Intraday Market Thoughts

Risk Trades Edge Higher on Chinese Trade

by Adam Button
Oct 15, 2012 2:05

Early indications point to a rise in risk trades as trading gets under way. Last week, the Australian dollar was the best performer while the euro lagged. Chinese CPI and comments from the BOJs Yamaguchi are the highlights on the calendar. Thursdays edition of Ashrafs Premium Insights is out, with new trading ideas on EURUSD, EURJPY, GBPUSD, AUDUSD, CADJPY,oil and CADJPY. In addition to the trading ideas from Thursdays Premium Insights, there are detailed chart analysis on multi-timeframe stochastics on GBPUSD. Existing trades on gold and silver and intact. See direct link below.

On the weekend, China released trade data that showed exports higher by 9.9% y/y, much better than the 5.5% expected. The caveat was that imports rose just 2.4%, matching expectations but underscoring worries that growth may not be sustainable.

Overall, the numbers resulted in a higher surplus, adding an upside bias to Thursdays Chinese GDP report. The Australian dollar opened the week 20 pips higher to 1.0250.

The top event on the calendar is Chinese CPI at 0130 GMT. The consensus is for a 1.9% inflation rate after a 2.0% rate in August. An unexpectedly higher number may dampen speculation about a cut in the required reserve ratio (RRR) and hurt risk trades.

Comments from Yamaguchi at 0120 GMT will also be scrutinized because of the ever-present threat of intervention or further BOJ action to weaken the yen.

Commitments of Traders

Speculative futures trading positions from the CFTC showed sizable swings in positioning with a general shift to the US dollar. The weekly numbers always reflect the close on Tuesday.

EUR net short increased 73K from 50K

JPY net long cut to 13K from 29K

GBP net long reduced to 23K from 30K

AUD net long cut to 40K from 63K

CAD net long pulled back to 96K from 101K

NZD long trimmed to 17K from 21K

Until this week, euro shorts had been scaling back but they have returned. Most of the new shorts will have been established around current levels are vulnerable to a rise in EUR/USD above 1.30.

The other takeaway is the continued rush to the exits in AUD/USD and the relative resilience of the Australian dollar. If we see another week of specs rushing out of AUD and the key 1.0150 and 1.000 levels hold, it could be a positive signal.

The direct link to Thursdays Premium Insights can be found here: Non subscribers can join here:



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