News

25/03 by Scott Forrest

Slightly softer dollar, Friday. This may continue, Monday, but there is plenty of scope for volatility in the week ahead.

In order to read the full daily research, please go to www.fxcharts.com.au. You will need to Register, which is free, and then to Login, once you have been emailed your password.The US Dollar reversed early week strength and turned lower on Friday after poor home sales data. Commodities rallied. Equities dipped but recovered. Charts suggest we may get a bit more of the same choppy trade, early next week. A lot of data from Germany will be a key driver in coming sessions, along with US Data & Draghi, Bernanke will be speaking. Euro/Usd remains 1.30/1.33 and Usd/Jpy looks capped at 83.00 for now. Aud and Kiwi have stabilised. EU Fin meeting on Friday to build a bigger firewall to prepare for the next EU crisis. It won't be too far away. Watch this space!

» Continue reading KNOWLEDGE TO ACTION/FX CHARTS Forex Trading WEEKLY UPDATE – 26-31 March 2012

04/03 by Scott Forrest

Today’s forecast is brought to you by WWW.FXCHARTS.COM.AU. Greece appears likely to return as the centre of attention this week, as the prospect of a default now looms large according to sections of the UK Press. Spain also made headlines by following its own budget deficit plan of 5.8% for 2012 as opposed to the the EU agreed 4.4%. Data ahead includes I/R decisions from RBA, RBNZ, BOE, ECB as well as China CPI and on Friday, US NFP. Keep an eye on Oil. A big week ahead!

EUR/USD: 1.3200

» Continue reading KNOWLEDGE TO ACTION FOREX TRADING FOCUS – MONDAY 5TH MARCH 2012

19/02 by Scott Forrest

The US dollar advanced last week, riding on some good economic news and rising against other USD Index currencies on the tensions in Greece. Athens will be the focus again this week with markets awaiting the outcome of the EU Finance ministers vote on Monday over whether to release the required funds to allow Greece to avoid default. The Presidents Day long weekend holiday in the USA will make liquidity a bit thin but key news events to watch are US Housing Sales on Wednesday, German Business confidence for January and US Unemployment Claims on Thursday and Revised UK GDP on Friday.

AUD/USD Forex Trading Forecast

» Continue reading KNOWLEDGE TO ACTION FOREX TRADING FOCUS – MONDAY 20TH FEBRUARY 2012

05/02 by Scott Forrest

AUD/USD Forex Trading Forecast

After opening at 1.0654 and dropping to a low of 1.0526, the Australian dollar broke through the important 1.0764 resistance line (mentioned last week) and continued to strengthen against the USD, reaching just sort of the 1.08 level before closing at 1.0755, for a gain of 100 pips for the week. Further gains are a possibility this week, barring any major disasters from Europe that would see a turnaround in risk sentiment, but the daily charts are looking increasingly overbought and we are overdue for a correction. The Australian economy, with its dependence on exports, has been hit by the global economic slowdown, but is well-prepared for an improvement in the global economy, especially that of the US. From the current price, the line of 1.0775, which was breached this week, is providing initial resistance to the pair. If this is breached again and the uptrend channel continues, next resistance will be at 1.0800, then the 11th May high at 1.0880, followed by the resistance level of 1.0990, which was last tested in August 2011. Above here the psychologically important level of 1.10, is the top line on my daily charts. Economic fundamentals in the US are looking much better following Non-Farm Payroll last Friday and this makes a correction in the Aussie seem well overdue. If we see that this week, price will need to fall through immediate support at 1.0750, then 1.0685 and break below here. We could then see quite a few key support lines being broken including weak support at 1.0610; the round number of 1.05; and the 1.0383 line, which recently served as resistance, and is now acting in a support role. The round number of 1.03 has been tested throughout January, and is strengthening in support as the Aussie continues to rally. Below here I have 1.0250, 1.02 and 1.0080 providing support on the way to the all-important parity level. There are nine economic indicators being released this week with the highlight being the RBA rates announcement on Tuesday, where it looks pretty certain that the RBA will cut rates. How much the Aussie reacts to any rate cut will depend on global risk sentiment at the time. Key trading partner, China’s CPI is due on Thursday and the Chinese Trade Balance is due on Friday with the markets predicting a sharp drop which could hurt the Aussie at the end of the week.

