FOREXYARD: Forex News Blog | |
- AUD/USD to Continue Upward Movement
- Aussie Dollar up Sharply on Rate Increase
- AUD/USD – Trading on News Events
- Bullish Correction Expected for the AUD
- SGX’s ASX Takeover Igniting Speculations of Further Mergers in the Region
- AUD/USD Moves Closer to Parity
- Aussie Dollar Moves Closer to Parity
- Is a Currency War Looming?
- Dollar Weakness Continues
| AUD/USD to Continue Upward Movement Posted: 03 Dec 2010 04:18 AM PST
After falling from a new high the Aussie dollar appears to have finished a correction to the intermediate trend line. Looking to the daily chart of the AUD/USD, the intermediate trend line (1) has taken the pair from a June low to a new record high in early November. After reaching a new all-time high of 1.0181 (2) the pair has corrected to the intermediate trend line which coincides with the pair's low of 0.9535 (3). A short term downward sloping trend line (4) has been drawn off of the recent highs. This trend line was breached during today's European trading session. We can expect resistance to come in at 0.9950 (5) along with the all-time high of 1.1081 (2). Should the upward trend fail to materialize, support is found at the double top of last November at 0.9400.
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| Aussie Dollar up Sharply on Rate Increase Posted: 02 Nov 2010 06:35 AM PDT
The day prior to the Fed's announcement that it will begin buying assets thereby increasing the money supply, the US dollar is not surprisingly weaker. Performing well against the greenback have been the Euro and the Aussie dollar. The Aussie dollar was stronger on the day following the decision by the Reserve Bank of Australia to increase interest rates by 25 basis points to 4.75%. The decision to raise rates was made in order to fend of increasing inflation in the Australian economy that is picking up speed due to the profitable mining industry. Many analysts were caught off guard with the rate hike as roughly 2/3 of analysts surveyed forecasted the RBA to hold rates steady at 4.50%. Following the announcement the Aussie dollar soared past parity with the US dollar and traded as high as 1.0022. The AUD/USD is currently trading at 1.0011, after opening the day at 0.9974. Traders were also bidding the euro higher following better than expected European Manufacturing PMI. The EUR/USD was trading higher at 1.4020, following an opening day price of 1.3916. Market watchers will be following two headline events to come both today and tomorrow; the US mid-term elections and the Federal Reserve Open Market Committee announcement. Both the AUD/USD and the EUR/USD should strengthen following these two events. The next resistance level for the EUR/USD is located at the October 25th high at 1.4080. |
| AUD/USD – Trading on News Events Posted: 29 Oct 2010 02:27 AM PDT
For traders interested in a "news trading" strategy, here is your guide. Looking at the AUD/USD over the past month, I noticed something interesting: this pair has actually been fluctuating sharply, and almost exclusively due to news events. Look at the chart below. I've noted the dates of each sharp movement to help make this a bit easier. Here is the timeline: Oct. 5: Australia's retail sales figures came out worse than forecasts; ANZ posted smaller growth in job advertisements; and the RBA held rates steady at 4.50% due to market pessimism. Result: AUD/USD dropped a whopping 104 pips over the span of a few hours, but rebounded once the US market opened following built-in short positions for the USD from an Oct. 4th announcement by Bernanke that the economy was in need of more easing. Oct. 7: At 00:30 GMT, Australia posted better-than-forecast employment change data. At 12:30 GMT, US posted better-than-forecast Unemployment Claims. Result: AUD/USD uptrend strengthened rapidly, peaking at 0.9916, followed (at 12:30 GMT) by a sharp correction due to American data. Oct. 8: At 12:30 GMT, US published worse-than-forecast Non-Farm Payroll data. Result: AUD/USD spiked upward 148 pips. Oct. 14: The entire week was filled with practically no relevant data for either currency. But on Oct. 14th, the US published worse-than-expected Trade Balance and Unemployment Claims figures. Result: AUD/USD almost reached parity, with a high price of 0.9996 on Oct. 15th. Oct. 18-19: By now the prospects of a quantitative easing move by the Fed had grown stronger, but traders were going long on the dollar due to a higher than expected TIC Long-Term Purchases report. The pair’s downward move came to a halt, however, when the US published a negative Building Permits report on the 19th. Oct. 25: At 00:30 GMT, Australia published stronger PPI figures than were expected. However, at 14:00 GMT, the US published much stronger housing data. Result: The AUD/USD spiked towards 0.9975 in early trading hours, but collapsed back downward after the US housing data was published. Positive US data published on