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Thread: Discuss the AUD/USD, NZD/USD , USD/CAD and more

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    Discuss the AUD/USD, NZD/USD , USD/CAD and more

    This thread is dedicated to the AUD/USD and the NZD/USD and will be moderated by a real DailyFX Analyst who will post news, research and anything else that pertains to this pair. Please feel free to express your opinion about what direction you believe the market will take and what you think about the research presented.

    Thanks a lot and happy trading!

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    Chart of the Day: AUD/NZD

    Wednesday, 08 October 2008 05:51:16 GMT
    Written by Thomas Long, Power Course Instructor
    Full Article

    A look at a 4-hour chart of the AUD/NZD confirms once again just how weak the AUD has become recently.



    All of these pairs are trending strongly and offered great trading opportunities in the last week or two. But this is the time when professionals use extreme patience and discipline in waiting for the next selling opportunity. Notice how the Slow Stochastics, using values of 15,5,5, have not yet come close to the overbought level, which is considered 80 or above. I have circled three occasions on the chart where the indicator did move up to above 80, which signaled a selling opportunity since the direction of the trend was down. We want to wait for the market to reach a point where the odds of a successful trade are better and this is where the use of technical indicators can be of great value.

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    New Zealand Retail Sales on Tap - Will Improved Spending Help the Kiwi?

    Friday, 10 October 2008 13:51:36 GMT
    Written by David Song, Currency Analyst
    Full Article

    Retail spending in New Zealand has certainly weakened throughout the first half of the year, and conditions may only get worse as the economy slipped into a recession for the first time since 1998.

    Trading the News: New Zealand Retail Sales

    What’s Expected
    • Time of release: 10/12/2008 21:45 GMT, 17:45 EST
    • Primary Pair Impact: NZDUSD
    • Expected: --
    • Previous: -0.8%





    How To Trade This Event Risk

    Retail spending in New Zealand has certainly weakened throughout the first half of the year, and conditions may only get worse as the economy slipped into a recession for the first time since 1998. The downturn in the housing sector has certainly taken a toll on the economy as property values slipped 6.1% from the previous year, and was followed by a 24% decline in home sales. Furthermore, building approvals fell 7.9% in July, which was the lowest reading since 1986, and suggests that the housing demands may weaken further as employment demands falter. In the second quarter, the jobless rate unexpectedly surged to a two year high of 3.9%, indicating that business have cutback on recruitment as the global economy slows down. Growth prospects have clearly deteriorated for the $105B economy, which led the Reserve Bank of New Zealand to cut the benchmark interest rate by a total of 75bp over the last two policy meetings. In fact, RBNZ Governor Alan Bollard expects the economy to contract another 0.3% in the third quarter, leaving the door wide open for further rate cuts. Nevertheless, as interest expectations weaken in the midst of stalled growth, disappointing sales data could fuel a bearish outlook for the New Zealand dollar.

    Setting up a trade based on the given event risk may not be as clear cut as some of our other trades, but an unexpected improvement in the retail sector could trigger bullish sentiment in the New Zealand dollar. In fact, consumer confidence snapped back from a 17 year low as the index increased to 104.8 from 81.7 in the second quarter, which suggests that lower borrowing costs paired with falling oil prices have helped to improve consumers’ outlook. Therefore, a rise in private-sector consumption would favor a bullish outlook for the kiwi, and we will look for a green, five-minute candle following the release to trigger a long trade for two lots of the NZDUSD. We will setup our initial stop at the nearby swing low (or reasonable distance), and this risk will determine our first target. Our second target will be based purely on discretion, and in order to preserve our profits, we will move the stop on the second lot to breakeven when the first trade reaches its target.

    On the other hand, the central bank has signaled that they are clearly switched their focus to growth, and may look to lower the benchmark interest rate further as growth prospects falter. Therefore, a drop in sales would generate a short position for the pair, and we will follow the same strategy as the long position mentioned above, but just in reverse.



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    Though I wouldn't trade it, I think that if volatility dies down and NZDUSD holds above 0.5900, we could get a reversal from that point.