» Continue reading KNOWLEDGE TO ACTION FOREX TRADING FOCUS – MONDAY 6TH FEBRUARY 2012

30/01 by Scott Forrest

AUD/USD Forecast

The Aussie dollar continued higher last week, reaching a peak of 1.0687 and now faces a tough test at the twice-rejected level of 1.0764 dating back to September and October 2011. The US dollar weakened against most major currencies following Bernanke’s announcement that interest rates will likely remain near zero until late 2014. However, the global slowdown has taken its toll on the Australian export sector, and the Aussie may run out of steam as a result. Last week the December quarter CPI showed that core inflation is bang in the middle of the Reserve Bank's 2–3% target range and it was virtually unanimous among forecasters that the next cut in official interest rates would happen in February, but with things settling down in Europe, many are now pushing this out to March. This will help the housing market, which is already looking stronger in 2012, and therefore lift consumption - but despite any rate cut, money is pouring into Australia looking for higher relatively safe yields, which could continue pushing up the Australian dollar. It is a busy news week with 9 economic indicators released so check for news items on www.forexfactory.com . The Aussie looks as though it might want to test the line of 1.0667, which was breached last week and if it closes above here it should test the important 1.0750/65 area. This is followed by the strong resistance level at the July highs of 1.0884 then 1.0990, which is also strong resistance, and just below the psychologically important level of 1.10. On the downside the round number of 1.05, which served as support in May and June, is now back in that role. A more serious correction is likely if the Aussie closes below 1.05 with the next target the low of January 24 at 1.0428. The round number of 1.03 has been tested throughout January, and now finds itself providing weak support with the next serious support then at 1.0249.

» Continue reading KNOWLEDGE TO ACTION FOREX TRADING FOCUS – MONDAY 30TH JANUARY 2012

23/01 by Scott Forrest

AUD/USD Forecast

Markets are having their traditional good start to the year; in fact it's one of the best for decades, prompted by some successful debt auctions in Europe and optimism about corporate earnings in the United States. The Aussie had a big week, breaking through resistance at 1.0380 early in the week and then breaking above 1.0450, then 1.0460 and finishing on its highs, just below further resistance at 1.0492. This was despite last week’s Australian economic data, which was mostly disappointing; while housing finance rose in November, maintaining a slight uptrend over the last year, it is yet to show much evidence of a solid recovery from the falls of 2010; consumer confidence failed to recover much from a sharp fall in December; motor vehicle sales fell in December; and the December labour market report highlighted very soft employment conditions with no jobs growth at all in 2011. The only reason unemployment hasn’t increased more sharply is because labour force participation has declined! Finally, the terms of trade fell in the December quarter as export prices fell and a weaker Australian dollar boosted import prices. All of this combined with the TD Securities Inflation Gauge suggesting that inflation remains benign, supporting the case for more rate cuts from the RBA, with the next cut likely to occur at next month’s meeting. We get Australian PPI on Monday, CPI Wednesday, and it is Australia Day on Thursday, in what will be a thin week in the absence of Asian volume - so price action could be exaggerated. In the US we get economic growth data and a meeting of Federal Reserve policy-makers. First resistance is at 1.0500 with stronger resistance at 1.0570. Above here, 1.0750 begins to come into view, then the twice-tested peak of September 2011 at 1.0760, followed by the July highs of 1.1080 but I do not really expect to see these levels this week. A pullback this week could find first support at the lows of January 13, 1.0230. If that line fails subsequent support is at 1.0140, 1.0040, and if we fall below parity, 0.9860.

» Continue reading KNOWLEDGE TO ACTION FOREX TRADING FORECAST – MONDAY 23rd JANUARY 2012

15/01 by Scott Forrest

AUD/USD Forecast

Once the rating agency Standard & Poor's Eurozone downgrade rumours began to appear on Friday, we saw a spike down to 1.0230 which was was followed by an impressive recovery to finish pretty much unchanged for the day. Early Monday trading is nervous following the EU downgrades, but sharp bounces are inevitable and the Aussie will probably continue to trade between converging support and resistance levels in the 1.0040-1.0385 range. Flows are coming into the Aussie at the expense of the Euro, the Pound, and the Swissy, currently propping it up and perhaps supporting a test of the 1.0380 level yet again this week. On Friday, we saw an all time low at one stage with the EUR/AUD trading at 1.2263 and looking as though the 1.2000 target may not be far away. This week sees the release of the December readings on inflation from the Producer Price Index and the Consumer Price Index, as well as December housing starts. Offshore this week, China releases important data on GDP, retail sales and home prices. In the US, markets are closed on Monday for the Martin Luther King holiday but from Tuesday, traders will be watching as earnings reports from numerous bellwethers including Bank of America Corp, General Electric Co, Intel Corp and Goldman Sachs provide some direction. First serious resistance is in the 1.0380/1.0410 range with strong resistance above this at 1.0460 and at 1.0500, but don’t expect to see that any time soon. Support below the current price is at 1.0180, 1.0150 and at 1.0040, the previous low, ahead of parity. Below here could see a test of 0.9990, 0.9660 and then 0.9920on any move lower. If the situation with the Euro gets worse, this may happen sooner rather than later, but my indicators are not supporting that move. Being a US holiday will make for thin forex trading conditions on Monday.

» Continue reading KNOWLEDGE TO ACTION FOREX TRADING FOCUS – MONDAY 16TH JANUARY 2012

08/01 by Scott Forrest

Sorry I have been off-air for a while but the volumes were very low and it was a great time to go to the beach. Trading volume is expected to return to normal this week after the holiday break and I will start to look at technical levels in more detail from January 16th.The dollar edged up in the last week of 2011 and 2012 began with another leg down for the euro, amid growing worries. Last week the EUR/USD plunged to its lowest level since September 2010, following Italy’s failure of raise sufficient funds from its recent bond auction. Italy is likely to become the first EU country to enter recession, increasing concerns in the Eurozone.

