My picks: Sell Short AUD/JPY in Any Rally
Expertise: Fundamentals and Sentiment
Average Time Frame of Trades: 1 day - 3 months

I have been trying to find a bottom in the AUD/JPY without that much success. Indeed, the Japanese yen has been the main beneficiary of the lack of confidence in the financial system and the current environment of uncertainty and de-leveraging in financial markets makes high yielding currencies vulnerable to a complete collapse. In fact, despite the good fundamentals of the Australian economy the AUD/JPY is clearly in a bear market and one investor could achieve betters risk adjusted returns by selling any rally.

Sentiment Analysis for USD/JPY

The ratio of long to short positions in the USDJPY stands at 1.47 as nearly 59% of traders are long, according to the FXCM SSI which measures the positioning of thousands of retail traders. Last week, the ratio was at 1.42 as 59% of open positions were long. Short positions are down by 18.2% since last week and retail traders have been covering their USDJPY short trades. The SSI is a contrarian indicator and signals more USDJPY losses

Sentiment Analysis for AUD/USD

The ratio of long to short positions in the AUDUSD stands at -1.08 as nearly 52% of traders are short, according to the FXCM SSI which measures the positioning of thousands of retail traders. Last week, the ratio was at 1.40 as 58% of open positions were long. Retail traders have been selling the AUDUSD and short positions are up by 0.9% since last week.

My picks: Pending AUDNZD Short
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week

Panic has once again taken over for the typical risk aversion. Conditions seem out of control for many asset classes, but currencies have been relatively reserved. This is pariticularly interesting for the most risk sensitive currencies (like the Japanese yen, Australian dollar and New Zealand dollar). Jumping on an already overextended trend or calling for a massive reversal from any of the Aussie or kiwi crosses is a crap shoot. Therefore, it is important to find a sound technical trend, fundamental support and something remotely resembling safe harbor from the overwhelming influences of risk appetite.

To remove some of the volatility related to the ebb and flow of risk appetite, only AUDNZD comes close to closing the gap with a 150 basis point spread. Fundamentally, this isn't really a carry opportunity; rather, the Aussie dollar is dropping in reaction to the delayed bearish outlook for the economy and its interest rates. When the RBA cut its rates by 100 basis points, it revealed a willingness to aggressively ease from a central bank that is usually conservative. What's more, the recession in New Zealand was fully expected, but the market seems to be just coming to grips with the one in Australia. Technically, the downtrend is clear. However, in these market conditions, setup is important. Therefore, I'll be looking for a daily close below 1.10 before I am confident enough that the bear trend will carry through.

My picks: Short AUD/JPY (But Not Yet)
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1 - 3 Days

With risk aversion driving price action in the markets, I think it's worthwhile to stay long JPY. Since we're focusing on AUD and NZD today, I'll be looking for opportunities to sell AUD/JPY but not at current levels. This pair has seen incredibly steep declines but my concern is that we could see a sharp retracement higher. We're seeing signs of stabilization between 64.50 and 65.50, which could yield a break lower, but it's tough to find a trade that shows good risk/reward potential. Thus, I would look to sell AUD/JPY on a bounce back up to 69.77/70.00. Otherwise, I'll be on the sidelines when it comes to AUD and NZD today.

My picks: Short NZDUSD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 2-4 Days

As long as commodity prices continue to fall and the global growth outlook dims, I have to remain bearish on the com dollars. I made the mistake yesterday of thinking a bottom was forming and watched the USDCAD shoot higher. Although I do see a turn coming, it is hard to go against the trend given current market sentiment. Retail sales are due out on Monday and further weakness will continue to weigh on the Kiwi, as the RBNZ is expected to have several more rate cuts ahead of them. Especially, after all the major banks cut rates last week. The 10/08 low of 0.5786 is in sight, with the 0.5639 September 03 low as a longer term target.

My picks: Short AUD/JPY
Expertise: Fundamentals Combined with Technicals
Average Time Frame of Trades: 2 - 10 Days

The AUDJPY has fallen quite dramatically over the week on the back of fading risk sentiment, and may slide further as the flight to safety continues. Just this week, the pair has slipped 1500+ points to break below major support levels, and the 100 Day SMA has just crossed below the 200 Day SMA, which has favored a bearish outlook for the pair. I anticipate the pair to fall further over the following week, and forecast the aussie-yen to work its way down towards the 10/29/01 low of 61.22.