    Of course, we really need to see the broader markets refind their sense of risk appetite first. Until then, regular technicals just aren't reliable enough to trade from.
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    Market Panic Drives Volatility For The Australian And New Zealand Dollars

    Analyst picks for: 2008/10/10
    Written by the DailyFX Research Team
    Full Article

    Market Panic Drives Volatility For The Australian And New Zealand Dollars

    A panic has seized the global financial markets, sending the stocks plunging and overnight lending rates soaring. For the currency market on the other hand, the high-risk, carry pairs have been comparatively quiet. This won't last for long though and our DailyFX Analysts are positioning for what is expected to be a volatile day and perhaps a busy week beyond that.
    Questions about these picks? Visit the DailyFX forum for a Q&A with the Analysts.

    Chief Strategist Antonio Sousa

    My picks: Sell Short AUD/JPY in Any Rally
    Expertise: Fundamentals and Sentiment
    Average Time Frame of Trades: 1 day - 3 months

    I have been trying to find a bottom in the AUD/JPY without that much success. Indeed, the Japanese yen has been the main beneficiary of the lack of confidence in the financial system and the current environment of uncertainty and de-leveraging in financial markets makes high yielding currencies vulnerable to a complete collapse. In fact, despite the good fundamentals of the Australian economy the AUD/JPY is clearly in a bear market and one investor could achieve betters risk adjusted returns by selling any rally.

    Sentiment Analysis for USD/JPY

    The ratio of long to short positions in the USDJPY stands at 1.47 as nearly 59% of traders are long, according to the FXCM SSI which measures the positioning of thousands of retail traders. Last week, the ratio was at 1.42 as 59% of open positions were long. Short positions are down by 18.2% since last week and retail traders have been covering their USDJPY short trades. The SSI is a contrarian indicator and signals more USDJPY losses

    Sentiment Analysis for AUD/USD

    The ratio of long to short positions in the AUDUSD stands at -1.08 as nearly 52% of traders are short, according to the FXCM SSI which measures the positioning of thousands of retail traders. Last week, the ratio was at 1.40 as 58% of open positions were long. Retail traders have been selling the AUDUSD and short positions are up by 0.9% since last week.

    Currency Strategist John Kicklighter

    My picks: Pending AUDNZD Short
    Expertise: Combining Money Management with Fundamental and Technical Analysis
    Average Time Frame of Trades: 3 days - 1 week

    Panic has once again taken over for the typical risk aversion. Conditions seem out of control for many asset classes, but currencies have been relatively reserved. This is pariticularly interesting for the most risk sensitive currencies (like the Japanese yen, Australian dollar and New Zealand dollar). Jumping on an already overextended trend or calling for a massive reversal from any of the Aussie or kiwi crosses is a crap shoot. Therefore, it is important to find a sound technical trend, fundamental support and something remotely resembling safe harbor from the overwhelming influences of risk appetite.

    To remove some of the volatility related to the ebb and flow of risk appetite, only AUDNZD comes close to closing the gap with a 150 basis point spread. Fundamentally, this isn't really a carry opportunity; rather, the Aussie dollar is dropping in reaction to the delayed bearish outlook for the economy and its interest rates. When the RBA cut its rates by 100 basis points, it revealed a willingness to aggressively ease from a central bank that is usually conservative. What's more, the recession in New Zealand was fully expected, but the market seems to be just coming to grips with the one in Australia. Technically, the downtrend is clear. However, in these market conditions, setup is important. Therefore, I'll be looking for a daily close below 1.10 before I am confident enough that the bear trend will carry through.

    Currency Strategist Terri Belkas

    My picks: Short AUD/JPY (But Not Yet)
    Expertise: Fundamentals Combined With Technicals
    Average Time Frame of Trades: 1 - 3 Days

    With risk aversion driving price action in the markets, I think it's worthwhile to stay long JPY. Since we're focusing on AUD and NZD today, I'll be looking for opportunities to sell AUD/JPY but not at current levels. This pair has seen incredibly steep declines but my concern is that we could see a sharp retracement higher. We're seeing signs of stabilization between 64.50 and 65.50, which could yield a break lower, but it's tough to find a trade that shows good risk/reward potential. Thus, I would look to sell AUD/JPY on a bounce back up to 69.77/70.00. Otherwise, I'll be on the sidelines when it comes to AUD and NZD today.

