2015年10月12日星期一

2015年9月19日星期六

2015年7月26日星期日

Australia and New Zealand interest rates and the exchange rate is still much room for further decline

Capital Economics on Monday (July 27) in a research report pointed out that Australia and New Zealand interest rates and the exchange rate is still much room for further decline. Chinese forex blog said so.

Kay cast macro representation, is expected to enter in 2016, the Australian dollar will drop to 0.65, NZD / dollar will drop to 0.55; expected the RBA (RBA) cash rate to 1.5% eventually, the RBNZ (RBNZ) official cash rate will fall to 2.0%. The following reasons:

★ With the slowdown in gross domestic product (GDP) growth, both in Australia and New Zealand trade deterioration; significant deterioration in New Zealand GDP.

★ Australia May monthly rate of capital goods imports fell 17.6% in the second quarter showed that investment in plant and machinery and weakness.

★ New Zealand May stagnant residential building permits, another sign that the building boom after the earthquake reconstruction demand-driven drawing to a close.

★ weaker demand in China and Australia and New Zealand will restrict the recent weakness of the currency exchange rates boosted net exports.
Agency: Australia and New Zealand interest and exchange rates are expected to decline further

11:45 GMT, the Australian dollar against the US dollar reported 0.7290 / 93.

Barclays Capital said that in the near future Greece and its international gold master agreement conditional commodity currencies continued the decline

Barclays Capital said that in the near future Greece and its international gold master agreement conditional commodity currencies continued the decline, due to market concerns about the Chinese economy to make the foreign exchange market continues to trade sideways almost no people space.
Barclays: The Australian dollar continued to recommend short, the target to see 0.7000 in our forex blog.

And the famous "fight hamster" game is very similar, causing market volatility and nervousness of news events being followed. June and early July after China's stock market crash, the Chinese side indicators have begun to deteriorate, released last week, China in July manufacturing purchasing managers index (PMI) fell to 15-month lows to shrink situation, and the market is expected to significantly deterioration.

June commodity prices and related currencies such as the Australian dollar, New Zealand dollar, Canadian dollar and the Norwegian krone has plummeted. In a market risk sentiment relatively cautious environment, commodity prices continued to expect further weakness in the Australian dollar is still overvalued from the current level of continued downward (overvalued by about 10%) on.

And last week, the RBNZ cut rates by 25 points to 3.00 percent contrast, the RBA seemed reluctant to implement the necessary monetary stimulus measures, due to the country's largest city, Sydney house prices rise too quickly the situation, is still a major concern of monetary policy makers.

Thus, in the case of interest rate policy can not be put in place to further suppress the Australian dollar will be the only option for the RBA to safeguard stability in the economy can take. Barclays therefore recommend short Australian dollar continued, maintaining short positions starting from 0.7779, stop at 0.8180, the next target to see 0.7000.

12:00 GMT, the Australian dollar against the US dollar reported 0.7290 / 92.

2015年7月9日星期四

European stock markets are continuing to push higher as we approach the mid-session

European stock markets are continuing to push higher as we approach the mid-session. Investors are relieved that China’s attempts at halting the market turmoil there has finally worked – at least for now, anyway – as the Shanghai Composite closed up 5.75% overnight.  We have binary options platforms. In addition, optimism about the prospects of a Greek deal is growing as Prime Minister Alexis Tsipras is due to submit ‘credible’ reform proposals to the EU later. In the US, index futures are also pointing to a higher open on Wall Street  as the second quarter earnings season unofficially got underway last night after Alcoa reported its numbers. US investors may wait to see the results of a few company earnings before deciding on what to do with their long equity positions, which could be another factor helping to stabilise the markets. Meanwhile minutes from the FOMC’s last policy meeting yesterday contained very little in the way of new information other than what we already knew. However, as some FOMC members are concerned about the developments in China and Greece, the Fed may after all wait until the start of 2016 before hiking interest rates. The prospects of rates remaining low for slightly longer than expected is further good news for the stocks markets, and potentially bad for the dollar.

Like China’s Shanghai Composite and the S&P 500 in the US, Germany’s DAX has found strong support from its own 200-day moving average. This particular moving average is closely-watched and it is thought that some money managers and hedge funds have specific rules that prevent them from buying markets which trade below these averages. Others, particularly those that believe in the theory of mean reversion, have strategies that specifically require them to buy at or around the 200-day average. It is therefore encouraging to see these indices finding some much-needed strength at these levels. BUT it remains to be seen whether this bounce is indeed driven by strong buying pressure or merely short covering.

