Two “Macro Economic Views” on what is (or will be) taking place in the world currency market.
For a View for this week:
No major Red Flag economic news coming out today. Performance in the U.S. and European Stock Markets will be a key. Economic data to be released includes European a & U.S. consumer-confidence indexes, as well as figures on employment and inflation. The U.S. will also release its gross domestic product info and the Federal Open Markets Committee (FOMC) meets.
At present, the consensus call in the market is that the worst is behind us. But if the automakers file for bankruptcy, causing additional thousands in unemployment, we could be in for a second BIG dip to the downside.
For a longer term View (this Quarter):
Intercontinental Exchange Inc.’s Dollar Index, which measures the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, is up 4.2 percent this year, after falling 5.4 percent at this point in 2008.
Strategists increased their forecasts for the dollar this year against all those currencies, data compiled by Bloomberg show. Since January, the analysts have boosted their year-end dollar forecast 2.2 percent to $1.32 per euro from $1.35, and 5.2 percent to 101 yen from 96 in February, the median of more than 40 estimates compiled by Bloomberg show.
So far, data show undiminished foreign demand for U.S. financial assets Net Purchases totaled $22 billion in February as China and Japan added to their holdings of U.S. government debt, the Treasury said. The Fed’s holdings of Treasuries on behalf of foreign central banks and other institutions rose 8.7 percent this year to $1.84 trillion.
More foreign money flowed into U.S. stock markets in the 20 business days ended April 15 than in 69 percent of the other 20- day periods going back to 1997, according to State Street data. The five-day flow was in the 77.6 percentile, compared with outflows in the last six months that were higher than 86.4 percent of past periods, the data showed.
“We’re at a loss to identify other major currencies that look more attractive” than the dollar, State Street’s Blake said. “The equity-flow data have been dollar supportive almost any way you look at it. When people flood into the equity market they’ve been buying the dollar as well.”
Now for some observations on the Charts. I’ll keep it down to “The Big 8”
I use a Fibonacci on the 4-hr charts (using the most recent High/Low wicks/tails), and view these Fib lines on the 30-min charts. I would like to begin referencing my observations on the Fib.
audusd
a drop early last week created a recent Low (a new 0.0% fib line). It ran up a bit through the week and seems to be settled between the 23.6% and the 76.4% fib lines. This could provide an area of nice Oscillations for the EA to work within for a couple days.
euraud
the pair seems to be Oscillating in a fairly tight range. This could be good for running the EA, but keep in mind the Red Flag economic reports coming out later this week. They could spark a breakout.
eurchf
The last 2 weeks have provided good Oscillations of less than 200 pips. This is the type of chart the EA can work well with. However, note that the current price is pressing down on the recent Lows. I’d like to see it drift up, and continue the Oscillation patterns of the past couple of weeks. However if it falls below 1.5050, then some additional downward pressure could alter the nice patterns we’ve been seeing.
eurusd
Last week, this pair runs up, and overnight it did nothing but run down. The 30-min charts are providing some good Oscillations through all of this. Keep an eye on the $1.2880 Support line, as it is the recent Low from early last week. Also, be aware of the European and U.S. Economic reports due out this week.
gbpchf
Lots of volatility here, as the GBP shows weakness. Be cautious of this pair and play it within tight Trading Times (don’t let the EA run during European morning/afternoon sessions, nor during the U.S. morning session.
gbpusd
Lots of volatility here. 4 of the past 5 weeks have had +400 pip swings. Be cautious of this pair and play it within tight Trading Times (don’t let the EA run during European morning/afternoon sessions, nor during the U.S. morning session.
usdcad
Due to Commodity prices associated with the CAD, there is lots of volatility here. 4 of the past 5 weeks have had +400 pip swings. Be cautious of this pair and play it within tight Trading Times (don’t let the EA run during European morning/afternoon sessions, nor during the U.S. morning session.
usdchf
There is a lot of movement in this pair, but overall it seems to have some nice Oscillations on the 30-min chart over the past 5 days. Be aware of the European and U.S. Economic reports due out this week. But, this pair should continue with its recent Oscillation patterns.
FAQ of the Day:
Q. I do not have a credit card to use with PayPal. What are my payment options?
A. You can set up your personal account with PayPal to take a payment straight out of your bank account. It is an easy process to set up, and thousands do it in this manner. I have 2 or 3 regular monthly payments taken out this way. Never an issue.
Monday, April 27, 2009
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