Unlike the grim situation in the EU, the US market is doing rather well with better employment data, elevated consumer sentiment and improved housing figures. Last week the weekly jobless claims dropped to 372K continuing the recovery in the labor market after 387K claims in the prior week. ADP Non-Farm Payrolls also surprised with a gain of 325K jobs in the private sector, much better than the 176K predicted. These figures led to the Non-Farm Payrolls surging higher than expected with an addition of 200,000 jobs and another drop in the unemployment rate. These positive figures raise expectations for a stronger job market and US economy in 2012.

» Continue reading KNOWLEDGE TO ACTION WEEKLY FOREX TRADING OUTLOOK; JANUARY 9-13

11/12 by Scott Forrest

AUD/USD Forecast

It was a wild ride for Aussie Forex traders last week but in the end the Aussie closed only 5 pips above the previous week’s close. ANZ Job Advertisements remained unchanged in November, but the Aussie ignored this and only moved up on the agreement announced by Angela Merkel and Nicolas Sarkozy early in the week. The Aussie then took a dive when the RBA cut interest rates to 4.25% on Tuesday but managed to recover. It was announced that the Australian economy grew by 1% in Q3, as expected and this helped the Aussie, but it remained weighed down by the European crisis. Employment figures were a disappointment, with a loss of over 6,000 jobs and a rise in the unemployment rate to 5.3% and then the Aussie got another blow from the lack of help from the ECB to troubled European countries. The end of the week saw trading in a wide range of 1.0380/1.0046, so we may be in for a continuation of the same choppy conditions. As usual, much will depend on the EU situation but thankfully EU leaders are not meeting again this year so keep an eye on the slowing Chinese data and this week’s European bond auctions which could prompt the Aussie lower – check for news items on www.forexfactory.com . My charts are very messy right now and are not offering much assistance so it looks as though we are going to be in for a directionless run in to Christmas as liquidity dries up. Dips towards the previous support at 1.0150, and Fibonacci support at 1.0075 look likely to hold but the low on Friday at 1.0046 could be seen again on any negative news from the EU. A close below 1.0040 and the Aussie does not have much support so we could see parity challenged. Parity strengthened as a support line in September after capping a recovery attempt. Below parity, 0.9953 is a line of weak resistance. The 0.9850 line provided support when the Aussie was falling in October and is minor now. Below, 0.9803 provides further resistance. The round number of 0.97 provided some support for the pair in September, before falling even lower and is the last support line I am bothering with for now despite my view that we are headed below here in the medium/long term. Looking up, the resistance line at 1.0335 was reached last week and could be tested again this week. 1.04 was a swing low in June and also the peak of a failed recovery attempt in September. 1.0460 was a support level in September, and is now a line of resistance. The round number at 1.05, which served as strong resistance in August and September, is the last line on my messy charts.

» Continue reading KNOWLEDGE TO ACTION FOREX TRADING FOCUS – MONDAY 12TH DECEMBER 2011

04/12 by Scott Forrest

AUD/USD Forecast

The Aussie climbed nearly 300 points in one day after a surprise announcement on Wednesday that saw six of the world’s most important central banks announce they would “enhance their capacity” to provide liquidity to the global financial system, easing strains in the financial markets after banks had started to pull back on their lending to households, businesses and each other. The Aussie twice tested levels above 1.03 (Friday’s high was 1.0324), but failed both times and closed the week on the Friday lows, just above 1.0200 - probably in expectation of a rate cut at the upcoming RBA meeting on Tuesday. The tone for forex traders at the start of the week was set by China’s Services PMI which was released on Saturday, coming in at 49.7, down from the previous month of 57.7, on softer demand. It is a huge news week with 17 news items on www.forexfactory.com but Tuesday’s Interest Rate Announcement, Australian Unemployment data, Chinese CPI/PPI at the end of the week and of course the outcome of the EU summit, will be drivers of the Aussie this week. Wednesdays rebound from 0.9660 was huge and the momentum suggests that we may see further tests of my line at 1.0324 (Friday’s high) and possibly towards 1.0400, which was a swing low in June and also the peak of a failed recovery attempt in September. If it breaches here, my next resistance lines are at 1.0460, 1.05 and 1.0717. The downside has support lines at 1.0211, 1.0150 and then at the Fibonacci line at 1.0075. Parity strengthened as a support line in September after capping a recovery attempt and also proved its importance in October. Below parity I have 0.9953, 0.9850, 0.9803, 0.97 and the swing low of 0.9622 as the final line of support for now. It is not really possible to pick the direction of the Aussie from the charts right now, but I expect a drift towards the 1.0211 or 1.0150 support lines in what will be pretty choppy trading, made more pronounced as liquidity begins to dry up in the approach to Christmas.

» Continue reading KNOWLEDGE TO ACTION FOREX TRADING FOCUS – MONDAY 5TH DECEMBER 2011