Something Expansive

January 29, 2012

AUDUSD for January 30 - February 4

Projections for this week (January 30 - February 4)
Will the Aussie reach great heights? It’s unclear to me, but if it does it has typically been short lived. The current all-time high is around 1.11 and that certainly seems out of reach, with the Australian economy showing some weakness, the US economy not self-sustaining yet and Europe also uncertain at the moment. China on the other hand seems to be going reasonably. Key indicators to look out for this week are the AU trade balance (should be bad) and US unemployment rate (if lower than 8.6% could be very good for the AUD). I’m thinking the AUD will bounce off 1.07 or 1.08 perhaps by Wednesday or Thursday.

Upcoming events this week:
ø US ADP non-farm employment change
ø ISM manufacturing PMI
ø AU building approvals
ø AU trade balance
ø US unemployment claims
ø US Fed chairman Bernanke testifies
ø US non-farm employment change
ø US unemployment rate
ø US ISM non-manufacturing PMI

Week in review (January 23 - January 28)
Despite some bad numbers the Aussie rose nearly 200pips this week, mostly due to the Fed’s commitment to keeping rates low, possible QE3 and the possibility Russia will make the AUD a reserve currency.

Supporting the AUD
+ US core durable goods orders (2.1% vs 0.9%)
+ US Fed committed to keep rates low throughout 2014 (an extension of 18 months to their prior commitment). They also hint at more bond buying (QE3).
+ Russia might buy the AUD as a reserve currency starting in February.

Neutral for the AUD
• AU PPI (0.3% vs 0.4%)

Against the AUD
- AU CPI (0.0% vs 0.2%)
- US pending home sales (-3.5% vs -0.6%)
- US unemployment claims (377K vs 371K)
- US new home sales (0.4% vs 0.7%)
- US advance GDP (2.8% vs 3.0%)

Charting & Comments
All uphill for the AUD this week. I’m looking for it to be trapped between 1.07 and 1.04. Breaching 1.07 will require something special.

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December 10, 2011

AUDUSD for December 12 - 17

Projections for this week (December 12 - 17)
More of the same channel trading within 1.00 - 1.04 to look forward to this week. The events to look out for are the AU trade balance, US FOMC statement and US core CPI. Very positive/negative results for these could break us out of the channel, but I see it as unlikely. As it approaches Christmas and people want money for spending, economic releases might be less significant and instead an appreciation of the USD may prevail. If this is the case going short AUDUSD until January 2 or 3 may be an option.

Upcoming events this week:
ø AU home loans
ø AU trade balance
ø US core retail sales
ø US retail sales
ø US FOMC statement
ø CN HSBC flash manufacturing PMI
ø US PPI
ø US unemployment claims
ø US Philly Fed manufacturing index
ø US core CPI

Week in review (December 5 - December 10)
Not much movement this week as the markets waited for the result of the EU summit. Following the lack of solution(s) at the summit our currency dropped followed by a recovery, allowing for trading either direction in the channel to be profitable this week. The Chinese economy showed more weakness while the Australian cash rate cut was already factored in. Also Moody’s downgraded debts of the 3 largest French banks (BNP Paribas, Societe Generale and Credit Agricole) because they probably hold a lot of PIIGS nations debts.

Supporting the AUD
+ US unemployment claims (381K vs 397K)
+ US prelim UoM consumer sentiment (67.7 vs 65.6)

Neutral for the AUD
• AU cash rate (4.25% vs 4.25%)
• AU GDP (1.0% vs 1.0%)
• US trade balance (-43.5B vs -43.5B)

Against the AUD
- US ISM non-manufacturing PMI (52.0 vs 53.6)
- AU employment change (-6.3K vs 10.3K)
- AU unemployment rate (5.3% vs 5.2%)
- CN CPI (4.2% vs 4.6%)
- CN trade balance (14.5B vs 15.4B)

Charting & Comments
Closing right in the middle of the channel and at almost the same place as the previous week, I wouldn’t be surprised to see similar results.

