I feel much relieved now with USD/JPY at 98.20s. A bit more and we can take some off the table at 98.50s. 99.70s is still in the cards, and if it plays out, the market will need a little bit more time [see Roger, clear for take off (USD/JPY)] . Yet with a PMI above 50 from China, the stars are aligned. Not much more to say here for USD/JPY.
Thus we get into the art of knife catching one of the commodity currencies. The group has been getting crushed lately; no surprise there. However, because of such crushing, a pleasant surprise from China will hopefully go a long way in giving the AUD and NZD a breather. I’m not talking about a full reversal ladies and gents, but I think we could get some 80-100 pips on the upside out of these bad boys.
The play is quite technical now. The NZD/USD is at strong support and so is the AUD/USD. If there’s a place to catch knives, it’s at strong support combined with a positive surprise from an important data point. I can already see the headlines for the next 12 hours as Europe and the US wake up to trade: “Chinese PMI surprises to the upside” “Will China have a comeback?” “Global Economy ____ fill in the blank” yada yada yada.
This is no sure bet like the USD/JPY long, but for a smaller trade, it’s something to ponder on. For Trust Trade 10 (as per tweet), we have long NZD/USD from .7842, risking 50 and looking for 120 (may have to adjust this target lower).
Below we have the AUD/USD 4 Hour Chart and the NZD/USD daily chart. Both show us the big support levels we’re at. Good luck and careful not to cut yourself.