*Good morning/afternoon everyone!* The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130. *The MAIN THEMES I see today are* +EUR +CHF -CAD -JPY *Trading Biases* +EUR, +CHF, +GBP, -CAD, -JPY mildly +AUD, +NZD, -USD *Today’s Initial Trades* Here’s the summary – 1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912 2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275 3. Buy AUDCAD at .9531, Stop at .9503, target .9559 4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130.

*The MAIN THEMES I see today are*

+EUR
+CHF
-CAD
-JPY

*Trading Biases*

+EUR, +CHF, +GBP,
-CAD, -JPY
mildly +AUD, +NZD, -USD

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912
2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275
3. Buy AUDCAD at .9531, Stop at .9503, target .9559
4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Will AUD Extend Losses on RBA?

Will AUD Extend Losses on RBA?

Chart Of The Day

Will AUD Extend Losses on RBA?

Tonight is a busy one in Australia with retail sales, the trade balance and a Reserve Bank rate decision on the calendar. The latest consolidation in the Australian dollar reflects the market’s hope that the RBA will remain optimistic. Data hasn’t been terrible as evidenced by last night’s economic reports. Service sector activity expanded at its fastest pace in 6 months, inflation ticked up according to the Melbourne Institute Inflation index and job advertisements increased a whooping 6.2% at the start of the year, which is the largest one-month rise since 2010. All of these reports along with the improvements seen in the table below suggest that a 2018 rate hike remains in play but the currency is strong (up 4.5% since the last meeting) and the RBA may not want to drive it higher by talking about tightening just quite yet. Nonetheless, the Australian economy continued its recovery since their last meeting and China is performing better than expected. If the RBA talks rate hikes or emphasizes the upside risks to growth and inflation, AUD/USD will bounce back to .7980-.8000. However if they express greater concerns about the level of currency and its impact on the economy, AUD/USD could slip down to .7850.

Technically, AUD/USD is in a downtrend but 79 cents is a former resistance turned support level (from Oct 13 high). If it drops back below 79 cents, the next stop should be 7850, the 23.6% Fib retracement of the 2011 to 2016 decline. On the upside, if 79 cents hold, the 20-day SMA just under 80 cents could cap gains.

How High Can AUD Rise?

How High Can AUD Rise?

Chart Of The Day

How High Can AUD Rise?

The best performing currency this week was the Australian dollar, which extended higher for the 5th consecutive trading day against the U.S. dollar. In fact so far this month, there’s only been 4 down days for AUD/USD. This move took the pair to fresh 2-month highs well above 77 cents. Considering that Australian data has been mixed, U.S. dollar weakness, higher commodity prices and a renewed demand for risk currencies are the primary catalysts for AUD/USD’s rise. With no major Australian economic reports scheduled for release this week, these are the same factors that would fuel a continued rally in the currency. In the near term, we think some year end profit taking is warranted particularly after such a strong move in AUD/USD – its up nearly 4 cents in 3 weeks.

On a technical basis, the latest rally stopped right at the 100-day SMA, which is a possible point of retracement. If it makes it past that point, then the next stop should be .7815, the 50% Fibonacci retracement of the September to December decline and then 79 cents. If AUD/USD rejects the 100-day SMA and starts trending lower from here, 77 cents is the main level of support.

Will AUD Break 75 Cents?

Will AUD Break 75 Cents?

Chart Of The Day

Will AUD Break 75 Cents?

With hours to go before the Reserve Bank of Australia’s monetary policy announcement, the Australian dollar extended its gains for a second day in a row to 0.7498, just 2 pips shy of the key 75 cent level. Today’s gains had little to do with data as Australian service sector activity and inflation growth slowed. Job ads also grew by only 0.4%, down from 1.5% the previous month. These reports should make the Reserve Bank less optimistic but on a day like today when geopolitical events drove Aussie flows, that mattered little to FX traders. The decision by Gulf States to cut ties with Qatar sent AUD sharply higher. While Qatar is not a major oil producer, it is a major producer of liquefied natural gas. Australia is quickly becoming a major player in this market and should be a big beneficiary of Qatar’s diplomatic crisis. Saudi Arabia closed its borders and suspended air and sea travel between the 2 countries. In the long run, these developments will have a positive impact on Australia’s economy, but in the near term it may not be enough to please the RBA.

Technically, AUD/USD had a nice rally over the past few days but the rally stopped short of the 50-day SMA. There’s a lot of resistance for AUD/USD between 0.7500 and 0.7560 (see the moving averages) but if this range Is cleared, we could see AUD/USD rise as high as 77 cents. Until then, those are the levels to watch. If the RBA under delivers, AUD/USD should sink back to 0.7430 and possibly even lower.

Today’s Trading Plan – EUR/USD and AUD/USD

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading slightly higher against the Japanese Yen this morning but its gains are limited to only a few currencies (JPY and GBP). It is not clear whether USD/JPY’s gains are durable but U.S. yields are up and we could hear some hawkishness from the handful of Fed Presidents scheduled to speak today. Euro and NZD are leading the gains -- while there is not specific catalyst for the New Zealand dollar, the euro is benefitting from Merkel’s view that the currency is too “weak.” GBP is underperforming because of new Brexit concerns but we still think 1.30 is support rather than resistance for GBP/USD. Comm dollars in general look bid and should be poised for more gains.