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December 3, 2011

AUDUSD for December 5 - 10

Projections for this week (December 5 - 10)
Monday may be up slightly as I suspect the good US unemployment figure may be having a delayed effect. The rest of the week has more possibility for ending lower as the cash rate is likely to stay the same with a possibility for a rate cut, where the rate cut will send the AUD lower. The other figures I’m also predicting to be neutral to negative for the AUD. This week almost all economic releases are important ones, less important ones have been crossed off.

I’m thinking a small rise on Monday followed by a sinking feeling the rest of the week, trapped between 1.00 - 1.04. Of course Europe and Central Banks could change this.

Upcoming events this week:
~~ø US ISM non-manufacturing PMI~~
ø AU cash rate
ø AU RBA rate statement
ø AU GDP
~~ø AU employment change~~
ø AU unemployment rate
~~ø US unemployment claims~~
ø US trade balance
ø US UoM preliminary consumer sentiment

Week in review (November 28 - December 3)
Manipulated markets! Is how I would describe this week. Another quick-fix to boost confidence as borrowing rates were lowered by the US Fed Reserve, European Central Bank, Bank of Canada, Bank of Japan, Bank of England and Swiss National Bank. On top of this the Peoples Bank of China reduced bank reserve requirements by 50 basis points. This sent the Aussie upwards from a low of around 96.5cents. The push was dulled by lower than expected AU retail sales on Thursday.

Supporting the AUD
+ US CB consumer confidence (56.0 vs 43.9)
+ AU private capital expenditure (12.3% vs 8.2%)
+ US ADP non-farm employment change (206K vs 131K)
+ US pending home sales (10.1% vs 1.4%)
+ US ISM manufacturing PMI (52.7 vs 51.6)
+ US unemployment rate (8.6% vs 9.0%)

Neutral for the AUD
• AU S&P downgrade big four banks (WBC, CBA, NAB, ANZ) debt (AA- vs AA)
• US non-farm employment change (120K vs 126K)

Against the AUD
- US new home sales (307K vs 313K)
- AU building approvals (-10.7% vs 3.6%)
- AU retail sales (0.2% vs 0.4%)
- AU manufacturing PMI (49.0 vs 49.8)
- US unemployment claims (402K vs 390K)

Charting & Comments
We seem to have hit a resistance just above 1.03. With the same level tested twice and bouncing off convincingly it looks likely that a fall will occur soon.

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November 21, 2011

AUDUSD for November 21 - 26

Projections for this week (November 21 - 26)
Sentiment will again be the main factor in the market this week as there are few economic releases and few of importance to the Aussie dollar. US preliminary GDP and the US FOMC meeting minutes could cause some major volatility.

As our dollar is just under parity it could move either way and I would take a long position if we can recover to 1.01 or short if we go under 0.99. European economics will be the deciding factor.

Upcoming events this week:
ø US existing home sales
ø US prelim GDP
ø US FOMC meeting minutes
ø CN HSBC flash manufacturing PMI
ø US core durable goods order
ø US unemployment claims

Week in review (November 14 - 19)
Despite many positive economic figures, the dollar followed my prediction of downwards after Monday (14 Nov), mostly due to European fears. Our dollar fell lower than parity as investors dumped equities in favour of the USD and JPY.

RBA Meeting Minutes
+ The European Financial Stability Facility (EFSF) has been approved by all Euro countries and has the capacity to lend around €1trillion through some form of leverage. Financial markets stabilising somewhat because of this.
• AUD moving through a 14% range this month; volatile.
- CN growth slower than previous levels
+ US economy improving slightly
- Lots of problems for Europe, Germany and France growth slowing. Italy and Greece.
- AU unemployment up
+ AU retail sales up
+ AU mining sector above trend
- AU non-mining sectors below trend

Supporting the AUD
+ US core retail sales (0.6% vs 0.2%)
+ US retail sales (0.5% vs 0.3%)
+ US TIC long-term purchases (68.6B vs 63.4B)
+ US building permits (0.65M vs 0.60M)
+ US unemployment claims (388K vs 396K)

Neutral for the AUD
• US core CPI (0.1% vs 0.1%)

Against the AUD
- US PPI (-0.3% vs -0.1%)
- US Philly fed manufacturing index (3.6 vs 8.7)

Charting & Comments
Hanging around the 1.00 S/R line the currency could move either way. Technicals I use aren’t going to be helpful until it begins to move. After it does move, channel trading will commence.

