Forex Blog

October 19, 2014

Australia 200 – Desperately Trying to Return to Above 5400

Australia 200 for Monday, October 20, 2014

Since the beginning of September the Australia 200 Index has declined strongly from its multi-year high after running into resistance around 5650 back to enter its previously established trading range between 5400 and 5500, before falling further below 5200 and to an eight month low around 5120 a couple of weeks ago.  It enjoyed support from the 5200 level and is still fighting hard to rally higher above 5200 after recently threatening to break through this level for the first time since February 2014. Earlier last week it received solid support from the 5100 level which saw it rally well in the last few days to close out last week.  Several weeks ago the 5400 level was called upon to offer support as the index desperately tried to stay in touch with its range, however it fell through there before rallying strongly back up to 5400.  Up until recently, the 5400 level had done well and propped up price to keep it within the range.

In its recent fall at the beginning of August it moved down to a three week low around 5375, however it received solid support at the 5400 level which has allowed to consolidate and rally higher. The solid move higher throughout July saw it move strongly up through both the 5500 and 5550 levels to reach a then six year high around 5620. In recent weeks it has discovered a new key level to deal with after running into a short term resistance level at 5550, which earlier last week provided some solid support. It reversed strongly several weeks ago bringing it back down to almost touch the 5400 level before rallying back higher again. At the beginning of June the Australian 200 Index fell and broke back down through the key 5500 level towards a four week low around 5400 before consolidating and resting on support there for an extended period.

The 5400 and 5500 levels firmly established themselves as significant and now that we have seen a substantial break to one side, momentum has kicked in and seen the index fall strongly lower. Back at the end of May, it moved back and forth between the two key levels of 5500 and 5550 before the recent fall. Over the last couple of months the Australia 200 Index has formed an amazing attraction to the key 5500 level as it spent a considerable amount of time trading around it. A couple of weeks ago, the index fell away heavily back down to support around 5400 before returning to the key 5500 level just as quickly, as if gravity had pulled it back. The index has done very well over the last couple of years moving from below 4000 to its present trading levels around 5500.

The background to economists commentary this in Australia week was a sobering speech from the RBA.  RBA assistant governor Guy Debelle referred repeatedly to a potential sell-off in financial markets once the current period of unusually low volatility inevitably ended, and to the likelihood that it could be violent.  Later that night, the US share market turned downward, only to bottom out more than four per cent lower a little over 24 hours later.  More than one economist referred to the market action as “carnage” – they included St George Bank’s Besa Deda and NAB’s Spiros Papadopoulos.  Merrill Lynch economists Saul Eslake and Alex Joiner zeroed in on Dr Debelle’s remark that a lower exchange rate would help to achieve balanced growth in the Australian economy.  “This passage again makes it abundantly clear that the RBA wants to see the $A lower still and is focused more on its supporting of economic growth than being concerned about any inflationary impact it may have,” they said.  September quarter inflation figures are due on Wednesday.  Commonwealth Bank’s Michael Blythe thinks economists might be surprised by the strength of the rise in the CPI.

(Daily chart below)

asx_20141020

Australia 200 October 19 at 23:00 GMT   5307   H: 5307   L: 5307

Australia 200 Technical

S3 S2 S1 R1 R2 R3
5100 5500 5650

During the hours of the Asian trading session on Monday, the Australia 200 Index is going to try to rally higher and remain above the recent support level at 5200, after recently breaking through this level for the first time since February 2014. For most of this year the Australia 200 Index has moved well from the lower support level at 5000 up to the multi-year highs above 5500 in the last month or so.

Further levels in both directions:

• Below: 5100.

• Above: 5500 and 5650.

Economic Releases

  • 21:45 (Sun) NZ External Migration (sa) (Sep)
  • 05:00 JP Leading indicator (Final) (Aug)
  • 08:00 EU Current Account (sa) (Aug)
  • 10:00 UK CBI Industrial Trends (20th-25th) (Oct)
  • 12:30 CA Wholesale Sales (Aug)
  • EU EU Foreign Ministers Hold Meeting in Luxembourg

* All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

October 2, 2014

Australia 200 – Support Around 5250 Continues to Assist

Australia 200 for Friday, October 3, 2014

For all of September the Australia 200 Index has declined strongly from its multi-year high after running into resistance around 5650 back to enter its previously established trading range between 5400 and 5500, before falling further below 5250 in the last week.  A couple of weeks ago the 5400 level was called upon to offer support as the index desperately tried to stay in touch with its range, however it fell through there before rallying strongly back up to 5400 early last week. It has now fallen sharply to a seven month low below 5250 and it hopes to stay in touch with the well established range between 5400 and 5500. Up until recently, the 5400 level had done well and propped up price to keep it within the range. For most of this year when the index has fallen to the 5400 level, it has bottomed out at around 5370 so it will be interesting to see whether this happens again now. All of this was preceded by a solid move higher bouncing strongly off the support level at 5400. Just prior to the surge it fell sharply over a couple of weeks returning back to more familiar territory between the 5400 and 5500 levels.

