.9% QoQ, slightly below expectations

Revised Capex for the same period was +0.9%, better than the expected 0.3%. USD/JPY is unchanged at 90.45.

RBNZ act pretty much as expected

For those who missed it earlier, the RBNZ kept New Zealand interest rates unchanged at 2.5% and reiterated their intention to start removing monetary stimulus later this year. Many AUD/NZD longs, which had squared up in the last few days, have now started to reinstate.

Governor Alan Bollard is now being quoted across the newswires. He says that the NZD level is not of any concern, it’s still a USD story. They can afford to wait-and-see before raising rates and they probably will not need to raise as high as in the prevous cycle.

Citibank tactical portfolio: long GBP/USD

Tactical trades are based more on presumed market positioning than on technicals or fundamentals. Citi probably have the same stop-losses as the other banks (see below) and are taking a punt on a bout of short-covering. They went long overnight at 1.4920 with a s/l below 1.4775 and a profit target at 1.5700. These are the sorts of trades that I like.

GBP/USD: talk of stops starting above 1.5030

I’m hearing of decent sized stop-loss buy orders above 1.5030, 1.5040 and again above 1.5080 in the cable. This could mean two things; either the market knows about some big selling interest ahead of these levels and feels safe, or the market is short and getting nervous (therefore lowering trailing stops). If there’s talk of stops, the market will tend to gravitate towards that level.