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November 12, 2011

AUDUSD for November 14 - 19

Projections for this week (November 14 - 19)
Will Europe crumble this week? Most of the volatility in the market seems to be hanging on it. If not this week, then when? or if at all? The RBA meetings, Glenn Stevens’ speech and the US core retail sales are the releases to look out for; save Greek and Italian economics.

The Aussie is currently at 1.0275, closing in on 1.04. Breaching 1.04 will depend upon all the economic data, if they are negative, then we can expect a fall back to parity. I think our currency is in a sustainable range at the moment (1.00 to 1.04), my prediction is a volatile week, in a mostly downward direction after Monday.

Upcoming events this week:
ø AU monetary policy meeting
ø US core retail sales
ø US PPI
ø US retail sales
ø US TIC long-term purchases
ø AU RBA Gov Glenn Stevens speaks
ø US building permits
ø US unemployment claims
ø US Philly fed manufacturing index

Week in review (November 7 - 12)
Italy is now a greater cause for concern than Greece with around $2.6trillion in debt, around 5x the Greek debt. The possibility of a Eurozone breakup was also talked about. This would be bad for for the nations in question, but the world as a whole could certainly prefer this in the long run.

Supporting the AUD
+ AU home loans (2.2% vs 1.7%)
+ CN CPI (5.5% vs 5.4%)
+ AU unemployment rate (5.2% vs 5.3%)
+ US trade balance (-43.1B vs -46.1B)
+ US unemployment claims (390K vs 401K)
+ US prelim UoM consumer sentiment (64.2 vs 61.3)

Neutral for the AUD
• AU employment change (10.1K vs 10.1K)

Against the AUD
- AU trade balance (2.56B vs 3.02B)
- CN trade balance (17.0B vs 26.3B)

Charting & Comments
Trapped between 1.00 and 1.04 for the week is my kind of prediction. As a fan of channel trading, it is quite ideal.

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October 25, 2011

AUDUSD for October 24 - 28

Projections for this week (October 24 - 28)
The markets will be awaiting the results of the EU economic summit this week. So far no solution has been agreed upon, but European governments are expected to reserve “as much as €108 billion to boost the cash reserves of banks weakened by their exposure to sovereign debt”. Which is sure to be comforting to the market. If such details are confirmed the Aussie would be pushed upwards, at least temporarily. Others to look out for this week are AU CPI and US advance GDP.

Currently the AUD is sitting right on a SR line, so it could move either way. Though my view of the AUD right now is pessimistic, if it were to rise it would be short-lived based on information we currently have. So I’m thinking a short rise to 1.05 if that followed by a fall to the more comfortable levels at 1.02 and 1.03.

Upcoming events this week:
- AU PPI (0.6% vs 0.8%)
ø AU CPI
ø US new home sales
ø US core durable goods orders
ø US advance GDP
ø US unemployment claims
ø US pending home sales

Week in review (October 17 - 21)
RBA meeting minutes:
- House prices down 3%
- Markets expect the cash rate to fall “significantly” by the middle of next year
- Market concern of Greek default
+ Modest AU GDP growth in June quarter
- Unemployment increase to 5.3%

Supporting the AUD
+ US PPI (0.8% vs 0.2%)
+ US TIC long-term purchases (57.9B vs 27.8B)
+ US philly fed manufacturing index (8.7 vs -9)

Neutral for the AUD
• US building permits (0.59M vs 0.61M)
• US unemployment claims (403K vs 401K)

Against the AUD
- CN GDP (9.1% vs 9.3%)
- US core CPI (0.1% vs 0.2%)
- US existing home sales (4.91M vs 4.94M)

Charting & Comments
All week the currency pair was bouncing between 1.04 and 1.01. The V-shaped activity I was predicting was a fairly reasonable estimate for Tuesday and Wednesday, finding support before 1.01 then returning to low 1.03s. However the amount of volatility the currency pair experienced was unanticipated.

