AUD/USD Forecast Dec. 06, 2011, Fundamental Analysis

The AUD/USD pair traded in a narrow range early Monday after the pair hit its highest level in almost three weeks, as the US dollar lost ground against most of its major counterparts.

The Australian dollar advanced as a high-yielding currency against the greenback, after the cheerful news regarding the U.S. unemployment rate which came better than expectations and dropped to 8.6%.

The American data helped the risk appetite to dominate the market and reduced demand for safe haven currencies such as the US dollar. On the other hand, the new Italian plan to cut the nation’s debt increased confidence in the financial market.

On Tuesday, the Australian economy will issue the Current Account for the third quarter, where it’s expected to show a narrowing deficit of A$5600 million compare to the previous deficit of A$7419 million.

At 03:30 GMT, the Reserve Bank of Australia will announced the interest rate decision, where it’s expected that the central bank will keep the rate steady at 4.50%.

AUD/USD Forecast for the Week of December 5, 2011, Technical Analysis

AUD/USD had a strongly bullish week as the pair ended up well over the 1.02 level. The pair did give back some of the gains at the end of the trading week, but managed to retain 80% or so of the gains. The risk environment is still high, and as a result – the headlines can come into the markets and slam this pair straight down – or even shoot it straight through the roof. With this in mind, we like buying this pair on pullbacks and a breaking of the high for the week, but are going to be very quick to move our stop losses to break even as the risk in trading this pair is very high at the moment.

AUD/USD Forecast for the Week of December 5, 2011, Technical Analysis AUD/USD Forecast for the Week of December 5, 2011, Technical Analysis

AUD/USD Forecast December 5, 2011, Technical Analysis

The AUD/USD pair struggled on Friday as the market sold off in general. The Thursday session produced a hammer, and the Friday session formed a shooting star – effectively stating that the pair is confused and could grind sideways over the next few sessions. The pair is very sensitive to headlines, and as a result – great care should be taken when trading this market. We would be willing to buy pullbacks, especially ones that find support at parity.

AUD/USD Forecast December 5, 2011, Technical Analysis AUD/USD Forecast December 5, 2011, Technical Analysis

AUD/USD Weekly Forecast Dec. 5-9, 2011, Fundamental Analysis

The AUD/USD pair soared last week to record its highest level in almost three weeks, as the US dollar dropped against most of its major counterparts which opened the way for the Aussie to record more gains.

The risk appetite returned to the market and supported higher-yielding currencies such as the Aussie, which used the chance to cover some of its previous losses against the greenback.

The global equities rally supported the Australian dollar, which still has a higher interest rate compared to other major currencies that helped Aussie to be the biggest winner last week.

Confidence returned once again into the financial market, as six major central banks lowered the borrowing dollar swap rate for banks, which increase optimism between investors.

The AUD/USD pair could continue its upside movement with a little correction to the downside, but with any change in the current sentiment the US dollar could restore its momentum and return to dominate the FX market.

Major highlights for this week that will affect the AUD/USD pair’s trading:

Monday December 05:

On Monday at 22:30 GMT (Sunday), the Australian economy will release the AiG Performance of Service Index for November, where it had a previous reading of 48.8.

At 00:30 GMT the ANZ Job Advertisements for November will be published, where it had a prior reading of 0.7%.

At 15:00 GMT the U.S. economy will release the ISM Non-Manufacturing for November, where it’s expected to come at 53.5 from the previous reading of 52.9.

On the other hand, Factory Orders for October will be released at the same time and expected to remain flat following 0.3% rise the previous month.

Tuesday December 06:

The Australian economy will issue the Current Account Balance for the third quarter, where it’s expected to show a deficit of A$5600 million narrowing from the previous deficit of A$7419 million.

At 03:30 GMT, the Reserve Bank of Australia will release its interest rate decision and the RBA is expected to hold rates steady at 4.50%.

Wednesday December 07:

On Wednesday at 22:30 GMT (Tuesday), Australia will issue the AiG Performance of Construction Index for November, where it had a prior reading of 34.7.

At 00:30 GMT, Australia will release Gross Domestic Product for the third quarter, where it’s expected to show the economy expanded 1.2% the same as the previous reading. While the annual Gross Domestic Product is expected to grow by 2.3% compare to the previous reading of 1.4%.

