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Daily Observations: December 12, 2012

Daily Observations: December 12, 2012

Christopher Vecchio, CFA, Senior Strategist

Current Positions:

- Short AUDUSD from 1.0582, Stop at 1.0630, Target 1 at 1.0515, Target 2 at 1.0460, Target 3 at 1.0415

- Long EURCHF from 1.2018, Stop at 1.1990, Target 1 at 1.2500, Target 2 at 1.2750

- Short EURUSD from 1.3085, Stop at 1.3130, Target 1 at 1.3030, Target 2 at 1.2950, Target 3 at 1.2880

- Long USDJPY from 80.65 (1/2), Stop at 82.05 (daily close), Target 2 at 83.30, Target 3 at 84.00

Recently Closed Positions:

- Exited Short EURUSD from 1.2975 at 1.3030 for -55-pips

- Exited Short NZDUSD (1/2) from 0.8379 at 0.8405 for -26-pips

Time Frame: 1-day to 1-week

The past few days I've said: "sell US Dollar strength ahead of the Fed meeting tomorrow, in particular against high beta (AUD, CAD, NZD)...I will be looking long USD following Chairman Bernanke's press conference, as I imagine that the AUDUSD (1.0610/30), EURUSD (1.3110/30), and S&P 500 (1435) will be near key resistance levels."

I'm sticking to my trading plan here, especially given the rhetoric of Chairman Bernanke's press conference - that a wind-down of stimuli could occur once certain economic benchmarks are hit. With the US economy improving in the near-term, it's unclear that this iteration of QE will hurt the US Dollar at present time. Just like the Reserve Bank of Australia rate cut was priced into the Australian Dollar last week, I think that this easing was expected for a long-time coming, and the US Dollar could see a rebound shortly.

In terms of recent trades, two intraday calls did not pan out, as the run up to the Fed's meeting was a bit more dramatic than I anticipated; nevertheless, proper risk management (using weekly and monthly pivots as objective levels) insulated my trades from even larger losses.

Any other trade ideas and general macroeconomic musings can be found in the Real Time Newsfeed, or by following me on twitter @CVecchioFX.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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