Get it done while you still can – the FX year is ending

It’s Monday again and the start of the effectively the second last week of trading for this year. And what a week we have in store for us! More on that momentarily. In terms of weekend events/news, well Chinese data came in somewhat stronger than anticipated, as did the Australian numbers, both acting in tandem to push the Little Battler higher in Asian Sunday trade. With stops hit on the topside the AUDUSD climbed as high as 0.9170 (or close) and this morning trades somewhat lower, but still looks constructive. Otherwise Japanese data was smalls softer but still left the market feeling positive about itself and the latest effort of Abenomics.

This morning so far we’ve had the first raft of PMI prints from Europe and while it’s been a mixed bag, they have generally been firmer than expectations. Up next is the UK PMI which if remotely positive will give the Cable yet another lift, with outperformance already noted on last night’s open. Be it Osborne in the media or simply thin conditions attracting stop and barrier hunters, either way Betty has shone and shone bright. Taking out year highs so far, the upside still has room, but 1.6480 should cap it.

The rest of the day has more of the same (PMI prints) in store for us with the US printing theirs and Bernanke jawboning at some function somewhere. With several central banks printing decisions this week (not least of which the ECB and BoE) as well as the NFP on Friday, we should be due some feverish excitement. None of it likely to be even remotely rational, but volatility rarely is, is it. I think the ECB is in a quandary and one it won’t be getting out of at this meeting, while the BoE… well bubble, bubble toil and trouble? The NFP will be revised lower but probably keep us in line with the rolling 3 month average.

In terms of what to expect on the day, well I’m not entirely sure, but here goes;

EURUSD: I like it higher, but cautiously so. Stops above 1.3625/30 are there in size, but so are offers ahead. If stops are done expect a wild ride into 1.3650/80 where more sellers join. No outright buyers noted on the downside thus far outside of profit takers on shorts and they reside around the 1.3550/30 area.

AUDUSD: Order flow and information hard to come by right now, however I’m a dip buyer for choice looking for 0.9110 and 0.9080 to hold downside forays. On the upside there still remain more stops above 0.9175 and sellers join above there into 0.9200/30, however I wouldn’t expect such lofty heights to be attained today. On the downside the only piece of information I’ve received is that 0.9060 should mark good buying interest and thus support.

GBPUSD: Betty continues to motor to the upside but will likely run into headwinds as noted above around the 1.6480 area, with talk of options barriers at 1.6450, well you know the drill, stops above and we should get a push up there.

And generally speaking regarding the USD… Well this afternoon should provide some hints, but the way I see it playing out is initial USD buying, before a reversion later in the week. So either wait patiently to sell USD, or buy them now in expectations of reversing the position by around mid week..

Helmets on and good luck out there.