Forex Blog

March 26, 2014

RBA’s Stevens: Lower AUD, improved global conditions will help growth

The post RBA’s Stevens: Lower AUD, improved global conditions will help growth appeared first on MarketPulse.

February 5, 2014

USD/SGD Technicals – USD Strength Expected To Shine Through

The recent emerging market turmoil actually helped SGD strengthen against SGD as regional funds escape their respective beleaguered economies and get into the only Triple A rated country in Asia with a stable outlook by all 3 major rating agencies – allowing SGD to shave off more than 1 Singapore cent against USD.

Daily Chart

USDSGD_050214D1

Currently, price is sitting just above the lower wedge, and the possibility of price rebounding from there is high given that Stochastic readings are already within the Oversold region which favors bullish scenarios moving forward. Furthermore, from a fundamental basis,  it is likely that a large part of the funds that have come into Singapore should be from within the region, a region that is not known for its deep pockets. As for funds that originated from out of the region, it is more likely that they would prefer to shift their money into traditional safe havens such as USD and JPY which are cheaper compared to their historical average, unlike SGD which is actually higher than the historical average. As such, it is unlikely that this safe haven flow into Singapore will continue for long, which impairs the long-term bullish potential of SGD even before we take into consideration that foreign funds are leaving Singapore as well.

On a comparative basis, USD is also slated to strengthen in 2014 due to continued QE tapering. This acts yet another bullish driver for USD/SGD, which makes long-term bearish follow-through below the lower wedge unlikely. This view is echoed from a technical perspective which says that prices will find further support around 1.262 – 1.265, potentially sending prices back up into the wedge once again.

USDSGD_050214H1

Short-term momentum is still to the downside though, as price has found it hard to break the 1.27 ceiling. With descending Channel Bottom coming into play in the next few hours, it will be hard to imagine USD/SGD able to find the bullish strength to break it unless something drastic happen during US market today. If not, immediate bearish direction towards 1.2675 is favored. Stochastic readings agree with this outlook as Stoch curve appears to have peaked. However, given that Stoch curve has since made a slight U-turn pointing higher after peaking, traders wishing to participate in the USD/SGD downward momentum may wish to seek further confirmation of Stoch level breaching 60.0 in conjunction with price breaking 1.269 soft support in order to ascertain the strength of short-term bearishness.

More Links:
EUR/USD – Consolidates around 1.35
AUD/USD – Breaks Through 0.88 to Three Week High above 0.89
GBP/USD – Bounces Off Support at 1.6250

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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.

The post USD/SGD Technicals – USD Strength Expected To Shine Through appeared first on MarketPulse.

AUD/USD breaks 0.89 round figure support during early European Trade. EUR/USD Higher.

Filed under: OANDA News — Tags: , , , , , , , , , — admin @ 7:55 am

The post AUD/USD breaks 0.89 round figure support during early European Trade. EUR/USD Higher. appeared first on MarketPulse.

January 15, 2014

IFO President: Lower German cur acc surplus leads to lower rescue package/ECB action

The post IFO President: Lower German cur acc surplus leads to lower rescue package/ECB action appeared first on MarketPulse.

October 31, 2013

ECB’s Nowotny: There will liquidity provisions to avoid “cliff effects” from 3Y LTRO expiration. EUR/USD Lower

The post ECB’s Nowotny: There will liquidity provisions to avoid “cliff effects” from 3Y LTRO expiration. EUR/USD Lower appeared first on MarketPulse.

NZD/USD back above 0.8250 after RBNZ Comments

The New Zealand dollar is trading higher late Thursday after rallying strongly on comments from the Reserve Bank of New Zealand early in the session.

Gains came after RBNZ Governor Graeme Wheeler described the New Zealand dollar as high, but said this gives the central bank “greater flexibility as to the timing and magnitude of future increases in the OCR (official cash rate),” ASB’s head of institutional FX sales, Tim Kelleher, said.  “Because he didn’t call the currency overvalued it’s basically carte blanche to tweak it higher again,” Mr. Kelleher said.

Westpac currency strategist Imre Speizer noted the market seemed to be positioned ahead of the release for “more emphatic concern regarding the exchange rate,” and when that failed to emerge, the New Zealand dollar rose 45 points against the U.S. dollar.