The U.S. economy will release the Consumer Credit for October at 20:00 GMT, where it’s expected to come at $7.00 billion compare to the previous reading of $7.386 billion.

Thursday December 08:

On Thursday at 00:30 GMT, the Australian economy will release the Unemployment Rate for November, where it’s expected to hold at 5.2%.

As for the Employment Change in Australia, it’s expected to come at 10.0 thousand from the previous 10.1 thousand.

At 13:30 GMT the U.S. economy will issue its weekly initial jobless claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 402 thousand last week.

The Wholesale Inventories for October will be published at 15:00 GMT, where it’s expected to come at 0.3% compare to the previous reading of –0.1%.

Friday December 09:

On Friday, the U.S. economy will release the Trade Balance for October, where it’s expected to show a deficit of $44.0 billion widening from the previous deficit of $43.1 billion.

The University of Michigan Confidence for December will be released at 14:55 GMT and expected to slow to 63.0 from 64.1.

AUD/USD Forecast Dec. 05, 2011, Fundamental Analysis

The AUD/USD pair reached to its highest level in almost three weeks, where the US dollar lost momentum against most of its major counterparts due to risk appetite that dominated the market last week.

The AUD/USD pair could continue its upside movement with a little correction to the downside, but with any change in the current sentiment the US dollar could restore its momentum and return to dominate the FX market.

On Monday at 22:30 GMT (Sunday), the Australian economy will release the AiG Performance of Service Index for November, where it had a previous reading of 48.8.

At 00:30 GMT the ANZ Job Advertisements for November will be published, where it had a prior reading of 0.7%.

At 15:00 GMT the U.S. economy will release the ISM Non-Manufacturing for November, where it’s expected to come at 53.5 from the previous reading of 52.9.

On the other hand, Factory Orders for October will be released at the same time and expected to remain flat following 0.3% rise the previous month.

AUD/USD Forecast Dec. 2, 2011, Technical Analysis

AUD/USD fell during the session, but bounced back to form a hammer by the end of the day. This shows that the pair still wants to rise, and that the majority of traders think that the pair should rise. However, with the Non-Farm Payroll numbers set to be released during the US morning session, this pair could move again in a rapid manner today. We prefer selling if the bottom of the hammer gets violated as it shows a “hanging man”. The breaking of the highs would run into resistance, and could perhaps struggle.

AUD/USD Forecast Dec. 2, 2011, Technical Analysis AUD/USD Forecast Dec. 2, 2011, Technical Analysis

Markets Over React to the Central Bank Annoucement.

Strategists said Europe’s sovereign debt problems will continue to be the key driver for the euro. The EU and IMF must now do something positive to help the debt crisis and protect the euro.

Markets Over React to the Central Bank Annoucement.

The news today can be best interpreted from what investors and analysts are saying this morning.

“As Europe dithered, monetary policy makers acted, even if their ‘actions’ have more symbolism than significance,” said strategists at RBC Capital Markets. “Markets breathed a huge sigh of relief.”

Yesterdays move by the Central Banks signaled leadership and direction. This is what the markets are looking for. Investors jumped head first into the markets.

The move is an attempt to “ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the banks said in a statement.

“It’s the first time we’ve seen this type of global coordination since November 2008,” said Michael James, a senior equity trader at Wedbush Morgan. “The degree of coordination sends a message to the markets that global leaders are going to do whatever they need to do to instill confidence in the markets.”

“The fundamentals just keep marching forward despite the market turmoil,” said Doug Cote, chief investment strategist at ING. “The real economy seems indifferent to the EU debt headlines.”

Central banks are “hoping the rate is so attractive that hitting the swap line makes business sense as opposed to signalling vulnerability,” he said. “They hope if they draw enough institutions, the stigma will decline, stresses on the liquidity front will ease and that will ease some of the bearish demeanor towards the euro.”

“The price action was because the market was short, not being bought by people entering new long positions in euros and equities,” he said. “It’s people closing shorts.”

This morning’s coordinated action also implies that the central banks feel conditions are much worse than they would otherwise lead us to believe, which is why more liquidity is needed immediately,” said Kathy Lien, director of currency research at GFT. “The markets are always relieved to see central banks put up a unified front, especially on the heels of a similar increase in liquidity from China.”