In the case of the DAX, the German index has also completed an AB=CD move. Point D of this move has been established at just below the 161.8% Fibonacci level of the BC swing at 10690. This Fibonacci exhaustion point is not too far below the long term 38.2% Fibonacci retracement level of the upswing from the October low, at 10855. The latter represents a relatively shallow retracement in the long-term bull trend and if the index were to find a clear base here, then the next move higher could potentially be explosive as it would suggest that the bulk of the market participants are still positioned long or at least hold a bullish view. Meanwhile the momentum indicator RSI has formed a clear bullish divergence with the index: it has made a higher low.

Thus, if the 200-day average support holds firm, as it is for the time being, a potential rally could be on the way, particularly as there are also a couple of market gaps that have yet to be “filled.”  The first such void is above the resistance level of 10995 and the second is above 11295. We could therefore see the DAX rally all the way to the upper trend of its bearish channel, particularly if we hear some good news regarding Greece.  The bear channel would turn into a long-term bull flag if the DAX eventually breaks out to the upside. If seen, this would be a very bullish outcome.

However, if the bounce from these levels fails to inspire a buying frenzy in the coming days then we could be in for a much larger correction. Indeed, if the DAX and co. break decisively below their 200-day averages, we could see further withdrawal of long positions from the group of market participants discussed above, which could exacerbate the sell-off. In this case, the DAX could easily drop to 10,000 or lower before deciding on its next move.

The Reserve Bank of Australia (RBA) is expected to keep its power dry at its monetary policy meeting on Tuesday

The Reserve Bank of Australia (RBA) is expected to keep its power dry at its monetary policy meeting on Tuesday. Since cutting the cash rate in may the RBA maintained an implicit easing bias at its policy meeting in June, while its board members expressed an explicit easing bias at other times. It’s clear the bank remains in wait-and-see mode with its figure on the policy-trigger, but it’s not ready to shoot yet.

The impact of prior easing still hasn’t had time to find its way into the economy, economic data since the bank last meet has broadly been encouraging and the Australian dollar has readjusted to a more comfortable level for the RBA, reducing the motivation of the bank to loosen policy further in the short-term. Australia’s economy grew 0.9% in Q1, accelerating from 0.5% in Q4 2015 and beating an expected 0.7% expansion. The economy’s year-on-year pace slowed to 2.3% from a revised 2.4% in the prior quarter, but this was still better than the market was expecting.

However, the RBA is still clearly concerned about the potential for a slowdown in growth in coming quarters, largely because non-resources parts of the economy are failing to pick up the slack being left behind by diminishing mining investment. This is highlighted by a lack of activity at the ground level in Australia; retail sales increased a measly 0.3% m/m in May, after falling a revised 0.1% in April.

Without an increase in consumer spending, corporates are likely to remain cautious. A lower exchange rate should theoretically encourage consumers to spend more and save less – this is monetary policy 101. However, an increase in activity at the ground level is unlikely without a jump in consumer confidence, which is constrained by negative investor sentiment and a soft labour market; it’s a vicious circle and the RBA doesn’t want to waste its ammunition, especially when the Australian dollar is falling without its help.

The exchange rate

The AUD has been a point of concern for the RBA ever since it began refusing to fall alongside key commodity prices. Yet, it has been stifled by negative investor sentiment stemming from Europe and China. Greece voted no to Austerity and China’s stock markets are struggling despite Beijing’s best efforts, making it a precarious time to own hazards assets, like AUD, despite its prior attractiveness to yield seekers. In fact, AUDUSD has been sent to a new five-year low due to the increased threat of a Grexit and the failure of Beijing to control its stock markets.

Greece says Oxi

The definite and loud ‘no’ from Greece means one of two things; either its international creditors fold or Greece goes bankrupt. It’s too early to tell exactly what is going to happen, but it seems more likely that Greece will break away from the eurozone after the No camp won over 60% of the vote. Even if it doesn’t, this venture into uncharted territory is likely going to result in volatile markets in the near-term.

Another wild day for Chinese equities

In China, Beijing froze new share listings and setup a fund to stabilise markets, after already significantly loosening monetary policy in response to the turmoil in China’s stock markets. However, it doesn’t appear to be working; the Shenzhen Composite opened around 7% higher, but it’s approximately 3% in the red at the time of writing. This is a huge intra-day move, even for China’s highly leveraged, highly volatile tech-heavy markets. It seems that the systemic risk in Chinese stock markets isn’t going away whilst global investor sentiment remains sour.

Market reaction

The recent moves in the Australian dollar, combined with strong GDP numbers and the RBA’s already accommodative monetary policy stance make it unlikely that the bank will loosen monetary policy further this time around, despite the risk of market turmoil stemming from overseas. The RBA will likely state that it is keeping a close eye on events in Europe and China, while maintaining its view that the exchange should remain depressed. It may also take the opportunity to further weaken the exchange rate by introducing an explicit easing bias, something which it hasn’t done at an official policy meeting lately.

The EUR/USD is again sharply lower today as investors await fresh news from Greece.

The EUR/USD is again sharply lower today as investors await fresh news from Greece. Following the weekend’s referendum which resulted in an emphatic “No” to the bailout offer from the trioka and the subsequent resignation of the outspoken Greek finance minister Yanis Varoufakis, the focus is now on Prime Minister Alexis Tsipras to present a new package of reforms to the euro zone leaders later today. If a deal is finally reached this week, it is likely that the EUR/USD’s initial reaction will be a positive one. Thus, any positive headlines regarding Greece leading up to a potential deal could support the euro. But once the initial euphoria fades, the EUR/USD may then resume its long term downward trend as investors focus back on the fundamentals and realise that the interest rate differential between the US and Eurozone is growing. Also, the single currency had been supported by the unwinding of the long equity and bond positions lately, and the corresponding rise in benchmark government yields. But yields have fallen back in recent days and if Greece is “saved”, it is likely that they would fall even further and stocks rally. Consequently, the EUR/USD may head south as the spread between US and euro zone yields widen. But if the unthinkable happens and Greece exits the euro zone, this too will be bad news for the EUR/USD. Thus, I think that the outlook for the EUR/USD is looking bearish from whichever angle you look at it.

Indeed even from a technical point of view, the EUR/USD appears to be on the verge of a breakdown. Yesterday, the worlds’ most heavily-traded FX pair gapped lower as traders responded to the weekend’s “No” vote in Greece. It spent the rest of the day ‘filling’ that gap before running into fresh selling pressure once it reached Friday’s closing level of 1.1095. From there it has pulled back quite sharply and this morning it momentarily dropped below yesterday’s low. But things could go from bad to worse if the EUR/USD goes on to break below last week’s low too, at around 1.0950/5. It is likely that a cluster of stop loss orders are sitting below this level. If they get triggered, we may well see a sharp move to the downside. Indeed, the next key support is all the way down at 1.0845, a level which corresponds with the 61.8% Fibonacci retracement of the up move from the March base. What’s more, price has already broken a bullish trend line and the momentum indicator MACD has created a bearish crossover and is below the “zero” level. But with the above-mentioned fundamentals working against the bulls, we wouldn’t be surprised if the euro went much lower over time. On the upside, the key resistance to watch is yesterday’s high at 1.1095. This level also corresponds with a short-term bearish trend line. For as long as price holds below here, the short-term bias would remain bearish.

The Australian dollar has been on the front foot lately as investors brush aside some risk-off sentiment from earlier in the week

The Australian dollar has been on the front foot lately as investors brush aside some risk-off sentiment from earlier in the week.  It seems the market isn’t as concerned about the possibility of a Grexit as initially thought, at least not yet, and the expected negative impact on Australian economy of such an event would be fairly limited. It’s worth noting that the still high yielding Australian dollar is an attractive option for cash leaving the euro, although this has to be weighed against stronger flows to the ultimate safe haven currencies, like the US dollar and yen.

A stronger than expected set of housing numbers from Australia today have also supported the currency in the Asia session, with building approvals jumping 2.4% in May (expected 1.2% m/m), bringing year-on-year growth to an impressive 17.6%. The data may not have a material long-term positive impact on the aussie, but they are helping to establish AUDUSD above 0.7700 in the short-term.

However, our medium-term bias for AUDUSD remains mildly bearish due to the cap that has been placed on the pair by the RBA and the belief that the US dollar will strengthen; a high AUD increases the RBA’s motivation to loosen monetary policy, which is generally a currency negative, hence the cap. That being said, it would likely take a substantial push towards the Australian dollar to have a material impact on the outlook for monetary policy.

From a technical perspective, AUDUSD is in no man’s land at the moment. There’s a lot of weight on the pair, but it still hasn’t been able to break through 0.7500/50. A push through this level may have to come from another potential US dollar rally. This unlikely threat of a US dollar rally and the aforementioned long-term weakness inherent in the aussie may keep AUDUSD broadly pinned below 0.8000.

the Australian dollar is eagerly awaiting the release of private capital expenditure numbers for Q1

It has been a very quiet afternoon in Asia due to a lack of market moving events and economic data. Things should begin to heat up tonight with the release of important US economic data. The deluge begins with the release of durable goods orders numbers, followed by services PMI, consumer confidence and new home sales figures. The data will help to shed more light on the US economic recovery and either add too or erode the recent push towards the US dollar that was sparked by Yellen’s hawkish comments on Friday.

Meanwhile, the Australian dollar is eagerly awaiting the release of private capital expenditure numbers for Q1 (Thursday at 1130AEST). CAPEX is expected to have contracted 2.2% last quarter, matching a fall in Q4 2014. The ABS also releases the second estimate for investment intentions in 2015-2016 and the final estimate for 2014-2015. Diminishing mining investment and a lack of activity in non-resource parts of the economy is weighing on corporate investment intentions. Estimate 2 for 2015-2016 should show a slight improvement from estimate 1, around 10 (E1 was 110bn), but be well below the same estimate from 2014-2015.

An even softer than expected reading may weigh heavily on the Australian dollar and increase the chance of another rate cut by the RBA. While the RBA isn’t expecting much from the mining sector, it is expecting non-resource parts of the economy to pick up the slack, at least at some point. The longer business confidence and investment intentions remain depressed, the longer the RBA must maintain an accommodative stance on monetary policy. On the other side of the equation, the quicker the economy recovers, the sooner the RBA can withdraw stimulus, either way the dollar is very vulnerable to the CAPEX numbers.

AUDUSD

AUDUSD is looking somewhat weak from a technical perspective and remains in a short-term downward trend. There’s some support around 0.7800 and then 0.7690/0.7700, before an all-important support zone around 0.7535. On the upside, we’re watching the top of the pair’s downward trend and then 0.8000.

After the SNB’s surprise decision to scrap its 1.20 EURCHF peg, this pair is trying to find its new equilibrium around 1.0500

The calm after the storm. After the SNB’s surprise decision to scrap its 1.20 EURCHF peg, this pair is trying to find its new equilibrium  around 1.0500, but it has come after a turbulent day when EURCHF fell to as low as 0.8517 at one stage.

If EURCHF does settle somewhere around 1.05 – 1.10 zone then Swiss exporters and those that hold CHF-denominated debt need to get used to a new normal where the Swissie is significantly higher than where they may have thought it would be at the start of this year.

Should we stockpile chocolate and watches?
Interestingly, as the Swissie has tried to claw back some earlier losses, the selling pressure on Swiss stocks has been pretty relentless today. The Swiss stock index has fallen nearly 13% as we approach the last hour of trading in London. Some of the big losers include the chocolate maker Lindt & Sprungli. The Lindt chocolate ball was ubiquitous in my house over the Christmas season, so should I rush to Canary Wharf’s Waitrose and stock pile? The answer is probably yes, as the US and Europe make up 85% of Lindt sales, and a stronger CHF could force the retailer to put up its EUR, GBP and USD prices to protect its profits. The CEO of watch manufacturer Swatch said that words failed him, calling today’s actions from the SNB a tsunami for the entire country.

So why did the SNB do it?

Probably to get ahead of a potential ECB QE announcement at its meeting next week. This decision makes ECB QE extremely likely, and it could be larger than the EUR 500 bn that market seems to think that the ECB will announce (see more here)

The SNB’s big EUR problem

The problem for the SNB is that its EURCHF peg was weighing heavily on its balance sheet. Since implementing the peg in August 2011, the SNB’s FX reserves have more than doubled, rising from CHF 200bn to EUR 500bn. Nearly half of these reserves are denominated in EUR. So, the SNB is long an asset that is losing value. The reason to say enough (eur) is enough right now, could be that the SNB thinks that the EUR may drift even lower in the coming months and it needs to divest as much of its EUR holdings as possible. Thus, today’s decision is not a vote of confidence in the future strength of the single currency.

Today’s decision may actually be self-fulfilling for the SNB. In order to maintain its peg it had to purchase a lot of EUR, by abandoning the peg, the EUR has lost one of its buyers “of last resort”, and the SNB’s move could accelerate the EUR’s downfall making it more important for the SNB to diversify into USD, JPY and even GBP going forward (Read more HERE).

Eastern European concerns

EURUSD has not been the only collateral damage from today’s action. Eastern European currencies including the Polish zloty and Czech koruna have also been pummelled today as investors worry about CHF denominated loans in these countries. Banks and individuals who are unhedged could find that their repayments have become a lot more unaffordable from today, which could spark a wave of defaults in this already beleaguered region.

Looking forward, without the peg what other tools does the SNB have to weaken the CHF and try to ward off deflation? The first is sporadic currency intervention and negative deposit rates (it cut rates by 50 bps earlier, taking the deposit rate to -0.75%). No doubt it will also try to sell its large EUR holdings, which could leave EURUSD as the biggest casualty of today’s move.

Takeaway:

·         EURCHF is finding some stability around 1.05 after a day of wild volatility for the Swissie.

·         The Swiss stock market is still suffering as a stronger franc hits the bottom line of exporters like chocolate makers and luxury goods companies.

·         The EUR may be the biggest casualty as the SNB tries to divest some of its huge EUR holdings in the coming months.

·         The SNB’s move, coming as it does ahead of next week’s ECB meeting, is a big no confidence vote in the future value of the EUR.

·         Expect sporadic intervention in the CHF by the SNB if it needs to weaken the Swissie in the coming months.

a technical pattern on AUDUSD that suggested .8145 would be a critical near-term pivot level for AUDUSD

Heading into the final trading day of the first full week, it seemed like today’s Non-Farm Payrolls report was the only topic of conversation for forex traders. As it turned out, that report had a little of bit something for everyone. The absolute quantity of jobs created in December was impressive, with headline employment growth rising by 252k, in addition to +50k revision to previous reports. However, the -0.2% reading in average hourly earnings, as well as the negative revision to last month’s earnings, spoke to a low quality of jobs and, most importantly for Fed policy, no inflationary pressure. After an initial spike in the US dollar, traders are now looking at this report as a negative for the greenback.

Yesterday, we focused in on a technical pattern on AUDUSD that suggested .8145 would be a critical near-term pivot level for AUDUSD (see “AUDUSD: Why .8145 is the Most Important Level to Watch” below for more). With today’s decline in average hourly earnings, the pair has now broken above that level, turning the pair’s near-term bias upward.

Now, the pair is pressing against previous resistance at .8215, but with both the MACD and RSI indicators turning higher, AUDUSD could easily clear that hurdle next week. Above there, the Fibonacci retracements of the mid-November to mid-December drop at .8325 (38.2%) and .8500 (61.8%) could come into play.

Finally, traders should note that there is a raft of fundamental data on tap for next week (including US Retail Sales, AU Employment, US PPI, and US CPI) that will heavily influence trade in AUDUSD.

AUDUSD: Why .8145 is the Most Important Level to Watch
The textbook definition of technical analysis is the use of past market data to help determine what future price action will bring. Because markets are driven by mass trader psychology and emotion, the same types of patterns tend to repeat over time. One simple but potentially effective form of technical analysis is the study of fractals, or repeating price action patterns. As we go to press, AUDUSD is tracing out a compressed version of the same pattern as it did two months ago, and this fractal suggests that the pair may turn lower off key resistance at .8145.
At the start of Q4 last year, AUDUSD….
1)      …dropped to a new multi-year low at .8700…
2)      …stabilized for a couple of weeks…
3)      …fell to a new low, characterized by a clear bullish RSI divergence…
4)      …then bounced back to the 61.8% Fibonacci retracement of the recent dip…
5)      …before rolling over for good and falling another 700+ pips
In an uncanny similarity to the Q4 price action, AUDUSD, at the beginning of December…
1)      …dropped to a new multi-year low at .8100…
2)      …stabilized for a couple of weeks…
3)      …fell to a new low, characterized by a clear bullish RSI divergence…
4)      …and has now bounced back to within striking distance of the 61.8% Fibonacci retracement of the recent dip…
Of course, fractals are not infallible, but if AUDUSD continues to follow its pattern, rates may stall out against the 61.8% Fibo at .8145, clearing the way for another leg down to new 6-year lows under .8000. Conversely, a break above the critical .8145 level would suggest a change in the “character” of the downtrend and could provide an early indication of a more substantial bottom (see my colleague Chris Tedder’s note from earlier this week for more on the bullish fundamental case for AUDUSD). Either way, traders should keep a close eye on .8145 ahead of the weekend and early next week.

2015年6月10日星期三

2015年4月29日星期三

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