At the Open. It's US...and RBA showtime!

09:10CET

Good morning everyone, hope you are fine. Well, today had to be the day when all (or most) of the price action would be centered around the mid-term elections in the US, implications that such an event will have on the USD, bla bla bla... But we had an unexpected visitor overnight, who decided to join the show as well. Its name: Reserve Bank of Australia (RBA). It's contribution: to hike 25bps almost to everyone's surprise the country's interest rates and to offer a very upbeat view on Australia's economy. Immediate reaction: AUD/USD has hit parity for the 3rd time in as much weeks, putting the USD under a bit of pressure, although since the Europeans are not very healthy either at the moment, they have utterly failed to capitalize on the data.

Today may mark the shift in US policy direction if Republicans take over the lower house of the US....really? Come on, we're not that naive, are we? We know that today's news, even though important, will mean nothing compared to what tomorrow and Friday will happen, so it's kind of a smoke curtain rather than something for real, although the initial reaction may just seem otherwise.

Technically speaking, I'd prefer to keep shorting EUR vs the USD than any other pair at present as the Euro looks very weak to me, and if any bad news come from the EZ, we might have some fireworks there.

Let me give you how FX retail positioning is looking at this hour:

Nov 2, 2010 08:40 GMT+0100
READING: %LONG / %SHORT - Watch the AUD rise in shorts, pity, yesterday we almost had parity there.....

   1. AUD/USD
      39.83% 60.17%
   2. EUR/CHF
      57.38% 42.62%
   3. EUR/GBP
      46.09% 53.91%
   4. EUR/JPY
      61.24% 38.76%
   5. EUR/USD
      43.96% 56.04%
   6. GBP/JPY
      66.13% 33.87%
   7. GBP/USD
      36.65% 63.35%
   8. USD/CAD
      61.23% 38.77%
   9. USD/CHF
      74.13% 25.87%
  10. USD/JPY
      83.49% 16.51%

Posted via email from MT4