Currently the AUDUSD is sitting right on the 1.04 SR line and seems to be edging its way upward very cautiously.

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October 18, 2011

AUDUSD for October 17 - 21

Projections for this week (October 17 - 21)

It seems little has changed since I last blogged. What I mean is Europe is still talking of contagion, US unemployment (9.1%) hasn’t improved, financial markets are still volatile and there is no sign of a global recovery (yet?).

As for this week the Aussie Dollar should range between 1.00 and 1.04. Falling to around 1.00 before a midweek recover on Wednesday or Thursday. I’m thinking Chinese GDP might be weak and the US rarely release any figures that bulls want to see. The releases that the market will be most sensitive towards are the Aussie meeting minutes, Chinese GDP and US core CPI.

Upcoming events this week:
ø AU monetary policy meeting minutes
ø CN GDP
ø US PPI
ø US TIC long-term purchases
ø US building permits
ø US core CPI
ø US existing home sales
ø US unemployment claims
ø US philly fed manufacturing index

Week in review (October 10 - 14)
Not much I can say since I didn’t really keep track of this week. However from the economic releases and the charts, it was a strong week for the Aussie on the back of unexpectedly good retail sales for the US, Australian unemployment improving slightly as well as hope for Greece’s debt.

Supporting the AUD
+ AU employment change (20.4K vs 10.1K)
+ AU unemployment rate (5.2% vs 5.3%)
+ US core retail sales (0.6% vs 0.2%)
+ US retail sales (1.1% vs 0.5%)
+ EU leaders seem close to finalising €8 billion loan tranche for Greece to be paid in early November

Neutral for the AUD
• AU home loans (1.2% vs 1.1%)
• CN CPI (6.1% vs 6.1%)
• US unemployment claims (404K vs 406K)
• US trade balance (-45.6B vs -46.0B)

Against the AUD
- CN trade balance (14.5B vs 17.1B)
- US prelim UoM consumer sentiment (57.5 vs 60.2)

Charting
I have left all the old S/R lines in place as they seem to be pretty reasonable still. Next week I will probably move them though. My feeling is that 1.04 is unlikely to be broken this week.

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May 9, 2011

AUDUSD for May 9 - 13

Projections for this week (May 9 -13)
Lots of action for the AUDUSD this week as it appears to be trade balance week. Besides those; China’s CPI, Australian unemployment and the score of US releases may swing the Aussie either way. I’m thinking we will be contained between 1.08 and 1.06 this week. With a inclination towards the Aussie peaking (for the week) Monday or Tuesday then dropping.

Upcoming events this week:
ø AU trade balance
ø CN trade balance
ø AU annual budget release
ø CN CPI
ø US trade balance
ø AU employment change
ø AU employment rate
ø US core retail sales
ø US retail sales
ø US PPI
ø US unemployment claims
ø US Fed Chairman Ben Bernanke Testifies
ø US core CPI
ø US prelim UoM consumer sentiment

Week in review (May 2 -6)
A really large swing from 1.10 to 1.05 occurred. Amongst other things, poor retail sales in AU and unemployment in the US not improving were the larger contributors.

Supporting the AUD
• US ISM manufacturing PMI (60.4 vs 59.9)
• AU building approvals (9.1% vs 5.1%)
• US non-farm employment change (244K vs 185K)
• AU RBA statement was positive. High terms of trade. Private investment growing, particular in resources. Strong growth in Asia. Europe uncertainty.

Against the AUD
• CN manufacturing PMI (52.9 vs 54)
• AU cash rate (4.75% vs 4.75%)
• US ADP non-farm employment change (179K vs 200K)
• US ISM non-manufacturing PMI (52.8 vs 57.9)
• AU retail sales (-0.5% vs 0.6%)
• US unemployment claims (474K vs 415K)
• US unemployment rate (9.0% vs 8.8%)

Charting
A strong resistance at the all time high of 1.10, a weaker resistance at 1.08. Around 1.06 is a strong support shown by the large wick on Friday followed by a long-wick “doji” (candlestick that is all wick) on Saturday.

