With the holiday season done for another 12 months (apart from Eastern Europe of course) markets and currencies get back to the daily business of ups and downs. Some currencies will be winners and some will be losers but one thing’s for sure. Whichever way a currency is heading – we can trade it the move.
JPY to benefit as investors will turn to IIP surplus currencies
FXStreet (Delhi) – Chris Turner, Global Head of Strategy at ING, suggests that the return of Japan’s current account to a large surplus is a timely reminder of Japan’s large Net International Investment Position.Key Quotes
“Decades of current account surpluses show Japan, Switzerland and Norway to have the largest claims on foreign assets. Those on the wrong side of the ledger remain Australasia, the US and most recently the UK following the recent switch to net FDI outflows in the UK.”
“If we are correct with our call for a more challenging Late Cycle investment environment, expect the JPY to enjoy many more days similar to those seen in the middle of August when it looked like the PBOC was de-valuing the CNY.”
“Expect the JPY to perform well on the crosses in 2016, with our favoured trades being short AUD/JPY and also short CNH/JPY. The latter looks largely an avenue to express a negative trade on USD/JPY, but could also surprise were the PBOC to accede to a strong USD environment and let USD/CNH rise.”
Why Weak Currencies Have a Smaller Effect on Exports – WSJ
Dec 27, 2015
The Outlook: Central banks around the world have loosened monetary policy this year in the hopes of nudging down currencies and giving a lift to exports. But it hasn’t had much of an effect this time. The reason? A change in what exports are made of.Proceed to the page: http://linkis.com/pXMZu
Bulls struggling to extend gains above 5-DMA
FXStreet (Mumbai) – The AUD bulls are struggling hard to fight back control in mid-Asia, oscillating back and forth in a narrow range amid holiday-thinned trades.AUD/USD clinging to 5-DMA support
Currently, the AUD/USD pair gains 0.05% to 0.7270, easing-off session highs reached at 0.7282 at Tokyo start. The Aussie attempts a minor pullback from Friday’s lows and remains supported above 5-DMA at 0.7262 amid lack of fresh fundamentals triggers as the Australian markets remain closed on account of Box Day holiday.
Later this week, nothing relevant for the AUD is expected to be reported while most traders are away on an extended Christmas-New Year holidays, with liquidity expected to return next Monday. While the focus now remains on the sentiment on the global equities and commodities’ prices for further momentum on the pair.
AUD/USD Levels to watch
The pair finds the immediate resistance at 0.7300 (round number) above which gains could be extended to the next hurdle located at 0.7352 (200-DMA). On the flip side, the immediate support is located at 0.7248 (1h 50-SMA). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.7228/20 (20 & 10-DMA).