WSJ

The post NZD/USD back above 0.8250 after RBNZ Comments appeared first on MarketPulse.

August 20, 2013

AUD/USD – Led lower by Kiwi despite no “immenient rate cut”

To say that AUD/USD has seen better days recently is an understatement. Price was rallying within a tight Channel from Friday to Monday’s, rising steadily on the back of  before breaking lower during early US trading session. This decline was also spotted in NZD/USD and other major USD pairs, suggesting that the move was USD inspired, most likely due to increasing QE tapering fears which drove stock prices lower as well. In less than 24 hours, we’ve seen AUD/USD falling from yesterday’s Asia High of 0.923 to 0.912 when we started today’s Asian session. Prices went further lower following the release of the meeting minutes, compounding AUD/USD misery, with prices currently trading around 0.906 which was the swing low back on 15th August. The recent corrective rally has been invalidated, and bears are back in business once again.

Looking at RBA minutes specifically, it is hard to simply label the minutes as outright dovish. Despite saying that AUD is overvalued, a mandatory byline in recent months, RBA actually stated that further rate cuts are possible but “not imminent”. This suggest that we may not be seeing anymore rate cuts in the next few months, and potentially for the rest of 2013. Furthermore, considering that RBA has been acting dovish all year round, the “possible rate cuts” feels more like empty threats rather than a signal of dovish intentions. Traders who were expecting more rate cuts soon were rudely shocked, resulting in price pushing back up towards 0.912 initially. However, the short-term bullishness is no match for the overall bearishness which has been in play since yesterday, suggesting that sentiment behind AUD/USD is extremely bearish once again.

Events around Australia isn’t helping bulls either. Kiwi dollar traded lower sharply around the same time thanks to RBNZ’s Wheeler’s comment, dragging AUD down together with it as there was no mention of rate hike by Wheeler despite his claims that RBNZ needs to be more prudent moving forward. Considering that Swaps are pricing in more than 80 bps in rate hike for the next 12 months, it is reasonable to say that market is hugely disappointed. This disappointment resulted in RBA minutes being re-interpreted in a more dovish light, pushing AUD/USD further lower as traders choose to focus on the future possibility of rate cuts.

Hourly Chart

http://forexblog.oanda.com/mserve/AUDUSD_200813H1.PNG

From a technical perspective, prices is still trying to break the 0.906 support. Stochastic readings suggest that price is Oversold, but as with all strong trends, counter-trend signals from Stochastic tend not to be reliable and we should not automatically assume that 0.906 will hold just because of this. Nonetheless, a rebound is still possible, and price should push back up above 0.908 and preferably 0.91 round figure to suggest that recovery towards 0.914-0.918 is in play. It is likely that Stoch levels will be above 20.0 when price is above 0.908, and hence would be a good confirmation for the 0.914-918 move. On the bearish front, there is no short-term references for bears, and hence there is an open target for bears should 0.906 is broken. However, with readings being Oversold for an extended period of time, it is possible that we could see some form of small pullback to retest 0.906 once again. If the support turned resistance hold, this would be a confirmation for the breakout and gives bears a higher likelihood of follow-through.

Daily Chart

http://forexblog.oanda.com/mserve/AUDUSD_200813D1.PNG

Daily chart favors the bears, with price being rejected by the 0.92 ceiling which happens to be the confluence with Kumo’s Senkou Span A. Stochastic readings is also showing the beginnings of a bearish cycle. If both indicators are correct, we could see prices pushing back towards 2013 lows of 0.885 and potentially lower. Preferably price should rade below the 0.90 – 0.903 tail of 13th July candle to show bearish conviction. It is likely that this move would result in a bearish Kumo twist forward, adding credence to a bearish scenario.

Fundamentally, with Fed taper fears building up, we could see continued USD strength which will drag AUD/USD lower. However, should September FOMC meeting not result in any tapering plans reveal, it is possible that price may rebound higher on USD weakening. That being said, with market now starting to re-pricing in future rate cuts by RBA, coupled by Australia’s weakening fundamentals, it is unlikely that USD volatility will allow AUD/USD to pull a full bullish reversal just on a non-tapering event.

