It’s understandable that forex investors basically ignore New Zealand. Its economy is around 10% the size of its neighbor Australia, its currency is less liquid, and spreads are higher. Given that its performance closely tracks the Australian Dollar, meanwhile, why pay it any attention?
To be sure, the new currencies from Down Under trade in virtual lockstep, having strayed by only a few cents in either direction from their trading mean over the last year. S
Sure this rally may have been short-covering, but something had to have stopped the decline from getting worse earlier in the week.
In the broadcast today: USD, EUR and GBP: Back to the “New Normal”? With equities posting their first three-day rally since April, we ponder if the EUR, USD, GBP and other major currencies are ready to resume their existing mid- and long-term trends or if we may be witnessing a shift in investor sentiment that could lead to the development of trend reversals for the currency majors, we analyze the latest trend developments with the EUR/USD, GBP\/USD and EUR\/GBP currency pairs, we examine the renewed strength of the commodity currencies: AUD, CAD and NZD, we note the double bottom support established for the USD\/JPY pair, we highlight the market’s reaction to the Australian Employment Situation report, the U.K.
(Chart courtesy of FX Solutions’ FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
7/07/2010 – USD/CHF – Price action on USD/CHF, a 4-hour chart of which is shown, is quickly descending to approach strong support in the key 1.0500 price region as of Wednesday (7/07/2010), establishing a new 12-week low in the process. As
By Elliott Wave International
The following article is an excerpt from Elliott Wave International’s free report, 20 Questions With Deflationist Robert Prechter. It has been adapted from Prechter’s June 19 appearance on Jim Puplava’s Financial Sense Newshour.
Jim Puplava: In 1933 at the bottom of the crisis, the Roosevelt administration comes in. In its first week they declare a bank holiday, they reopen the banks with the FDIC, they sever gold, they come in with massive fiscal stimulus and they devalue the dollar substantially. The r
Since the inception of the financial crisis, the Dollar has been treated as a safe haven currency. Simply, when there was a surge in the level of risk-aversion, the Dollar rose proportionally. When risk aversion gave way to risk appetite, the Dollar fell. It was as simple as that.
Lately, this notion has manifested itself in the EUR/USD exchange rate, with the Euro embodying risk, and the Dollar embodying safety. In fact, a carry trading strategy has unfolded along these lines and made this phenomenon self-fulfilling: traders have taken to reflexively selling the Dollar when news is good and selling the Euro when news is bad.
In recent weeks, this approach appears to be changing.
Look at this, USD/JPY moving along with 2 year yields. What does this suggest? That next week, USD/JPY could bounce. If payrolls is very weak, that may not happen, but U.S. yields are nearing very low levels and short positions area heavily weighted to USD shorts.
USDCAD Analysis.
Being contained by 1.0678 resistance, USDCAD pulled back from 1.0673, suggesting that a cycle top is being formed on 4-hour chart. Minor consolidation in a range between 1.0540 and 1.0678 would more likely be seen in a couple of days. Support is at the lower border of the price channel, as long as the channel support holds, one more rise towards 1.0852 previous high is still possible.
GBPUSD Analysis.
After touching the lower boundary of the price channel on 4-hour chart, GBPUSD bounces strongly from 1.4873 level.
Key News
Swissie on a tear for sure against the US dollar…hesitating at the 61.8% retrace from Nov ’09 low today, as speculators take the SNB seriously it seems, especially after this move…
USDCHF Daily: [Chart not available in text format.]
…and Swiss is smoking against the euro which is what the Swiss central bank is so concerned about…Swiss firms competing with German variety with that exchange rate disadvantage…
EURCHF Weekly: I think this picture is clear. [Chart not ava Full post…
It looks like emerging market investors took my last post (“Investors” Shouldn’t Worry about the Euro) to heart, since emerging markets (EM) have continued to rally in spite of the Euro’s woes. To be sure, EM stocks, bonds, and currencies all dipped slightly in May when the crisis reached fever pitch, but they have since recovered their losses and are once again en route to record highs.
That’s not to say that that surge in risk-aversion wasn’t justified. In fact, investors are continuing to punish the Eurozone as well as a handful of other risky areas. However, an