In its recent fall at the beginning of August it moved down to a three week low around 5375, however it received solid support at the 5400 level which has allowed to consolidate and rally higher. The solid move higher throughout July saw it move strongly up through both the 5500 and 5550 levels to reach a then six year high around 5620. In recent weeks it has discovered a new key level to deal with after running into a short term resistance level at 5550, which earlier last week provided some solid support. It reversed strongly several weeks ago bringing it back down to almost touch the 5400 level before rallying back higher again. At the beginning of June the Australian 200 Index fell and broke back down through the key 5500 level towards a four week low around 5400 before consolidating and resting on support there for an extended period.

The 5400 and 5500 levels have firmly established themselves as significant and any substantial break to either side will most likely be a significant move and be closely monitored. It is quite likely many are sitting on the sidelines waiting for the break before committing as they continue to watch the index move between these two levels. Back at the end of May, it moved back and forth between the two key levels of 5500 and 5550 before the recent fall. Over the last couple of months the Australia 200 Index has formed an amazing attraction to the key 5500 level as it spent a considerable amount of time trading around it. A couple of weeks ago, the index fell away heavily back down to support around 5400 before returning to the key 5500 level just as quickly, as if gravity had pulled it back. The index has done very well over the last couple of years moving from below 4000 to its present trading levels around 5500.

Australia’s trade deficit is on the improve, and should continue to shrink as the Australian dollar falls.  The trade deficit narrowed to $787 million in August, from a deficit of $1.075 billion in July, Australian Bureau of Statistics figures show.  Exports fell two per cent while imports were down three per cent.  The figures showed a lower Australian dollar would support domestic economic activity by making imports less attractive, Commonwealth Bank economist John Peters said.  The Australian dollar has taken a dramatic fall in the past month, falling from 94 US cents to an eight-month low of 86.64 US cents.  But that means Australians will start paying more for imported goods and travel, Mr Peters said.  “This is always a double-edged sword for consumers who have basked in cheap imported goods and services on the back of the strong Australian dollar,” he said.  “These are now becoming more expensive as the Australian dollar tracks lower. So domestic producers are winners at the expense of consumers.  “Higher petrol, auto and clothing and footwear prices are perfect examples of this economic dynamic. As well, holidays abroad are more expensive for peripatetic Aussies.”

(Daily chart below)

asx_20141003

Australia 200 October 2 at 23:25 GMT   5263   H: 5310   L: 5223

Australia 200 Technical

S3 S2 S1 R1 R2 R3
5250 5500 5650

During the hours of the Asian trading session on Friday, the Australia 200 Index will be trying to rally higher after falling sharply to below 5250. For most of this year the Australia 200 Index has moved well from the lower support level at 5000 up to the multi-year highs above 5500 in the last month or so.

Further levels in both directions:

• Below: 5250.

• Above: 5500 and 5650.

Economic Releases

  • 08:00 EU Services PMI (Sep)
  • 08:00 EU Composite PMI (Sep)
  • 08:30 UK CIPS/Markit Services PMI (Sep)
  • 09:00 EU Retail Trade (Aug)
  • 12:30 CA Merchandise Trade (Aug)
  • 12:30 US Private & Non-farm Payrolls (Sep)
  • 12:30 US Trade Balance (Aug)
  • 12:30 US Unemployment (Sep)
  • 14:00 US ISM Non-Manufacturing (Sep)

* All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

AUD/USD – Rallies and Steadies at 0.88

AUD/USD for Friday, October 3, 2014

The last few weeks has seen a strong decline for the Australian dollar moving from close to 0.94 down to below 0.87 and an eight month low in the process.  In the last few days it has taken a breather above 0.87 by rallying back to 0.8750 and more recently steadying around 0.8800.  A couple of weeks ago the Australian dollar found some much needed support at 0.8950 and rallied back up to just shy of the key 0.90 level before resuming its decline. The long term key level at 0.90 was called upon to desperately provide some much needed support to the Australian dollar, which it did a little a couple of weeks ago, however it has more recently provided resistance. Several weeks ago the Australian dollar showed some positive signs as it surged higher again bouncing off support below 0.93 and reaching a new four week high around 0.94 however that all now seems a distant memory.