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February 28, 2011

AUDUSD for February 28 - March 4

Projections for this week (February 28 - March 4)
Lots of numbers this week, the big ones being the Australian: GDP, trade balance, retail sales and cash rate (although this should be steady at 4.75%). Ben Bernanke and Glenn Stevens’ speeches could also be big market movers, same with the US unemployment rate if it’s a surprising figure. With the Aussie opening lower today, it seems 1.0200 is still a strong resistance line, but with all these figures yet to be released we could see a breach of the all-time high of 1.0256. I’m thinking the all-time high won’t be broken this week unless the cash rate is increased. If we see mediocre figures, then the AUD should range between 1.0000 and 1.0200

Upcoming events this week:
ø US pending home sales
ø AU retail sales
ø CN manufacturing PMI
ø AU cash rate
ø AU RBA rate statement
ø US Fed Chairman Ben Bernanke testifies
ø US ISM manufacturing PMI
ø AU GDP
ø US ADP non-farm employment change
ø AU building approvals
ø AU trade balance
ø US unemployment claims
ø US ISM non-manufacturing PMI
ø US non-farm employment change
ø US unemployment rate

Week in review (February 21 - 25)
As I suspected the Aussie headed down towards parity, all the way to 0.9942 even. However midweek it recovered strongly, closing at 1.0176. Glenn Stevens spoke positively on Wednesday, saying our terms of trade is at its highest in a long time (around 50 years). Also that the resource boom we are currently experiencing will last longer than previous booms. This surely set the tone for the rest of the week, all upward for the AUD. Nevertheless there is uncertainty on how long the boom will last and a reminder that the current pace of growth is much greater than it otherwise would be.

Supporting the AUD
• US CB consumer confidence (70.4 vs 65.1)
• US existing home sales (5.36M vs 5.27M)
• US unemployment claims (391K vs 403K)

Against the AUD
• AU private capital expenditure (1.3% vs 2.5%)
• US core durable goods orders (-3.6% vs 0.4%)
• US new home sales (-0.3% vs -0.2%)
• US prelim GDP (2.8% vs 3.3%)

Charting
The uptrend that occurred had candles that consisted of half a wick on the lower half, which shows that there was mixed sentiment reaching its current level. This is the second time the AUD has found support at around 1.0000, so we could see above parity as the new norm.

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February 20, 2011

AUDUSD for February 21 - 25

Projections for this week (February 21 - 25)
Monday and Tuesday should be fairly slow. There aren’t any big ticket numbers released on Monday and Tuesday is a bank holiday for America. I’m thinking the AUD will try and break 1.0200 followed by some oscillation back down towards 1.0000. The other scenario is breaking 1.0200 and perhaps breaking the all-time high into new territory.

Upcoming events this week:
ø US CB consumer confidence
ø AU RBA Governor Glenn Stevens speaks
ø US existing home sales
ø AU private capital expenditure
ø US core durable goods orders
ø US unemployment claims
ø US new home sales
ø US prelim GDP

Week in review (February 14 - 21)
My bearish thoughts about the AUD didn’t occur as our currency climbed all week save Wednesday when it dipped to around 0.994. By week’s end we closed at 1.0145 despite what seemed to be mostly poor news for the Aussie. I found Oanda’s Dean Popplewell had a reasonable explanation; saying “The lack of confidence in the US administration’s ability to deal with its issues has investors questioning owning the reserve currency (the US dollar)”.

Supporting the AUD
• AU home loans (2.1% vs 1.8%)
• CN PPI (6.6% vs 6.1%)
• US core CPI (0.2% vs 0.1%)
• US Philly Fed manufacturing index (35.9 vs 20.8)

Against the AUD
• CN trade balance (6.5B vs 10.5B)
• CN CPI (4.9% vs 5.3%)
• US core retail sales (0.3% vs 0.6%)
• US retail sales (0.3% vs 0.5%)
• US TIC long-term purchases (65.9B vs 91.3B)
• US building permits (0.56M vs 0.57M)
• US PPI (0.8% vs 0.9%)
• US unemployment claims (410K vs 401K)

Charting
No charts for this week.

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