More Links:
GBP/USD – Finds Comfort from New Support Level of 1.56
NZD/USD – Wheeler Driving Price Down Despite Inflation Bump
EUR/USD – Resistance at 1.34 Stands Firm

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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.

Emerging Markets Suffer

There’s been no let-up in the ‘taper tantrum’ that has demolished stocks across the emerging markets in recent months, a trend that could continue as investors turn cold on an asset class that was a market favorite until about six months ago.

Emerging market stock indexes have registered severe, in some cases double-digit, losses since the U.S. Federal Reserve first began talking about scaling back its extraordinary monetary stimulus in late May.

Indonesia’s benchmark Jakarta Composite Index – the biggest loser among emerging markets – has plunged over 20 percent in the past three months, putting it in bear market territory.

CNBC

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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.

July 23, 2013

USD/SGD – Lower CPI giving scope for MAS SGD weakening

Filed under: OANDA News — Tags: , , , , , , , , — admin @ 7:01 am

Latest data from Singapore Statistic Department showed that June CPI came in +1.8% Y/Y, matching forecast. M/M inflation was slightly lower than the 0.3% forecast, coming in at 0.2% instead. On the back of this lower than anticipated number, Central Bank MAS slashed the full 2013 inflation forecast to a 2-3% range, but at the same time assuring the markets that GDP growth this year will “comfortably” meet the official 1-3% forecast. Certainly the GDP forecast shouldn’t be in doubt considering that the range is relative wide, and even after accounting for the continued decline in industrial output, it shouldn’t be an issue for Singapore to hit a minimum 1% GDP growth. Nonetheless, the lower than expected inflation growth will allow MAS to cut SGD a little bit looser. Previously, MAS reiterated that they are still currently keeping SGD on a mild appreciative curve. A big reason for this insistence for a stronger SGD can be attributed to MAS fears that inflation in Singapore will spiral out of control. All recent changes in regulatory requirements aimed to cool down the housing and automobile markets have failed, with prices continuing to rally up despite higher capital controls and higher cost of borrowings. Hence this lower than expected M/M CPI growth is welcomed with gladness, and it allows MAS slightly more scope to maintain a weaker SGD moving forward.

Hourly Chart

http://forexblog.oanda.com/mserve/USDSGD_230713H1.PNG

From a technical perspective, price has broken the descending Channel Top after rebounding from the Channel Bottom and the 1.26 floor. Currently price is facing new resistances in the form of overhead Kumo and the 1.264 structural resistance. Stochastic readings is deep within the Overbought region now, and suggest that price may not be able to break up higher from here easily. Should price bounce lower from where we are now, the immediate bearish target would be the Channel Top once again. Should Channel Top be broken, quick acceleration towards 1.26 and Channel Bottom may take place as the breakout from Channel will be regarded as a “fakeout”. Conversely, should price manage to breach 1.264, the buoyancy provided by Kumo and the magnetism of the flat Senkou Span B may draw price towards the 1.266 resistance quickly. But given that Stoch readings will be extremely Overbought then, it is likely that price will find it tough to simply break 1.266 from current bullish momentum. A pullback of some sort hence would be reasonable in this case, perhaps using 1.264 as support.

Weekly Chart

http://forexblog.oanda.com/mserve/USDSGD_230713W1.PNG

Weekly Chart shows price finding support via Senkou Span B and the confluence with the downward sloping trendline. Interestingly, Stochastic on the weekly chart is bearish, with a new bearish cycle being signaled right now. This bearish signal can be confirmed if price trades below the 1.26 support, more specifically the 1.257 Senkou Span B level. This may open up lower targets from 1.22 – 1.24, as the rally in June-July would be invalidated. However, given the previous track record of Stochastic readings in June, which saw Stoch readings rebounding up around  65.0, it is possible that Stoch readings may react similarly again. This would favor a move back towards July’s swing high, and affirms the rebound of trendline/Senkou Span B support and make a cash for a bullish extension of May’s initial breakout.