The Australian dollar reached a three week high just shy of 0.9480 at the end of July after it enjoyed a solid period which saw it surge higher through the resistance level at 0.9425 to the three week around 0.9480, before easing back towards that level. The Australian dollar enjoyed a solid surge higher reaching a new eight month high above 0.95 at the end of June, only to return most of its gains in very quick time to finish out that week. Since the middle of June the Australian dollar has made repeated attempts to break through the resistance level around 0.9425, however despite its best efforts it was rejected every time as the key level continued to stand tall, even though it has allowed the small excursion to above 0.95.

After the Australian dollar had enjoyed a solid surge in the first couple of weeks of June which returned it to the resistance level around 0.9425, it then fell sharply away from this level back to a one week low around 0.9330 before rallying higher yet again. Its recent surge higher to the resistance level around 0.9425 was after spending a couple of weeks at the end of May trading near and finding support at 0.9220. Throughout April and into May the Australian dollar drifted lower from resistance just below 0.95 after reaching a six month high in that area and down to the recent key level at 0.93 before falling lower. During this similar period the 0.93 level has become very significant as it has provided stiff resistance for some time. The Australian dollar appeared to be well settled around 0.93 which has illustrated the strong resurgence it has experienced throughout this year.

Australia’s trade deficit is on the improve, and should continue to shrink as the Australian dollar falls.  The trade deficit narrowed to $787 million in August, from a deficit of $1.075 billion in July, Australian Bureau of Statistics figures show.  Exports fell two per cent while imports were down three per cent.  The figures showed a lower Australian dollar would support domestic economic activity by making imports less attractive, Commonwealth Bank economist John Peters said.  The Australian dollar has taken a dramatic fall in the past month, falling from 94 US cents to an eight-month low of 86.64 US cents.  But that means Australians will start paying more for imported goods and travel, Mr Peters said.  “This is always a double-edged sword for consumers who have basked in cheap imported goods and services on the back of the strong Australian dollar,” he said.  “These are now becoming more expensive as the Australian dollar tracks lower. So domestic producers are winners at the expense of consumers.  “Higher petrol, auto and clothing and footwear prices are perfect examples of this economic dynamic. As well, holidays abroad are more expensive for peripatetic Aussies.”

(Daily chart / 4 hourly chart below)

a_20141003 a_20141003_4hour

AUD/USD October 2 at 23:10 GMT   0.8796   H: 0.8826   L: 0.8722

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8700 0.9000 0.9100 0.9425

During the early hours of the Asian trading session on Friday, the AUD/USD is consolidating right around 0.8800 after recently rallying higher from below 0.8700. The Australian dollar was in a free-fall for a lot of last year falling close to 20 cents and it has done very well to recover slightly to near 0.95 again earlier this year. Current range: trading right around 0.8800.

Further levels in both directions:

• Below: 0.8700.

• Above: 0.9000, 0.9100 and 0.9425.

OANDA’s Open Position Ratios

a_20141003_ratio

(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for the AUD/USD has moved up to 65% as the Australian dollar has edged higher to 0.8800.   The trader sentiment remains in favour of long positions.

Economic Releases

  • 08:00 EU Services PMI (Sep)
  • 08:00 EU Composite PMI (Sep)
  • 08:30 UK CIPS/Markit Services PMI (Sep)
  • 09:00 EU Retail Trade (Aug)
  • 12:30 CA Merchandise Trade (Aug)
  • 12:30 US Private & Non-farm Payrolls (Sep)
  • 12:30 US Trade Balance (Aug)
  • 12:30 US Unemployment (Sep)
  • 14:00 US ISM Non-Manufacturing (Sep)

* All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

EURUSD edges up to 1.2670, AUDUSD steady around 0.8800, GBPUSD drops to 1.6150, USDJPY at 108.40, gold at 1214

October 1, 2014

USD/JPY Breaks 110 As Diverging Monetary Policy Set to Continue

The U.S. dollar briefly hit a six-year high above 110 yen Wednesday in Tokyo on views that the diverging monetary policy outlooks of the central banks of the United States and Japan would lead to wider interest rate gaps between the two countries.

At 5 p.m., the dollar bought 109.84-86 yen compared with 109.55-65 yen in New York and 109.41-42 yen in Tokyo at 5 p.m. Tuesday. It moved between 109.60 yen and 110.09 yen, the highest since August 2008, during the day and changed hands most frequently at 109.90 yen.

The euro was quoted at $1.2595-2596 and 138.35-39 yen against $1.2626-2636 and 138.45-55 yen in New York and $1.2684-2686 and 138.78-82 yen in Tokyo late Tuesday afternoon.

The yen fell against the U.S. currency as the Bank of Japan’s Tankan business sentiment report released in the morning suggested the country’s economy may need additional easing measures by the central bank.

Confidence among major nonmanufacturers dropped from the BOJ’s last survey three months earlier, still reeling from a consumption tax hike in April, while large manufacturers unexpectedly grew optimistic by a small margin.

