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Tag Archives: audusd

Thought: Overview of the FX market

EURUSD

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The EURUSD is currently trading above the 61.8% level of 1.3321, the 76.4% is at 1.3437 and the 100% is at 1.3640 established on 1 February 2013.

Last night’s high was at 1.3385and the low was at 1.3282.

 

GBPUSD

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The GBPUSD is presently trading above the 61.8% level of 1.5754 with the 76.4% at 1.5957 and the 100% at 1.686 established on 21 December 2013

Last night’s high was at 1.5723 and the low was at 1.5650.

 

AUDUSD

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The AUD is a currency that really begs to be thrashed.  The current spot is trading below the 0% level of 0.9671, the 23.6% is at 0.9891, 38.2% is at 1.0027 and the 50% at 1.0137.  How much will it take to drive the AUDUSD to the 50% level, I don’t think alot.  Home loans is down, consumer sentiment is down, however, employment is up and unemployment is down.

Let’s look at this more closely.

 

My hunch tells me that there is opportunity in the following: –

Call option on the AUDUSD

Call option on the USDJPY

Put option on the GBPUSD

Right now, we need to do a cost benefit analysis to determine which strategy is cost efficient and profit effective.

 

Trade: Quick Scalp; SHORT AUDUSD at 0.9485 and squared at 0.9460

Quick scalp, short AUDUSD at 0.9485 based on stochastic fast/slow and squared at 0.9460 for a 25bps trading profit.

Trade: LONG AUDUSD at 0.9434 and squared at 0.9430

This morning the technical analysis indicated a possible upside to the AUDUSD, so I bought at 0.9434.

Through the next 3 hours, it was pretty much flatline, I then, made the decision to cut loss at 0.9430 for a 4bps loss.

Guess what?

The AUDUSD is now trading at 0.9362.

AUDUSD

audusd_weekly chart_7 june 2013

I am of the view that the AUD has been trampled on too much and at the current level of 0.9525, could be an opportunity to place an option strategy.

The lows in the AUD: –

1 June 2013  –  0.9708

3 Oct 2012  –  0.9525

7 June 2010  –  0.8102

October 2008  –  0.6674

The above lows is to give us all a ‘feel’ the AUD.

I do not believe that the Aussie economy is worse off than back in 2008 to 2010.

From Black October, the AUD has powered from 0.6674 all the way up to 1.1075 in July 2011.  During the crisis in both the United States and in Europe, the AUD has always been trading between 1.03 and 1.05 despite the declining economic health in China.

Yes, Australia is paying for it today by being to resources export dependent and to China.  Today, Australia has a structural and fiscal problem, if appropriately fixed, the AUD should be well back above the parity level.

Currently, the weak AUD is helping the economy, making exports more competitive.  What is comforting is that consumption is still healthy and housing is stable.

A few more months below parity and the benefits of the weaker AUD will filter into the economy.  I do not believe there’s a need for RBA to further cut rates.

I am considering buying a call option when the volatility is lower.

Australia GDP tomorrow at 9:30am Singapore time

Tomorrow’s GDP number will potentially be a market mover for the AUD.

Watch out for it.

TRADE: SHORT AUDUSD at 0.9745 and squared at 0.9720

AUDUSD hit a high during NY session at 0.9790 after after a two wave move once at 10pm and another time at 11pm Singapore time.

Since then, it has been retracing all the way down to the current 0.9715 level.

I SHORT the AUDUSD this morning at 0.9745 and squared the position at 0.9720 for a quick trading profit of 25bps or 0.25%.

I believe RBA will keep rates the same and will have nothing exciting to say in the press conference.  I believe the RBA and the Aussie government are stuck in a corner as to how to re-energize the economy.

The Aussie economy has been reliant for too long on resources to fuel its growth in the past 5 years.  It has also relied heavily on foreign capital and domestic capital to fuel the housing market.

Let’s not forget that during the worse of times the past 2 years, the Aussie has been trading between 1.03 and 1.05.

I believe we are passed the bottom, and in the near term, the AUDUSD will range bound between 0.96 and 0.98.  We need to see some credible news from the Aussie government as to how they are going to structurally change the economy domestically to fuel growth.

The danger is alot of central banks are still holding AUD, when the situation in Europe and the United States is better, capital will flow out of Australia back to the home countries and it will put downward pressure on the AUD.

RBA Rate Decision Tuesday, 4 June 2013 @ 12:30pm Singapore time

What can we expect from the RBA?

Will the RBA reduce rates again?  I am not so sure that they will as the Aussie economy is not in such bad shape.

I will share my thoughts with you and also potentially a trading strategy.

Tune in.

Why is the AUDUSD so resilient?

The AUDUSD took out the critical 0.9580 last support level and established a new low of 0.9539 which started me thinking is there a bottom to the AUD?

Then again, the AUD staged a great comeback by defending the low and is currently trading at 0.9665.  So, the real question here is, is the AUD going to go to 0.92 like what the street is saying?

I am not convinced.

I am going to undertake an analysis of the AUDUSD and share my thoughts with all of you next week.  Maybe, the time is near to do a long dated call option on the AUDUSD to capture the BIG move back up?  Possible?  Maybe?

 

Trade: LONG AUDUSD at 0.9637 and squared at 0.9670

I saw the fast and slow stochastic signalling a buy, so I went long at 0.9637 and squared the trade 5 mins ago at 0.9670 for a trading profit of 33bps or 0.34%.

Trade: Short AUDUSD at 0.9645 and squared at 0.9635

I was so bored, decided to do a quick scalp; short the AUDUSD at 0.9645 and squared the position at 0.9635 for a 10bps trading profit.