    Currency Analyst John Rivera

    My picks: Short NZDUSD
    Expertise: Fundamentals Combined With Technicals
    Average Time Frame of Trades: 2-4 Days

    As long as commodity prices continue to fall and the global growth outlook dims, I have to remain bearish on the com dollars. I made the mistake yesterday of thinking a bottom was forming and watched the USDCAD shoot higher. Although I do see a turn coming, it is hard to go against the trend given current market sentiment. Retail sales are due out on Monday and further weakness will continue to weigh on the Kiwi, as the RBNZ is expected to have several more rate cuts ahead of them. Especially, after all the major banks cut rates last week. The 10/08 low of 0.5786 is in sight, with the 0.5639 September 03 low as a longer term target.

    Currency Analyst David Song

    My picks: Short AUD/JPY
    Expertise: Fundamentals Combined with Technicals
    Average Time Frame of Trades: 2 - 10 Days

    The AUDJPY has fallen quite dramatically over the week on the back of fading risk sentiment, and may slide further as the flight to safety continues. Just this week, the pair has slipped 1500+ points to break below major support levels, and the 100 Day SMA has just crossed below the 200 Day SMA, which has favored a bearish outlook for the pair. I anticipate the pair to fall further over the following week, and forecast the aussie-yen to work its way down towards the 10/29/01 low of 61.22.

  6. #6
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    Rec: Go Long in AUDNZD

    The long term equilibrium point for AUDNZD is about 1.11. Presently it is at 1.08; Further, AUD economy is fundamentally much stronger than NZD. RBA has declared that its rate cut does NOT form a pattern. RBNZ has declared that more rate cuts are forthcoming. Therefore AUDNZD MUST rally upwards significantly and perhaps beyond 1.25 again. The present fall of AUD seems correlated to commodity prices (other than Gold). Its weakness is very similar to CAD (both commodity currencies). This correlation won't continue for ever. Commodities like Silver has seen a spectacular fall ($19 to $10) in a few weeks. Aluminum and Copper also have fallen big time. They will stabilize soon. When Gold recovers and starts going towards $1000, it will pull up other commodities. Therefore, I wouldn't worry much about further commodity price fall affecting AUD.

    The recovery of JPY above 100 has shown that risk aversion is nearing an end. Once carry trade begins, AUDJPY will rally and with it AUD will go up. Thus, so many different arguments point to AUD recovery and rally.
    Munk likes this.

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    Quote Originally Posted by DollarBull View Post
    The long term equilibrium point for AUDNZD is about 1.11. Presently it is at 1.08; Further, AUD economy is fundamentally much stronger than NZD. RBA has declared that its rate cut does NOT form a pattern. RBNZ has declared that more rate cuts are forthcoming. Therefore AUDNZD MUST rally upwards significantly and perhaps beyond 1.25 again. The present fall of AUD seems correlated to commodity prices (other than Gold). Its weakness is very similar to CAD (both commodity currencies). This correlation won't continue for ever. Commodities like Silver has seen a spectacular fall ($19 to $10) in a few weeks. Aluminum and Copper also have fallen big time. They will stabilize soon. When Gold recovers and starts going towards $1000, it will pull up other commodities. Therefore, I wouldn't worry much about further commodity price fall affecting AUD.

    The recovery of JPY above 100 has shown that risk aversion is nearing an end. Once carry trade begins, AUDJPY will rally and with it AUD will go up. Thus, so many different arguments point to AUD recovery and rally.
    I would avoid saying a market 'must' do anything. What if the market isn't comforted by the global effort to help markets and the overnight lending market seizes again? The world is still sitting on enormous levels of leverage and banks will deleverage going forward regardless of market conditions.

    In my opinion, conditions and the currency market are far to volatility to attribute any sort of long-term balance point.

    That being said, looks like this overly active market hit your objective relatively quickly.
    John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

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    I've given this pair a lot of attention today; but NZDUSD is pushing it's a pretty tight range. Considering all the volatility we have had over the past month, the realization that the global economy is heading toward a recession and there is a RBNZ rate decision next week (economists expect a 100bp cut!), there seems a good chance that we can get a breakout.

    Since 0.59 is a four-year range low and there is a clear and dominant bear trend, I think any kind of break can redefine the future for this pair.

    I put in a range trade at 0.6185 a few hours before the session close. Already took profit on the first lot, and moved the stop on the second lot up to breakeven.

    Going to put in orders for a possible breakout later.