*The MAIN THEMES I see today are*

EUR strength
AUD, NZD, CAD strength

*Currencies we plan on day trading and the direction*
*These could change during the day, but for now

We will be trading around these themes --

+EUR
+AUD, +NZD
possible +CAD and +GBP

*Trading Biases*
These will change after US data

+EUR, +AUD, +NZD, +CHF
mildly +GBP, +CAD, +USD
-JPY

:triangular_flag_on_post: *Starting Trades*

OPENED AT MARKET EURUSD Buy
ENTRY -- 1.12369
STOP -- 1.11869
TAKE PROFIT -- 1.12669

NEW ORDER PENDING
AUDUSD Buy-limit 0.74570
STOP 0.74070
TAKE PROFIT 0.74870

AUD to 75 Cents?

AUD to 75 Cents?

Chart Of The Day

If you take a look at a recent chart of the Australian dollar, there’s no question that the currency is in the process of forming a top. Over the last 2 weeks, AUD/USD gradually descended from a high of 0.7750 to below 0.75 cents. 78 cents has been rock solid resistance for the Australian dollar since early 2016 and the currency pair continues to reject that level. Yet the decline in AUD/USD has been slow and AUD bears have been reluctant to call the recent move a top because of the Reserve Bank’s optimism. The Australian economy began showing pockets of weakness before the RBA met last month and while the central bank expressed continued concern about the complications of a strong currency, investors latched onto their brighter outlook for the global economy. But as the weeks passed, it is getting harder for the Reserve Bank to put on a brave face with economic data continuing to weaken. Last night, retail sales took an unexpected dip while manufacturing activity grew at a slower pace. We’ve compiled a table to show the extent of the changes in Australia’s economy since their last meeting in March and there’s been more deterioration than improvement. The RBA expressed specific concerns about the labor market and unfortunately the latest numbers provide greater cause for concern than optimism with the unemployment rate rising to its highest level in more than a year. The case can be made for less hawkishness from the RBA and that’s what we believe AUD/USD traders are waiting for, as it would imply that further easing is still on the table. If we are right and the RBA is less optimistic, AUD/USD could extend its losses to 75 cents. Technically , AUD/USD resistance is at 0.7650 with support at the 200-day SMA at 0.7550.

Will AUD Sink to 75 Cents?

Will AUD Sink to 75 Cents?

Chart Of The Day

Will AUD Sink to 75 Cents?

The Reserve Bank of Australia has a monetary policy meeting this evening . While the central bank is widely expected to keep interest rates unchanged, the Australian dollar is the best performing currency this year and its strength could worry the RBA. Since Jan 1, AUD is up more than 5.5% versus GBP, more than 4.5% versus USD and CAD, and over 4% versus EUR, NZD and Chinese Yuan. As shown in the table below, there have also been areas of weakness. Labor market conditions in particular deteriorated significantly at the start of the year, inflation expectations have fallen, service sector activity slowed, parts of the Chinese economy is losing momentum and the trade balance shrank significantly. Yet commodity prices are on the rise, retail sales and consumer confidence is up and manufacturing activity remains strong. Prior strength is beginning to fade and the RBA will need to decide whether the outlook is murky enough to emphasize the headwinds created by a strong currency. Last time they met they were upbeat but we expect less optimism this month. If we are right, AUD/USD could make a run for 75 cents.

Technically, there’s a significant amount of support between 0.7500 and 0.7530 whereas AUD/USD near term resistance is at Monday’s high of 0.7610. If AUD/USD breaks above 0.760, it should run up to the 20-day SMA near 0.7650. However if it falls, we expect the currency pair to drop to at least 0.7530 and whether 75 cents is taken out depends on the degree of RBA dovishness.

BK Big Trades 01.25.2016 2 New Orders for EUR and AUD

Swing

BK Big Trades -- 2 New Orders

1. EUR/USD

Aggressive

Place Order to Sell EUR/USD at 1.0865

Stop 1.1065

Conservative

Place Order to Sell EUR/USD at 1.0920

Stop 1.1120

2. AUD/USD


Aggressive

Place Order to Sell AUD/USD at 0.7010

Stop 0.7210

Conservative

Place Order to Sell EUR/USD at 0.7100

Stop 0.7300

It is a new trading week and we are ready to lay out some fresh Forex Big Trade orders. Nearly all of the major currencies are in play this week with AU CPI, FOMC, RBNZ, BoJ and UK GDP on the calendar. This morning’s German IFO report was also worse than expected reinforcing ECB President Draghi’s warning that more easing could be on its way in March.

We are laying out 2 sets of orders this morning -- on the back of the IFO and ahead of AU CPI. We are also actively watching USD/JPY and USD/CAD -- 2 pairs that we want to sell higher.

We still have the following pending order:

3. NZD/USD

Conservative

Order to Sell NZD/USD at 0.6560

Stop at 0.6760

BK Hot Chart – What’s Next for AUD Now that 0.80 Broke?

BK Hot Chart – What’s Next for AUD Now that 0.80 Broke?

Chart Of The Day

The Australian dollar broke through 80 cents to trade at its weakest level against the U.S. dollar in 5 years. The 1.3% decline came despite an uptick in the HSBC Chinese manufacturing PMI index. While there is growing evidence that China’s economy is stabilizing investors do not believe that this will stop the RBA from lowering interest rates by 50bp this year and these expectations could drive AUD even lower. Next week’s CPI report from Australia will be particularly important in shaping the market’s expectations for the next RBA rate decision on February 2nd. Given the decline in commodity prices, the odds favor a weaker release that could drive the currency pair towards its 2007 lows.

Now that AUD/USD has fallen below 80 cents and below the 61.8% Fibonacci retracement of the 2008 to 2012 rally, the next stop for the currency pair should be the 2007 swing low of 0.7675. As long as AUD/USD remains below 0.8050, the downtrend remains intact.