Oct. 26th continued to strengthen this downward momentum all the way through to the 27th. Oct. 27: Aussie data came out worse than expected, driving the pair to its lowest point since Oct. 5, with a price of 0.9651. Oct. 28: Australia's RBA announces that more data established another decision to maintain rates where they are. Pessimism grew. Result: The minor upward correction seen prior then turned bearish. Oct. 29 (today): Anticipation of a positive reading from the US Advance GDP today is driving the pair lower as traders price-in a bullish USD. If the data disappoints, this pair will likely turn upward sharply like it has in the recent past. AUD/USD – 4-Hour Chart Conclusion: Basically, trading on news events over the past few years has been tricky due to the strange nature of the markets (See the final section of my In-Depth Analysis on “The Greek Crisis” for a better description of this bizarre behavior). However, the AUD/USD pair has recently returned to normal trading behavior, with news events having clear indications for direction. Forex traders would be wise to notice this and start designing trading strategies, with Entry Orders and pre-programmed Stops/Limits, to start capturing these 100-150 pip swings. Check the economic calendar for the next week's events from the US and Australia and start planning your strategy now. |
| Bullish Correction Expected for the AUD Posted: 28 Oct 2010 11:41 PM PDT
Following a sharp decline over the past few days, the AUD seems to be headed for a bullish correction. Forex traders are advised to take advantage of this knowledge by going long on AUD/NZD now, and at a great entry price! Below is a 8 hour chart of AUD/NZD. The technical indicators are the RSI, Slow Stochastic and Williams Percent Range. - A breach of the lower Bollinger Band is evident on the chart (1), indicating an imminent upward correction may be expected. - A bullish cross is evident on the Slow Stochastic (2), signaling the next move may be an upward correction. - The RSI (3) signals that the price of this pair currently floats in the over-sold territory, suggesting upward pressure. - Williams Percent Range (4) further supports the upward direction.
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| SGX’s ASX Takeover Igniting Speculations of Further Mergers in the Region Posted: 26 Oct 2010 06:25 AM PDT
Yesterday's formal announcement of Singapore Exchange's takeover of ASX has been stirring Asian markets while making both investors and policy makers uneasy. ASX ended down 7.4% in Sydney Tuesday while SGX shares slumped the most in two years yesterday. Investors' opposition comes from the assumption that the price offered by SGX was too high, almost twice the average for takeovers of financial companies worldwide in the past year. Such a high premium comes as a surprise as Australia is a mature market and does not provide the high growth potential emerging markets do. The main opposition, however, comes from policy makers who are reluctant to see such a big portion of the Australian economy in foreign hands. The merger will have to face tough regulatory and parliamentary approval, raising doubts the deal can go through. While the Stock Exchanges involved in the merger dropped, other Asian Exchanges saw steep rises. The proposed merger is likely to draw greater investor attention to the region. Asia is a fast growing market place with many U.S and European based exchanges looking for exposure in the region. The Hong Kong Stock Exchange is currently the largest exchange in the world. The recent deal ignited speculations of the possibility of further exchange consolidations in the region. Whether or not this deal will actually be approved it appears as though the Asian markets will the focus in the near future as investors move from established, slow growing markets to the faster growing emerging ones. |
| AUD/USD Moves Closer to Parity Posted: 20 Oct 2010 03:02 AM PDT
The AUD/USD made a sharp fall after the Chinese central bank announced a rate hike. Despite the Australian positive data released earlier, the news from China had a negative impact on the pair. Although the pair is now supported in its lower levels, our technical analysis shows it could be just a temporary retracement and AUD/USD parity is sure in sight. After the pair fell from around 0.9900 to around 0.9650 on the Chinese move, it now bounced back above 0.9700. This line, 0.9650, served as a resistance line when the Aussie was climbing higher, and now worked as strong support after other lines collapsed. We will be looking at the daily chart for AUD/USD. The technical indicators being used are the Bollinger Bands, MACD and Relative Strength Index (RSI). - The RSI, while not quite in the oversold region yet, is pointing downward and is approaching the lower support line. Should the indicator move below the 30 level, traders can take this as a sign that the pair may see a bullish correction.
