News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • UK PM Johnson says there are some new evidence that the new COVID variant may be linked to higher mortality $GBP
  • Get your Friday market update from @DailyFX Chief Strategist @JohnKicklighter 👇 https://t.co/bbnkIHROmI
  • Indices Update: As of 17:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.33% France 40: 0.31% FTSE 100: 0.27% US 500: -0.15% Wall Street: -0.32% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/dUuCgtComn
  • #Bitcoin is currently trading around $32,600, heading higher today after briefly dipping below the $30,000 level early this morning. $BTC https://t.co/bmrf8cffca
  • The US Dollar has been whipsawing today amidst risk-off sentiment in the US equity markets, with the $DXY trading between 90.08 and 90.30. $USD https://t.co/HPeIFlT5Px
  • Markets are on the defensive to close the week amid renewed COVID concerns. Get your #equities market update from @JMcQueenFX here:https://t.co/btGOrdNmIs https://t.co/RfQRkwDCVE
  • 🇺🇸 EIA Cushing Crude Oil Stocks Change (15/JAN) Actual: -4.727M Previous: -1.975M https://www.dailyfx.com/economic-calendar#2021-01-22
  • 🇺🇸 EIA Distillate Stocks Change (15/JAN) Actual: 0.458M Expected: 1.214M Previous: 4.786M https://www.dailyfx.com/economic-calendar#2021-01-22
  • Forex Update: As of 15:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: 0.04% 🇨🇭CHF: -0.03% 🇯🇵JPY: -0.31% 🇨🇦CAD: -0.61% 🇳🇿NZD: -0.64% 🇦🇺AUD: -0.67% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/aXaVmNuUiR
  • Indices Update: As of 15:00, these are your best and worst performers based on the London trading schedule: Germany 30: -0.41% FTSE 100: -0.48% US 500: -0.48% Wall Street: -0.78% France 40: -0.95% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/ZthZd81b1n
Stong & Weak: Australian Dollar Weakness in Focus

Stong & Weak: Australian Dollar Weakness in Focus

Jeremy Wagner, CEWA-M, Head of Education

Talking Points:

-AUDUSD gets rejected at .95 horizontal resistance hinting at future Aussie weakness

-US Government spending debate and RBA rate decision may provide a catalyst for Aussie weakness

-Enter the AUD sell currency basket while keeping the Euro (EUR) buy currency basket open

When comparing a currencies general trend against their 200 Simple Moving Average, this past week has seen the Australian Dollar drop two rankings. This drop represents a tie for the largest in the week (tied with the US Dollar).

Based on structural weakness seen in the Aussie and a rejection of the AUDUSD pair at the significant .95 price level, we think Australian Dollar weakness will return to the market.

Forex Strategy: Matching Strong versus Weak

Currency

Up Arrows

Down Arrows

Change From Last Week

NZD

6

0

No Change

CHF

6

1

Higher 1 ranking

GBP

4

3

No Change

EUR

4

3

Higher 1 rankings

AUD

3

4

Lower 2 rankings

CAD

2

5

No Change

JPY

2

5

Higher 1 ranking

USD

0

7

Lower 2 rankings

Chart created by DailyFX EDU Robert Warensjo

There are a couple of news events that could spark a large move in the Australian Dollar.

First of all, US lawmakers are debating spending bills that if left undecided, could lead to a partial government shutdown of services. Then, US lawmakers have to additionally negotiate the debt ceiling on the US spending. This leads to uncertainty because more heat is being placed on the US economy to slow down the spending. This could impact other main world markets in Europe and Asia due to the size of the US economy.

Australia fits into this equation because they have strong ties with the Chinese economy. China is the biggest export destination of Australian goods. China is the largest importer into Australia. If the US economy reduces their spending, then China has less foreign demand for their products which affects their pull into Australia.

Secondly, Australia’s central bank, the Reserve Bank of Australia, releases their announcement on target interest rates Tuesday at 04:30 GMT. The RBA has been in a rate cutting mode for nearly 2 years now due in part to China’s slowing economy. Though the recent Fed ‘no taper’ announcement may lift emerging markets like China, the no taper signal indicates weakness still persists and that inflationary pressure may be tamed in US and China. Weak Chinese inflation means downward pressure on Australia inflation and rates.

Learn Forex: Austalian and Chinese CPI Correlation

Stong_Weak_Australian_Dollar_in_Focus_body_pict0000.png, Stong & Weak: Australian Dollar Weakness in Focus

Chart Data using tradingeconomics.com

Notice in the chart above how inflation has remained muted in both China and Australia even on the heels of the Fed’s QE3 announcement from September 2012. All of that money printing didn’t improve much of the worldwide spirits and spending. Therefore, look for the positive effects of ‘no taper’ to wear off which could hurt the value of the Australian Dollar.

Executing the Trade

Last week, we highlighted Euro strength and purchased Euro’s through a basket of currencies. The position was slightly underwater but never hit the stop loss of 1.5%. We will keep that Euro buy currency basket trade open.

This week, we’ll add a short AUD currency basket trade. The stop loss will be 1.5% of the account balance and we’ll take profit at 3.0% for a 1:2 risk-to-reward ratio.

The currency baskets offer several advantages. Trading a currency rather than a pair is a good way to spread out and diversify your exposure. This way, we are selling the AUD against a basket of currencies allowing us to isolate the valuation of the AUD.

Good luck with your trading!

Gauging relative strength of currencies is a common method employed by traders of all skill levels. The analysis is fairly simple and straight forward as previously laid out in “Know the Strong and the Weak Currencies.” The process can take about 15-20 minutes and doesn’t need to happen but once or twice per week.

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX Education

Follow me on Twitter at @JWagnerFXTrader.To be added to Jeremy’s e-mail distribution list, click HERE and select SUBSCRIBE then enter in your email information.

See Jeremy’s recent articles at his DailyFX Forex Educators Bio Page.

If you would like to learn more about using Simple Moving Averages in your strategy, register to take this free 20 minute “Trading with Moving Averages” course. You’ll learn how to use moving averages to detect trend and trigger signals.

Register here to start your learning.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES