AUD/USD Forecast May 8, 0212, Technical Analysis

The AUD/USD pair gapped down at the open for the Monday session like all “risk related” pairs, but the markets turned back around in the end as the gaps were all filled. The Aussie gave back some of the gains for the session in order to close right at the 1.02 level. The failure to stay above that handle suggests to us that there is still significant risk to the downside in this market. In fact, we are willing to sell at this point as we already have a sell signal based upon the bearish flag that we pointed out a couple of days ago. Buying isn’t a thought at the moment. 

AUD/USD Forecast May 8, 0212, Technical Analysis
AUD/USD Forecast May 8, 0212, Technical Analysis

AUD/USD Fundamental Analysis May 9, 2012 Forecast

Analysis and Recommendation: (close of Asian session)

The AUD/USD is trading at 1.0185. The Aussie fell on Friday after comments from the RBA to high a recent low, on Monday the AUD was able to regain some strength to move back from the 1.01000 levels but today’s trade balance figures continue to weaken the Australia dollar.

Australia’s trade deficit widened in March, exceeding forecasts of an increased deficit, according to data by the Australian Bureau of Statistics.

According to the figures, Australia’s trade deficit for the month of March was a seasonally adjusted $1.59 billion, a rise of $833 million on last month.

This compares with an upwardly revised deficit of $754 million in February, a rise of $833 million.

Economists’ forecasts had centered on a deficit of $1.2 billion in March.

During March, exports rose 2.0 per cent in adjusted terms while imports lifted 5.0 per cent, the ABS said on Tuesday.

Economic Reports for May 7-8, 2012 actual v. forecast

   

 

AUD

 

 

 

Building Approvals (MoM) 

7.4%

 

3.1% 

 

-8.8% 

 

 

 

 

 

AUD

 

 

 

NAB Business Confidence 

4

 

 

 

 

 

 

 

 

AUD

 

 

 

Retail Sales (MoM) 

0.9%

 

0.2% 

 

0.3% 

   

 

 

 

CHF

 

 

 

Unemployment Rate 

3.1%

 

3.1% 

 

3.0% 

   

 

 

 

CHF

 

 

 

CPI (MoM) 

0.1%

 

0.2% 

 

0.6% 

 

 

 

 

 

EUR

 

 

 

German Factory Orders (MoM) 

2.2%

 

0.5% 

 

0.6% 

   

 

 

 

CAD

 

 

 

Building Permits (MoM) 

4.7%

 

-1.5% 

 

7.6% 

   

May 08

 

 

GBP

 

 

 

RICS House Price Balance 

-19%

 

-10% 

 

-10% 

 

 

 

 

 

AUD

 

 

 

Trade Balance 

-1.59B

 

-1.40B 

 

-0.75B 

   

 

Upcoming Economic Events that affect the AUD, NZD, JPY and CNY

May 08

02:30

 

AUD

 

 

 

Trade Balance 

-1.59B

 

-1.40B 

 

-0.75B 

   

 

16:45

 

USD

 

 

 

FOMC Member Fisher Speaks 

 

 

 

 

 

 

 

May 10 

02:30

 

AUD

 

 

 

Employment Change 

 

 

-5.5K 

 

44.0K 

 

 

 

02:30

 

AUD

 

 

 

Unemployment Rate 

 

 

5.3% 

 

5.2% 

 

 

 

Tentative

 

CNY

 

 

 

Chinese Trade Balance 

 

 

7.93B 

 

5.35B 

 

 

 

13:30

 

USD

 

 

 

Import Price Index (MoM) 

 

 

-0.2% 

 

1.3% 

 

 

 

13:30

 

USD

 

 

 

Trade Balance 

 

 

-50.0B 

 

-46.0B 

 

 

 

13:30

 

USD

 

 

 

Initial Jobless Claims 

 

 

369K 

 

365K 

 

 

 

13:30

 

USD

 

 

 

Continuing Jobless Claims 

 

 

3278K 

 

3276K 

 

 

 

14:30

 

USD

 

 

 

Fed Chairman Bernanke Speaks 

 

 

 

 

 

 

 

 

19:00

 

USD

 

 

 

Federal Budget Balance 

 

 

30.0B 

 

-198.2B 

 

 

 May 11 

02:30

 

CNY

 

 

 

Chinese PPI (YoY) 

 

 

 

 

-0.3% 

 

 
 

02:30

 

CNY

 

 

 

Chinese CPI (MoM) 

 

 

 

 

0.2% 

 

 

 

06:30

 

CNY

 

 

 

Chinese Fixed Asset Investment (YoY) 

 

 

 

 

20.9% 

 

 

 

06:30

 

CNY

 

 

 

Chinese Industrial Production (YoY) 

 

 

 

 

11.9% 

 

 

 

06:30

 

CNY

 

 

 

Chinese Retail Sales (YoY) 

 

 

 

 

15.2% 

 

 

 

13:30

 

USD

 

 

 

Core PPI (MoM) 

 

 

 

 

0.3% 

 

 

 

13:30

 

USD

 

 

 

PPI (MoM) 

 

 

 

 

0.0% 

 

 

 

14:55

 

USD

 

 

 

Michigan Consumer Sentiment 

 

 

 

 

76.4 

 

 

 

Government Bond Auctions (this week)

Date  Time  Country 

May 09  09:10  Sweden 

May 09  09:30  Germany 

May 09  09:30  Swiss 

May 09  09:30  UK 

May 09  14:30  Sweden 

May 09  15:30  Italy  

May 09  17:00  US 

May 10  15:00  US 

May 10  17:00  US 

May 11  09:10  Italy   BOT auction

May 11  10:00  Belgium

AUD/USD Fundamental Analysis May 8, 2012 Forecast

Analysis and Recommendation: (close of Asian session)

The AUD/USD  has managed to climb off a low of 1.011 to trade at 1.0157 still down for the day.

Last week the RBA reduced its key lending rate by 50bps which surprised markets and sent the Aussie in a tailspin. On Friday, in a prepared statement the RBA said it was reducing its growth forecast for Australia for 2012 and adjusting its inflationary targets further weakening the AUD which was trading at the 1.04 range earlier in the week.

Midweek the USD moved up on news of manufacturing expansion, holding the Aussie to a lower trading range. On Friday, a confusing but disappointing Nonfarm payroll report showing that the US creates just 120K in jobs when the forecast was much high, should have sent the dollar falling, but it almost did the opposite, investors were now sure that the Fed would come to the rescue pushed the dollar to recent highs.

Several eco reports for Oz were released today, all were positive and should have supported the Australian dollar to help it move up, but they had little assistance.

Building approvals were double the forecast and retail sales were 4 times the forecast which should have offset last month’s negative data. We should see the Aussie show a little strength.

 

AUD

 

 

 

AIG Construction Index 

34.9

 

 

 

36.2 

 

 

 

JPY

 

 

 

Monetary Policy Meeting Minutes 

 

 

 

 

 

 

 

 

TWD

 

 

 

Taiwanese CPI (YoY) 

1.44%

 

1.40% 

 

1.25% 

   

 

AUD

 

 

 

Building Approvals (MoM) 

7.4%

 

3.1% 

 

-8.8% 

   

 

AUD

 

 

 

NAB Business Confidence 

4

 

 

 

 

 

 

AUD

 

 

 

Retail Sales (MoM) 

0.9%

 

0.2% 

 

0.3% 

   

 

AUD

 

 

 

ANZ Job Advertisements (MoM) 

-3.10%

 

 

 

0.70% 

   

 

IDR

 

 

 

Indonesian GDP (YoY) 

6.3%

 

6.3% 

 

6.5% 

 

 

 

CHF

 

 

 

Unemployment Rate 

3.1%

 

3.1% 

 

3.1% 

 

 

 

Economic Events for May 8, 2012

00:01   GBP              RICS House Price Balance                           -10%               -10%

02:30   AUD             Trade Balance                                              -1.40B             -0.48B

06:45   CHF               GDP                                                                                        0.1%

06:45   CHF              SECO Consumer Climate                            -18                   -19

13:15   CAD             Housing Starts                                               202K             216K

  Government Bond Auctions (this week)

Date  Time  Country 

May 08  09:15  Austria 

May 08  09:30  Belgium 

May 08  14:30  UK 

May 08  15:30  Italy  

May 08  17:00  US 

May 09  09:10  Sweden 

May 09  09:30  Germany 

May 09  09:30  Swiss 

May 09  09:30  UK 

May 09  14:30  Sweden 

May 09  15:30  Italy  

May 09  17:00  US 

May 10  15:00  US 

May 10  17:00  US 

May 11  09:10  Italy   BOT auction

May 11  10:00  Belgium

AUD/USD Forecast May 7, 2012, Technical Analysis

The AUD/USD pair fell hard for the Friday session as the “risk off” mode took over again. The pair broken through the 1.02 level, and we feel that the bearish flag we suspected as being formed is broken. The parity level below should be support, but at the end of the day it is very possible we fall much lower. Until we get to the parity level though, there is no way to know how the markets will react. None the less, we are selling this pair now on a fresh break of the Friday lows.

AUD/USD Forecast May 7, 2012, Technical Analysis
AUD/USD Forecast May 7, 2012, Technical Analysis

AUD/USD Forecast for the Week of May 7, 2012, Technical Analysis

The AUD/USD pair fell hard for the week as the “risk off” attitude came back into the markets. The jobs number in the US was poor on Friday, and we saw a real rout as a result. Because of this, all risk related assets fell during the session, and as a result the Aussie fell as well.

The breaking below of the hammer from last week is a massively bearish sign, and this should lead to more selling. The 1.02 level was the start of support, so the move lower could be a choppy one. We are selling a break of the previous week’s lows as a sign to sell though. 

AUD/USD Forecast for the Week of May 7, 2012, Technical Analysis
AUD/USD Forecast for the Week of May 7, 2012, Technical Analysis

AUD/USD Weekly Fundamental Analysis May 7 – 11, 2012, Forecast

Introduction:  The Australian dollar still isn’t in its good old days, but the performance is definitely improving. Resistance lines tend to work in a smoother manner than support lines, but they also work well. The pair move well together, not much volatility, but easy to chart and easy to trade with low risk factors

Weekly Analysis and Recommendation:

The AUD/USD ended the week at 1.0180 plummeting on negative comments from the RBA and a revision in growth forecast.

Highest: 1.0461

Lowest: 1.0170

Difference: 0.0291

Average: 1.0302

Change %: -2.33

This week the RBA announced a reduction in their growth forecast for 2012, stating that problems for the eurozone and exports as well as higher inflation are limiting growth in Australia.

This coupled with the .50bp rate reduction earlier in the week has caused the weakness in the AUD.

Also this week Australian inflation rose 0.3% in April, according to the TD Securities – Melbourne Institute monthly inflation gauge.. That was lower than a 0.5% increased recorded by the survey in March.

Homes sales weakest in more than a decade –Inflation gauge suggest RBA clear to cut rates –Housing credit remains subdued in March

Major Economic Events for the past week actual v. forecast

 

AUD

 

 

Interest Rate Decision 

3.75%

 

4.00% 

 

4.25% 

 

 

 

USD

 

 

ISM Manufacturing Index 

54.8

 

53.0 

 

53.4 

 

 

 

USD

 

 

ADP Nonfarm Employment Change 

119K

 

177K 

 

201K 

   

 

NZD

 

 

Unemployment Rate 

6.7%

 

6.3% 

 

6.4% 

   

 

EUR

 

 

Interest Rate Decision 

1.00%

 

1.00% 

 

1.00% 

 

 

 

USD

 

 

Initial Jobless Claims 

365K

 

380K 

 

392K 

   

 

USD

 

 

Nonfarm Payrolls 

115K

 

170K 

 

154K 

   

 

USD

 

 

Unemployment Rate 

8.1%

 

8.2% 

 

8.2% 

 

 

 

CAD

 

 

Ivey PMI 

52.7

 

61.0 

 

63.5

   

 

Economic Highlights of the coming week that affect the AUD,JPY, NZD and USD

May 7

1:30

AUD

 

Building Approvals m/m

   

-7.8%

1:30

AUD

 

Retail Sales m/m

   

0.2%

May 8

1:30

AUD

 

Trade Balance

   

-0.48B

9:30

AUD

 

Annual Budget Release

     

21:00

NZD

 

RBNZ Financial Stability Report

     

May 9

23:50

JPY

 

Current Account

   

0.85T

May 10

1:30

AUD

 

Unemployment Rate

   

5.2%

TBD

CNY

 

Trade Balance

   

5.4B

12:30

USD

 

Trade Balance

   

-46.0B

12:30

USD

 

Unemployment Claims

   

365K

May 11

1:30

CNY

 

CPI y/y

   

3.6%

12:30

USD

 

PPI m/m

   

0.0%

13:55

USD

 

Prelim UoM Consumer Sentiment

   

76.4

Upcoming Government Bond Auctions

Date  Time  Country 

May 08  09:15  Austria 

May 08  09:30  Belgium 

May 08  14:30  UK 

May 08  15:30  Italy  

May 08  17:00  US 

May 09  09:10  Sweden 

May 09  09:30  Germany 

May 09  09:30  Swiss 

May 09  09:30  UK 

May 09  14:30  Sweden 

May 09  15:30  Italy  

May 09  17:00  US 

May 10  15:00  US 

May 10  17:00  US 

May 11  09:10  Italy   BOT auction

May 11  10:00  Belgium

AUD/USD Monthly Fundamental Forecast May 2012

Outlook and Recommendation

The AUD/USD  ended the month at 1.0423 but has fallen continuously since the RBA cut interest rates and growth forecast in early May.

The Australian dollar (AUD) is in range-trading mode despite the Reserve Bank of Australia’s unexpected decision to lower its benchmark policy rate by 50 basis points to 3.75%. We forecast AUDUSD to regain an appreciating bias and close the year at 1.09 on the grounds of still supportive interest rate and growth differentials and a high yield target for portfolio diversification. The core group of floating Asian currencies, such as the South Korean won (KRW), the Taiwanese dollar (TWD) and the Thai baht (THB) are also poised to resume an appreciating tone.

In April the Aussie traded as shown below:

Highest: 1.0475

Lowest: 1.0227

Difference: 0.0248

Average: 1.0354

Change %: -0.03

 

The Australian dollar (AUD) has been weighed down by a dovish central bank. However, the market has likely gotten too aggressive pricing in almost 100 bps of interest rate cuts over the next 12-months. Accordingly, as China undergoes a soft landing, the outlook for Australian fundamentals should improve leaving the market scrambling to get long AUD once again. Accordingly, we hold a bullish AUD view, targeting 1.07 by quarter end and 1.09 by year-end. 

Central Bank Name: Reserve Bank of Australia

Date of next meeting or last meeting: May 01

Current Rate: 4.25 % (- 0.25)  (3.75 as of May 1)

Statement highlights of last meeting: The Board eased monetary policy late in 2011. Since then, its judgment has been that, with growth expected to be close to trend, inflation close to target and lending rates close to average, the setting of monetary policy was appropriate. The Board’s view was also that, were demand conditions to weaken materially, the inflation outlook would provide scope for easier monetary policy. At today’s meeting, the Board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy. On the May 1st meeting the board reduced interest rates by 50bps.

Economic events for the month of May affecting AUD,CNY,JPY,NZD and USD

Tuesday, May 01

00:30

 AUD

 

Interest Rate Decision

3.75%

4.00%

4.25%

 

 

00:30

 AUD

 

RBA Rate Statement 

 

 

 

 

 

10:00

 USD

 

ISM Manufacturing Index

54.8

53.0

53.4

 

 

Wednesday, May 02

08:15

 USD

 

ADP Nonfarm Employment Change

 

177K

209K

 

 

18:45

 NZD

 

Unemployment Rate

 

6.3%

6.3%

 

 

Thursday, May 03

08:30

 USD

 

Initial Jobless Claims

 

380K

388K

 

 

Friday, May 04

08:30

 USD

 

Unemployment Rate

 

8.2%

8.2%

 

 

08:30

 USD

 

Nonfarm Payrolls

 

170K

120K

 

 

Thursday, May 10

21:30

 CNY

 

Chinese CPI (MoM)

 

 

0.2%

 

 

21:30

 CNY

 

Chinese CPI (YoY)

 

 

3.6%

 

 

Wednesday, May 16

19:50

 JPY

 

GDP (QoQ)

 

 

-0.2%

 

 

In The Eyes of the Experts – 04/5/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • USD
  • JPY

 

Currencies watch for Short:

  • CHF
  • EUR
  • NZD

 

Today’s important times (GMT+2):

  • 15:30 USD
  • 17:00 CAD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD 1.3057    1.3105 1.3142 1.3190 1.3227
GBPUSD 1.6130 1.6159    1.6187 1.6216 1.6243
USDJPY    79.84 80.03 80.28 80.47 80.72
USDCHF 0.9080 0.9106 0.9139    0.9165 0.9198
USDCAD 0.9801 0.9840 0.9865 0.9904    0.9930
AUDUSD 1.0197 1.0230 1.0272 1.0305 1.0346   

AUD/USD Fundamental Analysis May 7, 2012 Forecast

Analysis and Recommendation: (close of Asian session)

The AUD/USD is currently at 1.0263 as the Aussie continues to decline. Earlier today the RBA announced a reduction in their growth forecast for 2012, stating that problems for the eurozone and exports as well as higher inflation are limiting growth in Australia.

This coupled with the .50bp rate reduction earlier in the week has caused the weakness in the AUD.

Economic events for May 3-4, 2012 actual v. forecast

May 3

 

GBP

 

 

 

Nationwide HPI (MoM) 

-0.2%

 

0.5% 

 

-1.0% 

 

 

 

 

TRY

 

 

 

Turkish CPI (MoM) 

1.52%

 

1.18% 

 

0.41% 

 

 

 

 

GBP

 

 

 

Services PMI 

53.3

 

54.6 

 

55.3 

 

 

 

 

EUR

 

 

 

Interest Rate Decision 

1.00%

 

1.00% 

 

1.00% 

 

 

 

 

BRL

 

 

 

Brazilian Industrial Production (YoY) 

-2.1%

 

1.5% 

 

-4.0% 

   

 

 

USD

 

 

 

Nonfarm Productivity (QoQ) 

-0.5%

 

-0.5% 

 

1.2% 

   

 

 

USD

 

 

 

Initial Jobless Claims 

365K

 

380K 

 

392K 

   

 

 

USD

 

 

 

Unit Labor Costs (QoQ) 

2.0%

 

2.8% 

 

2.7% 

   

 

 

USD

 

 

 

Continuing Jobless Claims 

3276K

 

3311K 

 

3329K 

   
 

 

USD

 

 

 

ISM Non-Manufacturing Index 

53.5

 

55.5 

 

56.0 

 

 

 

Economic Events for May 7, 2012 for the Asian and US Markets

02:30   AUD               NAB Business Confidence                                                    3         

The National Australia Bank (NAB) Business Confidence Index rates the current level of business conditions in Australia. Changes in business sentiment can be an early signal of future economic activity such as spending, hiring, and investment. The index is based on data collected from a survey of around 350 companies. A level above zero indicates improving conditions; below indicates worsening conditions.

02:30   AUD               Retail Sales                                                     0.2%                0.2%

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.

02:30   AUD               Building Approvals                                        3.0%               -7.8%

Building Approvals (also known as Building Permits) measures the change in the number of new building approvals issued by the government. Building permits are key indicator of demand in the housing market.

Government Bond Auctions (this week)

Date  Time  Country 

May 08  09:15  Austria 

May 08  09:30  Belgium 

May 08  14:30  UK 

May 08  15:30  Italy  

May 08  17:00  US 

May 09  09:10  Sweden 

May 09  09:30  Germany 

May 09  09:30  Swiss 

May 09  09:30  UK 

May 09  14:30  Sweden 

May 09  15:30  Italy  

May 09  17:00  US 

May 10  15:00  US 

May 10  17:00  US 

May 11  09:10  Italy   BOT auction

May 11  10:00  Belgium

AUD/USD Forecast May 4, 2012, Technical Analysis

The AUD/USD pair fell hard on the session for Thursday as traders prepared for the important Non-Farm Payroll numbers today. The announcement should be one of the most important this year, as the markets try to figure out if the Federal Reserve will have to ease again. If this is the case, there is a real chance that gold and other commodities will be bought, and the Aussie should rise in concert as well. The 1.02 level looks as if it is very important as support, so a break below it has us selling this pair none the less. In fact, there is a case to be made for a bearish flag if it gives way. On a daily close below that level – we are selling. If we rise and close higher for the day, we would buy on Monday.

 

AUD/USD Forecast May 4, 2012, Technical Analysis
AUD/USD Forecast May 4, 2012, Technical Analysis

Australia Cuts Growth Projection Due to Eurozone Crisis

Australia, home of kangaroos and the outback, the last frontier, a land mass as large as the United States, rich in minerals and cultural diversity continues to deal with economic hardships.

The country had weathers the global financial crisis better than most, they did not have to pump up their banking system, unemployment increase but within tolerable limits, the housing market declined but not significantly, interest rates were lowered to stimulate  growth but no to levels like in the US or the UK or the EU.

Just last week the Reserve Bank of Australia reduced its key lending rate from 4.25% to 3.75%.

The government has not had to jump in and save major businesses and their mining industry is on solid ground.

With strong political and economic leadership, the country looked like it would be able to navigate through the global economic disasters.

That is until recently. Australia is dependent on its neighbors in Asian for exports, income, and jobs. With the recent economic problems in Japan, beginning with the tsunami to more direct financial problems, Australia begun to lose a good portion of their exports and business, only due to the fact that as their neighbors suffer, they do also.

For their sake, their major trading partner China, has been able to weather the storm also, with continued growth and expansion, until recently, when China begin to show signs of a slowdown.

Although China will not have a hard landing and they will still maintain over 7% growth, this is well under the forecast, this reduction flows to their neighbors.

One cannot say that it was not expected, as China is the supplier to the world, when the eurozone is in the midst of a recession and the US is just beginning an economic recovery, their suppliers will see a drop in business. But in 2008 who knew this would still be going on in 2012.

Last week Glenn Stevens, Governor of the Reserve Bank of Australia announced a surprise rate cut of 50bps to help stimulate the economy.

The Reserve Bank of Australia has cut growth and inflation forecasts for 2012-2013, as weaker global conditions hit exports and restricted wage growth keeps prices in check.

But the central bank noted that outside of Europe, there are a number of indications that conditions have stabilized over recent months.

The RBA expects underlying inflation to be about 2.0 per cent for the year to the end of June, 0.25 percentage points lower than it forecast three months ago.

But the inflation outlook rests on the key assumption that labor costs will remain consistent with the forecasts.

This is particularly concerning to the RBA because, now that the Australian dollar has stopped rising, the deflationary effect in the prices of internationally tradable goods and services has also waned.

At the same time, non-tradable prices, driven by domestic economic conditions, are still rising.

Europe’s sovereign debt crisis remained the biggest threat to global growth, although the situation had improved there in recent months, it said.

In the year to December 2013 the economy is expected to grow at a rate of between 2.5 and 3.5 per cent, compared to its previous forecast of 3.0-4.0 per cent.

In its statement, the RBA also confirmed that although Europe’s sovereign debt crisis remains the biggest risk to world economy, its interest rate cut on Tuesday was a response to slower economic activity in Australia.

AUD/USD Fundamental Analysis May 4, 2012 Forecast

Analysis and Recommendation: (close of Asian session)

The AUD/USD continues to decline trading in today’s session at 1.03 even.

The recent Chinese eco data showing a continued slowdown is having negative effects on the Australian and New Zealand economy. The two major trading partners for Australia are Japan and China and both have been showing signs of continued slowdown.

China’s non-manufacturing purchasing managers index (PMI) was 56.1 in April, down from 58.0 in March, according to the data released earlier today.

Economic events for May 2-3, 2012 Actual  v. Forecast

 

 

CHF

 

 

 

SVME PMI 

46.9

 

50.5 

 

51.1 

 

 

 

 

EUR

 

 

 

French Manufacturing PMI 

46.9

 

47.3 

 

47.3 

 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

46.2

 

46.4 

 

46.3 

 

 

 

 

EUR

 

 

 

German Unemployment Rate 

6.8%

 

6.7% 

 

6.8% 

   

 

 

EUR

 

 

 

German Unemployment Change 

19K

 

-10K 

 

-18K 

 

 

 

 

EUR

 

 

 

Manufacturing PMI 

45.9

 

46.0 

 

46.0 

 

 

 

 

EUR

 

 

 

Unemployment Rate 

10.9%

 

10.9% 

 

10.8% 

 

 

 

 

USD

 

 

 

ADP Nonfarm Employment Change 

119K

 

177K 

 

201K 

   

May 3 

 

NZD

 

 

 

Employment Change (QoQ) 

0.4%

 

0.3% 

 

0.2% 

   

 

 

NZD

 

 

 

Unemployment Rate 

6.7%

 

6.3% 

 

6.4% 

   

 

Economic Events for May 4, 2012 for the Asian and US Markets

12:30   USD               Nonfarm Payrolls                                         170K    120K   

Nonfarm Payrolls measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity.

 12:30  USD               Unemployment Rate                                    8.2%    8.2%

The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. 

Government Bond Auctions (this week)

Date  Time  Country 

May 08  09:15  Austria 

May 08  09:30  Belgium 

May 08  14:30  UK 

May 08  15:30  Italy  

May 08  17:00  US 

May 09  09:10  Sweden 

May 09  09:30  Germany 

May 09  09:30  Swiss 

May 09  09:30  UK 

May 09  14:30  Sweden 

May 09  15:30  Italy  

May 09  17:00  US 

May 10  15:00  US 

May 10  17:00  US 

May 11  09:10  Italy   BOT auction

May 11  10:00  Belgium

AUD/USD Forecast May 3, 2012, Technical Analysis

The AUD/USD pair fell for much of the session on Wednesday, but bounced in order to form a hammer at the end of the day. The 1.03 level looks very supportive, and a bounce from this area could be coming. In fact, if we break the top of the Wednesday range, this would be a classic buy signal. However, the pair can also be said to potentially be forming a bearish flag, and if we break below the bottom of the hammer from Wednesday, there is a very good chance that we will fall much farther. In fact, we are sellers below the 1.02 handle. 

AUD/USD Forecast May 3, 2012, Technical Analysis
AUD/USD Forecast May 3, 2012, Technical Analysis

In The Eyes of the Experts – 02/5/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • GBP
  • USD
  • JPY

 

Currencies watch for Short:

  • CHF
  • EUR

 

Today’s important times (GMT+2):

  • 15:15 USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.3161    1.3199    1.3241    1.3279    1.3321   
GBPUSD 1.6156 1.6187 1.6216 1.6248 1.6277
USDJPY 79.38 79.79 80.04 80.45 80.70
USDCHF 0.9014 0.9045 0.9071 0.9102 0.9128
USDCAD 0.9796 0.9825 0.9861 0.9890 0.9926
AUDUSD 1.0232 1.0284 1.0355 1.0407 1.0478

AUD/USD Fundamental Analysis May 3, 2012 Forecast

Analysis and Recommendation: (close of Asian session)

The AUD/USD has recovered slightly from the fall yesterday when the Reserve Bank surprised markets dropping rates by 50bps. Markets had expected a reduction of 25bps.

As soon as the RBA announced their decision the Aussie began to decline, falling below the 1.0326 level.

Yesterday, the USD was able to gather some strength on eco data which showed an expansion in the US manufacturing sector.

Also, Chinese PMI was released a bit under forecast; which is a negative for the AUD.

The pair are presently trading at 1.0334 as the Aussie makes a small comeback.

Economic Data for May 1 – 2, 2012 actual v. forecast

( Most markets were closed for “May Day” Holiday)

 

 

GBP

 

 

 

Manufacturing PMI 

50.5

 

51.4 

 

51.9 

 

 

 

 

USD

 

 

 

ISM Manufacturing Index 

54.8

 

53.0 

 

53.4 

 

 

May 02

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.30

 

 

 

49.10

   

Economic Events for May 3, 2012 for the Asian and US Markets

8:30am            USD     Unemployment Claims                                             

Measures the number of individuals who filed for unemployment insurance for the first time during the past week. Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions.

8:30am            USD     Prelim Nonfarm Productivity q/q                          

Measures annualized change in labor efficiency when producing goods and services, excluding the farming industry. Productivity and labor-related inflation are directly linked – a drop in a worker’s productivity is equivalent to a rise in their wage. When businesses pay more for labor the higher costs are usually passed on to the consumer.

8:30am            USD     Prelim Unit Labor Costs q/q                                    

This measures annualized change in the price businesses pay for labor, excluding the farming industry. It’s a leading indicator of consumer inflation – when businesses pay more for labor the higher costs are usually passed on to the consumer.

10:00am          USD     ISM Non-Manufacturing PMI                                              

The Institute for Supply Management measures the level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry. It’s a leading indicator of economic health – businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.

1:00pm            USD     FOMC Member Lockhart Speaks

Federal Reserve FOMC members vote on where to set the nation’s key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.       

9:30pm            AUD     RBA Monetary Policy Statement                

Released quarterly the Statement on Monetary Policy provides valuable insight into the bank’s view of economic conditions and inflation – the key factors that will shape the future of monetary policy and influence their interest rate decisions.

Government Bond Auctions (this week)

Date  Time  Country 

May 03  08:30  Spain

May 03  08:50  France 

May 03  09:10  Sweden 

May 03  09:30  UK 

May 08  09:15  Austria 

May 08  09:30  Belgium 

May 08  14:30  UK 

May 08  15:30  Italy  

May 08  17:00  US 

May 09  09:10  Sweden 

May 09  09:30  Germany 

May 09  09:30  Swiss 

May 09  09:30  UK 

May 09  14:30  Sweden 

May 09  15:30  Italy  

May 09  17:00  US 

May 10  15:00  US 

May 10  17:00  US 

May 11  09:10  Italy   BOT auction

May 11  10:00  Belgium

AUD/USD Forecast May 2, 2012, Technical Analysis

The AUD/USD pair fell on Tuesday as the Reserve Bank of Australia cuts rates by .50 percent during the early part of the session. This of course led to Aussie selling, and as a result the pair poked back below the 1.04 handle again.

The fact that the central bank decided to cut rates more than anticipated suggests that there are more worries out there for the RBA than traders are willing to admit. This will certainly have some traders concerned, and as a result this pair could struggle going into the future. However, it should be noted that the Europeans weren’t trading during the session, and this means that the market hasn’t fully expressed its opinion in this pair yet.

The pair fell back down to the 1.03 level, but bounced a bit in the end. The level that we are seeing at the end of the day isn’t much in the way of a change after the initial knee-jerk reaction. This will of course catch the eye of traders out there, and it leads us to think that perhaps the downside is somewhat limited in the Australian dollar.

Also, one has to think about the fact that there is a suggestion in the markets that the Federal Reserve could be easing a bit further in to the later part of the year, and this would help alleviate some of the interest rate swap differential lost for the pair over the last 24 hours. The Federal Reserve hasn’t explicitly stated when they would ease, but the simple fact that Ben Bernanke is willing to say that there are more easing tools they could use if the economy gets worse suggests to a lot of traders that the Fed will be loosening yet again. This will certainly push this pair higher as the gold markets will heat up at that point.

The Non-Farm Payroll numbers come out on Friday, and this could move the market as well. Because of this, we suggest that the pair could be somewhat consolidative in tone until then. At this point, we are flat of this market until we get more clarity, perhaps at the end of the Wednesday session. 

AUD/USD Forecast May 2, 2012, Technical Analysis
AUD/USD Forecast May 2, 2012, Technical Analysis

In The Eyes of the Experts – 01/5/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • CAD
  • USD
  • EUR

 

Currencies watch for Short:

  • GBP
  • NZD
  • AUD

 

Today’s important times (GMT+2):

  • 17:00 USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.3178    1.3208    1.3237    1.3266    1.3295   
GBPUSD 1.6169 1.6199 1.6249 1.6279 1.6329
USDJPY 79.36 79.64 80.03 80.28 80.63
USDCHF 0.9033 0.9053 0.9074 0.9094 0.9115
USDCAD 0.9766 0.9821 0.9857 0.9911 0.9947
AUDUSD 1.0373 1.0398 1.0429 1.0453 1.0487

The RBA Surprises Markets with a 50bp Rate Cut

One can never predict what Glenn Steven’s is going to do, he is almost as confusing as his partner in the US, Fed Chairman Bernanke.

They seem to never cater to politics and have their own interpretation of the economy and their own long term picture and guide.

Once again the RBA surprised the markets. It was already a given that there would be rate reduction of .25bps. The markets had factored that in, but no one would have been surprised if the RBA decided to hold. But they went for the kill.  Sixteen economists surveyed last week expected the RBA to cut the cash rate at its May 1 board meeting. Almost all agreed a ¼ pt cut was likely.

The statement issued today said:

The Reserve Bank of Australia (RBA) has cut the official cash rate by 50 basis points to 3.75 per cent.

In a statement accompanying the decision, RBA governor Glenn Stevens said growth in the world economy slowed in the second half of 2011, and is likely to continue at a below-trend pace this year.

“A deep downturn is not occurring at this stage, however, and in fact some forecasters have recently revised upwards their global growth outlook,” Mr Stevens said.

“Conditions in Europe remain very difficult, while the United States continues to grow at a moderate pace.

“Commodity prices have been little changed, at levels below recent peaks but which are nonetheless still quite high.

“Australia’s terms of trade similarly peaked about six months ago, though they too remain high.”

Mr Stevens said financial market sentiment had improved this year and that capital market is supplying funding to corporations and well-rated banks.

“At the margin, wholesale funding costs have declined over recent months, though they remain higher, relative to benchmark rates, than in mid 2011,” he said.

“Market sentiment remains skittish, however, and the tasks of putting European banks and sovereigns onto a sound footing for the longer term, and of improving Europe’s growth prospects, remain large.

“Hence Europe will remain a potential source of adverse shocks for some time yet.”

The Aussie dropped in immediate trade, but markets and traders hailed the decision.

AUD/USD Fundamental Analysis May 2, 2012 Forecast

Analysis and Recommendation: (close of Asian session)

The AUD/USD has dropped more than half a cent after the Reserve Bank of Australia cut the official cash rate by a substantial 50 basis points.

Just prior to the decision, the local unit was trading at 104.09, but fell to 103.50 after the decision.

Reserve Bank beat analyst expectations of a 25 basis point rate cut on Tuesday, lowering interest rates to 3.75 per cent.

The Australian dollar finished yesterday’s session at 104.58.

The Reserve Bank of Australia (RBA) has cut the official cash rate by 50 basis points to 3.75 per cent, beating market consensus of a 25 basis point reduction.

The RBA’s decision to drop interest rates at its May board meeting comes after it kept the cash rate on hold since December last year.

In a statement accompanying the decision, RBA governor Glenn Stevens said growth in the world economy slowed in the second half of 2011, and is likely to continue at a below-trend pace this year.

“A deep downturn is not occurring at this stage, however, and in fact some forecasters have recently revised upwards their global growth outlook,” Mr Stevens said. “Conditions in Europe remain very difficult, while the United States continues to grow at a moderate pace.

Economic Data for April 30- May 1, 2012 actual v. forecast

 

 

EUR

 

 

 

CPI (YoY) 

2.6%

 

2.5% 

 

2.6% 

 

 

 

 

USD

 

 

 

Core PCE Price Index (MoM) 

0.2%

 

0.2% 

 

0.1% 

 

 

 

 

CAD

 

 

 

GDP (MoM) 

-0.2%

 

0.2% 

 

0.1% 

 

 

 

 

USD

 

 

 

Personal Spending (MoM) 

0.3%

 

0.4% 

 

0.9% 

   

 

 

USD

 

 

 

Chicago PMI 

56.2

 

61.0 

 

62.2 

 

 
 

 

NZD

 

 

 

Labor Cost Index (QoQ) 

0.5%

 

0.5% 

 

0.7% 

 

 

May 01  

 

CNY

 

 

 

Chinese Manufacturing PMI 

53.30

 

53.60 

 

53.10 

 

 

 

 

AUD

 

 

 

House Price Index (QoQ) 

-1.10%

 

-0.50% 

 

-0.70% 

   

 

 

AUD

 

 

 

Interest Rate Decision 

3.75%

 

4.00% 

 

4.25% 

 

 

Economic Events for May 1, 2012 for the Asian and US Markets

01:30     JPY         Labor Cash Earnings                                                                                                

Indicator released by the Ministry of Health, Labor and Welfare shows the average income, before taxes, per regular employee. It includes overtime pay and bonuses but it doesn’t take into account earnings from holding financial assets or capital gains. Higher income puts upward pressures over consumption; therefore an increasing trend in earnings is inflationary for the Japanese economy.

02:30     CNY       HSBC Manufacturing PMI                                                                                             

The HSBC Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics is an early indicator of economic health in the Chinese manufacturing sector. Any reading above 50 signals expansion, while a reading under 50 shows contraction. As the Chinese economy has influence on the global economy, this economic indicator would have an impact on the Forex market.

12:15     USD       ADP Employment Change                                                                                          

The Employment Change released by the Automatic Data Processing, Inc is a measure of the change in the number of employed people in the US Generally speaking; a rise in this indicator has positive implications for consumer spending which stimulates economic growth.                

14:00     USD       Factory Orders                                                                                                              

The Factory orders released by the US Census Bureau is a measure of the total orders of durable and non durable goods such as shipments (sales), inventories and orders at the manufacturing level which can offer insight into inflation and growth in the manufacturing sector. 

22:30     AUD       AIG Performance of Services Index                                                                        

AIG Performance of Services Index released by the Australian Industry Group presents business conditions in the Australian service sector. The group surveys 200 manufacturers on their assessment of the business situation including employment, production, orders, prices, and inventories, and their short-term planning. A result above 50 is seen as positive (or bullish) for the AUD, whereas a result below 50 is seen as negative (or bearish).

22:45     NZD       Unemployment Rate                                                                                                   

The Unemployment Rate released by the Statistics New Zealand is the number of unemployed workers divided by the total civilian labor force. If the rate is up, it indicates a lack of expansion within the New Zealand lobar market. As a result, a rise leads to weaken the Australian economy.

Government Bond Auctions (this week)

Date  Time  Country 

May 02  09:10  Sweden 

May 02  09:30  Portugal 

May 02  13:00  US 

May 03  08:30  Spain

May 03  08:50  France 

May 03  09:10  Sweden 

May 03  09:30  UK 

May 08  09:15  Austria 

May 08  09:30  Belgium 

May 08  14:30  UK 

May 08  15:30  Italy  

May 08  17:00  US 

May 09  09:10  Sweden 

May 09  09:30  Germany 

May 09  09:30  Swiss 

May 09  09:30  UK 

May 09  14:30  Sweden 

May 09  15:30  Italy  

May 09  17:00  US 

May 10  15:00  US 

May 10  17:00  US 

May 11  09:10  Italy   BOT auction

May 11  10:00  Belgium

AUD/USD Forecast May 1, 2012, Technical Analysis

AUD/USD fell during the session on Monday as the “risk off” trade came back. The fears of recession now are back out there as the Spanish situation continues to deteriorate. Because of this, risk assets in general fell for the session, and the Aussie dollar wasn’t any different. The pair retreated to the 1.04 level, but more importantly the 200 day EMA.

The session sees a Reserve Bank of Australia rate decision, and the market seems to be pricing in a .25 percent cut. There are some people that believe a .50 percent cut is in store, and as a result the pair may have been beat up a bit too much lately. The general consensus is that the .25 percent cut will be the result. If we get a .50 percent cut, there could be further selling. However, as a general rule, we prefer buying this pair once the decision is out if it is indeed a .25 percent cut. Obviously, if they don’t cut at all – this would be a buy signal as well.

There will more than likely be a knee-jerk reaction to sell on the cut, but it should simply prove a buying opportunity in the end.

AUD/USD Forecast May 1, 2012, Technical Analysis
AUD/USD Forecast May 1, 2012, Technical Analysis