More Links:
AUD/USD – Moves Through 0.92 with the Resistance at 0.93 Looming Large
EUR/USD – Pushes Towards Resistance at 1.32
GBP/USD – Moves Strongly Through 1.53 to Three Week High

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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.

May 22, 2013

USD/JPY – Yen weakened on worse than expected Trade Balance

Filed under: OANDA News — Tags: , , , , , , , , , , , — admin @ 2:19 am

Despite various Japanese ministers saying that Abenomics have been a resounding success, the underlying economic numbers seem to suggest otherwise. Latest Merchandise Trade Exports Y/Y came in at 3.8, higher than March’s 1.1 but way under mark versus analysts estimates of 5.4. Imports have grew much larger than expected, coming in at 9.4 vs a 6.9 forecast, and a large jump from previous month’s 5.6. The extreme growth seen in imports compared to the smaller jump in exports worsen April’s Trade Balance to a negative ¥879.9B, more than double that of previous month’s -¥364.0B and larger than the expected -¥620.6B.

The more than proportionate increase in imports versus exports suggest that a large of the increase in exports is purely due to the lower Yen – not actual sales quantity, but rather sales revenue due to the stronger foreign currencies converting to more Yen back home. The same applies to the larger than expected imports. If this trend continues, import prices will continue to increase and start to erode the benefits brought about by higher export earnings, and that would eventually hit higher inflation – the bad kind. When BOJ talks about inflation, Kuroda was surely wanting a demand driven inflation – higher demand deriving from higher wages deriving from stronger economy. However this kind of inflation due to higher import costs do not benefit Japanese. In fact, consumer consumption will be even lower due to mismatch of inflation vs wage gains, and put Japan into deeper recession.

What will this mean for USD/JPY then?

Yesterday we’ve suggested that Yen may be weakened further if Abenomics fail, and BOJ may end up having a runaway Yen train under its watch. Today is a sign of what weak Japan economics data can do – USD/JPY rallied slightly from 102.4 to 102.6 after the news release, showing that market is starting to place an emphasis on Japan’s fundamental once again after neglecting it in favor of BOJ’s promises all this while. Previously we were seeking clarity on the market’s interpretation of Japanese bad data – a sign that Abenomics not working – and wondered if bad numbers may draw stronger Yen due to safe haven/ loss of faith in BOJ ability to further weaken Yen. But it seems that market is currently more in line with traditional interpretation of fundamental data – weak data = weak currency – a good sign that rationality is entering back into the market.

Hourly Chart

http://forexblog.oanda.com/mserve/USDJPY_220513H1.PNG

From a technical perspective, 102.6 remains a tough nut to crack. Even though Stochastic readings are pointing up with current reading poised to break 50.0 and above the previous peak just a few hours ago, previous swing highs last week between 15 – 17 May will continue to pressure price lower even if we trade higher towards 102.8.Furthermore, from a weekly perspective, current price action still fit within the lower highs lower lows mold, which puts current downtrend firmly in play.

Historical Open Orders

http://forexblog.oanda.com/mserve/USDJPY_Openorders220513.PNG

OANDA’s Historical Open Orders shows that USD/JPY may enjoy some slight support between now and 102.0. However, price may also find resistance closer to 102.8 – 103, which suggest that price may continue trading sideways around where we are right now. This is plausible with Ben Bernanke scheduled to speak in Congress later tonight (morning US time). Should Ben come out all guns blazing, shooting down the recent hawks, we could potentially see a continuation of USD/JPY downtrend as USD may weaken quickly. However, this may not necessary translate to longer term bearish reversal especially seeing only buy orders below 101.5 and especially if Japanese economic figures remain less than encouraging. Furthermore, whether USD will ultimately weaken even if Ben Bernanke proved to be dovish is in doubt – as stock prices would most likely be driven higher, which may actually result in stronger USD and hence higher USD/JPY instead. Traders are advised to keep their eyes on market reaction rather than assuming that market will interpret fundamentals the same way as you do.

Stay sharp.

More Links:
EUR/USD – Moves to One Week High Above 1.29
GBP/USD – Pound Sinks As UK Inflation Tumbles
USD/CAD – Edges Higher as Markets Await Bernanke Remarks

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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.

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