    Any one else trading NZDUSD? AUDUSD looks much the same...
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    John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

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    AUD/USD

    When AUD/USD plunged from 0.84 to 0.64, 2000 pips in eight trading days, reasons cited were the credit freeze and risk aversion. Now that liquidity has improved and risk appetite is returning, an upward correction of the oversold condition of this pair could be reasonably expected. Yet, as I write this, AUD/USD has plunged 300 pips in 24 hours. Is this a head fake, or resumption of the downtrend? If the latter, how low can it go?

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    I'm watching AUDNZD closely as a potential breakout trade. The levels are very clear and we have event risk closing in with the RBNZ rate decision. What do you guys think?
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    John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

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    Quote Originally Posted by John Kicklighter View Post
    I'm watching AUDNZD closely as a potential breakout trade. The levels are very clear and we have event risk closing in with the RBNZ rate decision. What do you guys think?
    AUDNZD survived the RBNZ's 100 bp rate cut thanks to comments that suggest Bollard will take a more reserved pace to rate decisions going forward. I'm still waiting for a breakout though....

    It looks like most of the Aussie pairs are setting up with similar consolidation and breakout patterns. Another one that has caught my interest is AUDCAD - my analyst pick. A defined rising wedge, strong overhead resistance and high volatility - the makings of a breakout...
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    John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

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    advice?

    Hi
    i'm not entirely sure if this is an appropriate post for this forum.
    but, I could use a little advice.

    to be honest, I would love to NOT be involved with curency trading at all.
    but, I live in the US and work for a company in NZ - and I get paid in NZD.
    so, i have no choice in the matter.
    right now, I have a considerable sum of money in NZDs, sitting in my bank account in NZ.
    now, sooner or later I will need to move this money to the us, (I need to eat)but I have enough on hand now to live on for 4 months or so.
    so the question is.....
    should I move it now...or wait?

    any advice would be appreciated as I have NO idea what to do
    TIA

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    Quote Originally Posted by mwm12 View Post
    Hi
    i'm not entirely sure if this is an appropriate post for this forum.
    but, I could use a little advice.

    to be honest, I would love to NOT be involved with curency trading at all.
    but, I live in the US and work for a company in NZ - and I get paid in NZD.
    so, i have no choice in the matter.
    right now, I have a considerable sum of money in NZDs, sitting in my bank account in NZ.
    now, sooner or later I will need to move this money to the us, (I need to eat)but I have enough on hand now to live on for 4 months or so.
    so the question is.....
    should I move it now...or wait?

    any advice would be appreciated as I have NO idea what to do
    TIA
    You should move it soon, since NZD will substantially weaken over the next year owing to interest rate cuts and that the US rates have stabilized. However, what we cannot suggest is, what will be the exchange rate next week or even for the next few weeks. NZD is facing recession and they too will bring down interest rates like US has done and could come down as low as 3%, which might send NZD to 0.40 or lower. When a currency is strong just sell it. You should have sold it when it was at 0.80, why wait until 0.60? You lost 25% already.

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    Hi DollarBull
    thanks for the reply.
    0.40!? - that wasn't what i wanted to hear
    as for why I did not move it at 80 - well, I get paid weekly in NZD.
    and just wire myself money here in the US when I need it.
    so it is a constant thing.

    but in hindsight, it would have been smart to have moved whatever i could have at 80....oh well
    thanks again for the reply.


    Quote Originally Posted by DollarBull View Post
    You should move it soon, since NZD will substantially weaken over the next year owing to interest rate cuts and that the US rates have stabilized. However, what we cannot suggest is, what will be the exchange rate next week or even for the next few weeks. NZD is facing recession and they too will bring down interest rates like US has done and could come down as low as 3%, which might send NZD to 0.40 or lower. When a currency is strong just sell it. You should have sold it when it was at 0.80, why wait until 0.60? You lost 25% already.

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    Quote Originally Posted by mwm12 View Post
    Hi DollarBull
    thanks for the reply.
    0.40!? - that wasn't what i wanted to hear
    as for why I did not move it at 80 - well, I get paid weekly in NZD.
    and just wire myself money here in the US when I need it.
    so it is a constant thing.

    but in hindsight, it would have been smart to have moved whatever i could have at 80....oh well
    thanks again for the reply.
    anyway, just dont sell everything today! just look at the dailybars in NZD and if there is a possibility that it could spike to 0.65, you may want to exploit that opportunity. RBNZ recently cut rate, so they may not cut again in the next few months. Therefore, NZD may have stabilized for now. It may move along with major trends, such as US stock market and possibly give a higher price for exchange.

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