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| Aussie Dollar Moves Closer to Parity Posted: 06 Oct 2010 09:27 PM PDT
Strong employment data from Australia helped to lift the Aussie dollar as the AUD/USD eyes the 1.00 level. An interest rate differential between Australia and the US has given traders reason to continue buying the Aussie Dollar. As the Fed mulls further easing of monetary policy the gains in the pair should continue. Today's Market Events: GBP – MPC Rate Statement and Asset Purchase Facility – 11:00 GMT Economists are not expecting any changes to British interest rates or to the levels of quantitative easing by the Bank of England. Inflation expectations and comments on the British government's talk to lower government spending could make waves. The next target for the GBP/USD is the 1.6000. EUR – Minimum Bid Rate – 11:45 GMT No change is expected in the European Central Bank interest rate but President Trichet may put further support behind the euro while encouraging further buying. Now that the EUR/USD has taken out the March resistance at 1.3817, the 2010 high of 1.4578 may come into play. USD – Unemployment Claims – 12:30 GMT If yesterday's ADP unemployment data was a preview of what the weekly unemployment numbers will look like, the dollar may be in for further selling today. The USD/JPY could continue to fall towards its all-time low of 79.70. |
| Posted: 05 Oct 2010 09:46 PM PDT
The Bank of Japan surprised the financial markets Tuesday by announcing a 35 trillion yen ($418 billion) monetary easing program as well as stating it would cut its key overnight call rate to a range of 0.0%-0.1% for the foreseeable future. It also launched a 5 trillion yen program to buy private and public sector assets. The new monetary easing measures were taken in order to spur economic growth and to combat the unrelenting deflationary pressures. While markets were expecting some form of intervention to combat the ever rising yen, the extent of the monetary easing program caught investors by surprise. Bank of Japan Gov. Masaaki Shirakawa stated that the decision to undertake additional monetary easing measures was based on a worse-than-expected outlook for the Japanese economy. The Japanese recovery was hurt greatly by the strong yen as the country's economy is export driven and a strong domestic currency diminished the gains from this sector. Unfortunately for the Bank of Japan, while it might have been the first central bank to act, as recoveries in industrial nations falter, it can be expected that several central banks will soon follow suite. The USD/JPY pair remained virtually unchanged following the surprise announcement as expectations mount the Federal Reserve will be the next to act, pumping money into the U.S. economy, negating Japan’s yen-weakening program. The Federal Reserve has signaled last month they may announce the purchase of more Treasuries as soon as their next policy meeting on Nov. 2-3 in an effort to boost growth and reduce the unemployment rate which is hovering near 10% for the past year. Federal Reserve Bank of Chicago Governer, Charles Evans, reiterated this notion today by calling on the Fed to do more to charge up the economy, including a new program of U.S. Treasury bond purchases and possibly setting a higher inflation target. While other Central Banks may not be looking into further quantitative easing measure, they are suspending their interest rate increases. The most notable recent example is the Reserve Bank of Australia which Monday, unexpectedly left its benchmark rate unchanged at 4.5% despite a widely expected increase to 4.75%. It seems that the BOJ's next move will depend on the Federal Reserve as well as other Central Banks among the G20 nations. With growth stagnating in the developed nations we may be at the beginning of what some analysts have nicknamed as a "monetary easing war." |
| Posted: 23 Sep 2010 02:49 AM PDT
The dollar continues to fall as traders sell the dollar in light of the Fed's recent comments that open the door for more quantitative easing. However, the euro is rising despite a selloff in equities. Yesterday the Dow Jones Industrials finished the day down 0.2%. Despite the down day for equities, the dollar was also weaker with the euro and the Swiss franc putting in a strong performance. Today traders are going to be eyeing data releases in the US for direction in the FX markets. USD – Unemployment Claims – 12:30 GMT The weekly data for new unemployment benefits may surprise the market with a positive outcome, helping to increase risk appetite and a rise in the rate of the EUR/USD. Traders should be targeting their EUR/USD bets at 1.3510.This level is the 50% Fibonacci retracement from the 2009 high. Support is found at the height of the June to August bullish move at 1.3330. USD – Existing Home Sales – 14:00 GMT This report measures the annualized number of residential buildings that were sold in August. If the report comes in positive, it is typically dollar positive. But this time we may see the report serve to increase risk taking and provide a boost to the weakened US equity markets. This would in turn spur traders to sell the dollar and buy higher yielding currencies such as the Aussie dollar. The AUD/USD could rise to yesterday's high just below the 0.9600 level. |
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