Removing the risk of liquidity problems increasing further as year-end approaches provides a major relief to financial markets,” said Greg Anderson, senior currency strategist at CitiFX in New York.
“The level of cooperation and responsiveness being shown by the G7 central banks suggests that policy makers are now highly engaged and likely to come forward with further measures in coming days.”

“The big deal is just saying they are going to be involved. It’s not like they brought out the tank, they brought out the six shooter,” he said.

“It’s not enough. It’s a temporary liquidity initiative which is good, but it won’t solve the problem, because in a couple of days, the problems will put on their hats again,” De Leus said.

 

AUD/USD Forecast, Dec. 1st, 2011, Technical Analysis

The AUD/USD shot straight up during the session as the “risk on” trade came back into the fold as the central banks of the world have coordinated to make the borrowing of Dollars cheaper for the banks of the world. The idea is that it will take the idea of another Lehman Brothers collapse off the table. The Aussie shot straight to the 1.03 level where it finally met strong resistance at the 61.8% retrace. The knee-jerk reaction is strong, but if you look at the AUD/USD over the last couple of days, to say it is overextended isn’t exactly a stretch at this point. We are willing to fade this rally unless we clear the 1.03 again. We are looking for shorter time frames to lead the way for a nice fade.

AUD/USD Forecast, Dec. 1st, 2011, Technical AnalysisAUD/USD Forecast, Dec. 1st, 2011, Technical Analysis

AUD/USD Forecast Nov. 30th, 2011, Technical Analysis

The AUD/USD pair rose above the parity level on Tuesday as the commodity trade took off. The appetite for commodities was fueled by hopes of an EU workout. The pair has lost a bit off the top, but is closing above the parity line. The trend is certainly down, but with this strong of a push higher – we certainly must be aware that this move is countertrend. The 50% retrace of the move down is roughly at 1.03, and area that has been resistive in the past. With this in mind, we are quick to take any profits on long positions. We actually prefer being short of this pair, but not until we get some price action showing weakness.

AUD/USD Forecast Nov. 30th, 2011, Technical Analysis AUD/USD Forecast Nov. 30th, 2011, Technical Analysis

AUD/USD Forecast Nov. 29th, 2011, Technical Analysis

The AUD/USD pair surged during the Monday session as rumors flew around the marketplace of bailouts and promises of IMF money for Italy. Even after the IMF denied this rumor, there were other hopes of various fixes. The markets then ran up to just under parity, and it was at that point that the sellers came back into the market. The selling was fairly strong, and it appears that we are going to struggle to get above that parity level. The market seems to have retained its bearish tone at this point, and as such we are selling rallies in the AUD/USD.

AUD/USD Forecast Nov. 29th, 2011, Technical Analysis AUD/USD Forecast Nov. 29th, 2011, Technical Analysis

AUD/USD Forecast for the Week of Nov. 28th, 2011, Technical Analysis

The AUD/USD pair had a bearish week again as the world’s risk appetite continues to deteriorate. The pair is rapidly approaching a hammer on the weekly chart that was the start of the most recent up move in this pair. The 0.95 level just below should be supportive, so selling at this point is going to be difficult. We prefer to sell rallies at this point in time, and will continue to do so as negative headlines will continue to push this pair lower. The breaking of 0.93 to the downside would shift this into a down trend overall in our opinion. The markets are very nervous, and that never bodes well for the Aussie. We sell rallies, and will not buy at this point.

AUD/USD Forecast for the Week of Nov. 28th, 2011, Technical Analysis AUD/USD Forecast for the Week of Nov. 28th, 2011, Technical Analysis

AUD/USD Forecast Nov. 28th, 2011, Technical Analysis

The AUD/USD pair attempted a rally on Friday only to fail and print a second shooting star in a row. Both of these are at the bottom of a fall, and this shows that the pair may continue its descent lower as the headlines continue to deteriorate in the EU. The run to the US Dollar will continue to fuel the push lower, and the commodities markets falling will help push it lower as well. We don’t but the riskier currencies at this point, including the Aussie.

AUD/USD Forecast Nov. 28th, 2011, Technical AnalysisAUD/USD Forecast Nov. 28th, 2011, Technical Analysis

AUD/USD Forecast Nov. 25th, 2011, Technical Analysis

AUD/USD rose during the session on Thursday as traders started short-covering. The pair is decidedly bearish, and sold back off later in the session. The pair finished the day forming a shooting star at the bottom of the fall, and shows that further weakness is probably in store. The breaking of the bottom of the session’s range would be another sell signal in this pair. The 0.9350 level below seems to be calling and we think that the pair will oblige the markets. The rallies are to be sold, and we don’t buy the Aussie because of the massive amounts of headline risks out there currently.