But the dollar’s rise took a breather as traders awaited the release of U.S. job data later in the week for signs the Federal Reserve will raise its key interest rate sooner than previously thought, dealers said.

via Mainichi

September 19, 2014

September 9, 2014

Japan FinMin Issues Concern About Currency Volatility

Finance Minister Taro Aso expressed concern Tuesday about sharp currency moves as the U.S. dollar hit its highest level in nearly six years against the Japanese yen.

“A sharp rise in the foreign exchange rate means there is a high possibility that the rate will also fall steeply, so it is desirable that the rate moves moderately,” Aso said at a press conference.

Economic and fiscal policy minister Akira Amari also said at a separate news conference that rapid currency fluctuations are not beneficial for the global economy.

Their remarks came after the dollar topped 106 yen for the first time since October 2008 on Monday, amid growing speculation that the U.S. central bank may raise its interest rate sooner than expected while the Bank of Japan may implement additional monetary easing, widening the interest rate gap between the two nations.

The latest data have shown that the U.S. economy is on a recovery track, but Japan’s economy is stalling as the 3-percentage-point consumption tax hike to 8 percent from April 1 is dealing a heavy blow to domestic demand.

With fears intensifying about the negative impact of the second round of the two-stage tax hike to 10 percent scheduled in October 2015, Aso emphasized that Prime Minister Shinzo Abe’s government will prepare necessary measures to shore up Japan’s economy.

via Mainichi

US and Japan Talk Farm Tariffs Ahead of TPP

Japan and the United States resumed bilateral talks on Tuesday over Tokyo’s proposed exceptions to tariff elimination for key farm products under a Pacific free trade initiative, aiming to set the stage for Tokyo and Washington to secure a two-way agreement within the month.

The two-day working-level talks in Tokyo come after the Japanese minister in charge of Trans-Pacific Partnership negotiations said it is desirable for Tokyo and Washington to secure a bilateral deal by the end of September.

A deal between the two largest economies involved in the TPP negotiations is seen as vital to advancing the broader talks involving 12 nations. How much progress Tokyo and Washington make this month could determine whether the dozen nations involved in the negotiations can seal a broad deal by year-end as envisioned by U.S. President Barack Obama, trade observers said.

Hiroshi Oe, Japan’s deputy chief negotiator for the TPP, and Wendy Cutler, acting deputy U.S. trade representative, are heading the working-level negotiating teams. They are planning to meet again within this month.

Obama has placed the TPP, which would encompass 40 percent of global gross domestic product and a third of world trade, at the core of his “rebalance” to Asia, while for Japanese Prime Minister Shinzo Abe, it is a pillar of his growth strategy to shore up the country’s economy.

Though both Japan and the United States share the goal of striking a deal at an early date, they have struggled to settle huge disagreements over Japan’s calls for exempting five farm product categories — rice, wheat, beef and pork, sugar, and dairy — from tariff elimination, causing the overall negotiations to stall.

via Mainichi

August 19, 2014

Switzerland To Benefit From Russian Sanctions

Switzerland is facing a diplomatic dilemma over its decision not to go along with international sanctions against Russia, imposed by the European Union and the United States in response to the crisis in Ukraine.

Neutral, and not a member of the EU, Switzerland has chosen instead to ban the export of military equipment to both Russia and Ukraine, and says it intends to make sure financial sanctions imposed by the EU and the US cannot be broken in Switzerland.

The Swiss government says it is especially important to preserve neutrality amid the tensions between Russia and Ukraine, because Switzerland currently chairs the Organisation for Security and Co-operation in Europe (OSCE) and has offered its services as a peace negotiator between the two countries.

But some EU members have suggested the Swiss position is motivated more by self-interest, pointing to the fact that Switzerland did not adopt sanctions against apartheid South Africa – a move thought to have brought big financial gains to Swiss banks.

via BBC

July 23, 2014

EUR/USD Below 1.35 on Fed and ECB

The dollar advanced to the highest in eight months versus the euro as borrowing costs and monetary policies between the two economies diverge.

Australia’s dollar rose to the most since November against the shared currency after the central bank chief said he was content with monetary policy. Brazil’s real gained against all 16 major peers as swap rates dropped to an 11-month low. Russia’s ruble posted the biggest gain in almost a month. The annual increase in U.S. consumer prices was unchanged as the Federal Reserve weighs the pace of tightening monetary policy while the European Central Bank has offered unprecedented stimulus.

“The ECB policy supports a weaker currency, so therefore I would expect euro will continue this pace of moving lower,” Lennon Sweeting, a San Francisco-based dealer at the broker and payment provider USForex Inc., said in a phone interview. “Toward year-end we should be settling in somewhere around $1.30, and a more aggressive forecast maybe even $1.28.”

Bloomberg

Older Posts »

Powered by Efacilitators Hosting