AUD/USD Forecast Nov. 25th, 2011, Technical Analysis AUD/USD Forecast Nov. 25th, 2011, Technical Analysis

AUD/USD Forecast Nov. 24th, 2011, Technical Analysis

The AUD/USD pair fell apart on Wednesday as traders are decidedly dumping the riskier assets in the markets. The Aussie is highly sensitive to global risk appetite, and as such should continue to fall. We believe at this point you simply cannot buy this pair, and every rally should be viewed as a potential selling opportunity. The lows at 0.9350 are calling, and we think this pair will visit that area before it sees a level greater than parity.

AUD/USD Forecast Nov. 24th, 2011, Technical Analysis AUD/USD Forecast Nov. 24th, 2011, Technical Analysis

AUD/USD Forecast Nov. 23rd, 2011, Technical Analysis

AUD/USD fell again on Tuesday, albeit only by a small amount. The pair looks vulnerable at the moment, and the “risk off” attitude of the global markets will not be very conducive to the buying of the Aussie dollar. However, we do see a lot of support between present levels and the 0.95 level, and therefore will be selling rallies, not shorting here. Buying isn’t possible with all of the headline risks out there presently.

AUD/USD Forecast Nov. 23rd, 2011, Technical Analysis AUD/USD Forecast Nov. 23rd, 2011, Technical Analysis

AUD/USD Forecast Nov. 22nd, 2011, Technical Analysis

AUD/USD fell hard on Monday as traders continued to sell of the risk trade. The Aussie will always be sensitive to sentiment, and sentiment is poor at best lately. With this in mind, we sell rallies, and have no real interest in buying the Aussie at all. The area below is still in the massive support zone down to 0.95, and could produce pops in the market. Those we continue to be sold by us in the near-term.

AUD USD Forecast Nov. 22nd, 2011, Technical Analysis AUD USD Forecast Nov. 22nd, 2011, Technical Analysis

AUD/USD Forecast Nov. 21st, 2011, Technical Analysis

AUD/USD fell during the session on Friday after an initial bounce to form a shooting star. The pair looks weak, and the rallies are all being faded at this point. The parity level should offer some support, and we think that another bounce could be coming just under this area, perhaps at the 0.99 level. However, as long as the headline risks out there keep coming, the pair will continue to grind lower. This pair is very popular, so be aware of the fact that the move down will more than likely be a grind, not a sudden move. We sell rallies, and do not buy this pair.

AUD/USD Forecast for the Week of Nov. 21st, 2011, Technical Analysis

AUD/USD fell very hard during the week as traders continue to shun the riskier assets around the world. The Aussie is very risk-sensitive, so the fall was to be expected. The parity level is currently holding up the pair as support, and looks like the start of tough support coming up. With this in mind, this pair is a sell – but should be more of a grind than a sprint south form here. We like selling rallies as well, but don’t buy. If the parity level gives way with any meaning, the 0.9350 level will be targeted, but could take some time to reach.

AUD/USD Forecast Nov. 18th, 2011, Technical Analysis

The AUD/USD pair broke below the parity level on Thursday, and continued its bearish tone overall. The 0.99 level below should be somewhat supportive, and if that area gives way – this pair should fall much, much lower. The upside is going to be difficult in this pair at this point in time as it is so risk sensitive. The world’s markets are getting nervous, and this is never a good thing for the Aussie. We like selling a break below 0.99, and any rallies that present themselves.

AUD/USD Forecast Nov. 17th, 2011, Technical Analysis

The AUD/USD pair fell again on Wednesday as traders sell off risky assets. The pair is presently supported at the parity level, and that will be the key to our next trade in this pair. At present levels, we have no trade, but would be interested in buying on supportive candles at parity, or selling if we close below that level. Until then, we are sitting tight in this pair. Even with a pop higher, we think that the 1.05 level is the top of the market for a while.

AUD/USD Forecast Nov. 17th, 2011, Technical AnalysisAUD/USD Forecast Nov. 17th, 2011, Technical Analysis

AUD/USD Forecast Nov. 17th, 2011, Technical Analysis