Marc Waldon

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Members Excellent Analysis And Trade Plan

Members Excellent Analysis And Trade Plan

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Research for the week 3/15/15 – 3/21/15

portrait of group cheerful college graduates at graduationIt appears that we are in a transitional period in the markets from Risk On to Risk Off with the S&P 500 still on an uptrend (lost some steam the past two weeks but not on a down trend yet) and the VIX being below 20, the news coming out around the world are putting investors on alert of a regime shift.

With the US economy recovering and expectations of a rate hike in the near future (US Treasury yields are moving higher), the Eurozone in shambles with the QE introduction (which some experts believe it came too late and it’s impact on the economy will be limited and not the expected) and the issues with Greece still not settled, and the Chinese government lowering it’s expectation of economic growth for the year from 7.5% to 7% (and with the Chinese Premier saying even that won’t be easy to achieve). 

For the coming week I will be looking to possibly:

Sell EURUSD

Sell this pair but not until the FOMC announcement. If hawkish as expected with the word patient removed from the report then I will be shorting.

If the word remains then look for the press conference for any additional indications regarding policy and then wait for pull back before short probably around 1.068 (Main Trend Line and 4 Hour Fibonacci line). Otherwise I will wait for the market’s reaction.

Sell AUDUSD

Same as the above pair but also will be looking for the Monetary Policy Minutes and statement before entering a trade. If the announcements create a pullback I will be looking at the 0.77 area prior to shorting this pair.

Sell EURAUD

Again after the news from Australia I will be looking to sell this pair based on carry trade and the sentiment surrounding the Eurozone at this point.

Buy USDCAD

With oil prices low and a bearish outlook by the IEA I am looking to sell the CAD. So I am looking for the pull back to possibly 1.274 before entering a long trade for this pair. Again depending on the FOMC and dollar strength. Other wise wait for further pull back possibly to 1.26 (support and Fibonacci).

USD:

This past week news related to the US economy came out mostly worse than expected besides the weekly unemployment claims which were much better than expected. These news slowed down initially the USD’s strengthening but not for long as we saw an upward movement on Friday despite additional negative data as continuing interest rate increase expectations are still strong.

This coming week we have various economic data coming out (Building Permits, Weekly Unemployment Claims, Philly Fed Manufacturing Index) but none as important as the FOMC announcement on Wednesday which will be closely watched by the markets to see if the word “patient” will come out of the report or for any other indications as to the Fed’s policy for the near future especially when it comes to interest rate increase.

No matter what in my opinion I will still be looking to BUY the USD against weaker currencies since I don’t expect the interest hike speculation stopping any time soon unless more negative data come out in the future.


EUR:

This past week nothing changed for the EUR as it continued it’s decline against the USD. We had Goldman Sachs revising it’s expectation from $0.85 per Euro to $0.80 as the overall sentiment and data coming out of the Eurozone are negative towards the Euro.

Also, we had a comeback for Greece in the news this week as it appears that the back an forth between the Greek government and the rest of Eurozone (Germany) is not over. Both sides are making statements showing that they are not near any settlement and before long we will come up to the end of the 4 months extension with possibly not agreement.

This week on Monday the ECB’s president Draghi speaks and I will be looking for any information that may affect the negative sentiment among investors to at least slow down the rate at which the EUR is declining especially against the USD.

Then on Tuesday we have the German ZEW Economic Sentiment and on Thursday we have the announcement of the Targeted LTRO. I will be looking at the economic data and the speech for any potential Euro pullback but only to short the Euro against the USD or possibly against one of the commodity currencies (AUD, NZD)

AUD:

The Australian interest rate remained unchanged for now so we are looking at the data coming out to either strengthen or weaken the sentiment that the RBA will lower the interest rate in the near future. With commodity prices still very low and potential China growth issues the outlook for the AUD is to go even lower against the USD.

This coming week we have the release of the Monetary Policy Meeting Minutes which will be scrutinized for any indication of a policy shift and later in the week the RBA’s governor Stevens speaks at which time investors will be listening again for any policy shift indications especially in a potential rate cut. The AUD appears to still be a desirable currency in the carry trades so for the near future I expect it to have the upper hand in comparison to the EUR and the JPY.

I am still looking to sell the AUD against the USD and buy against the EUR unless the announcements coming out indicate a shift in policy at which time I will be reassessing my plan and possibly wait for a pull back against the EUR and USD and then place my trades.

NZD:

The RBNZ kept the interest rate the same as expected and per it’s governor Wheeler New Zealand’s situation is different than other economies that proceeded with policy changes and interest rate cuts. He cited strong economic growth at 3.25% and possibly 3.5% and expectation of further growth at those rates over the next two years.

Coming up on Tuesday we have the GDT Price Index announcement and on Wednesday the GDP q/q announcement. Need to see if they support the RBNZ’s decision to keep the rate unchanged.
CAD:

In the previous week we had the release of the Canadian unemployment data and the unemployment rate increased more than expectations. Also, oil prices dropped on Friday after a mostly bearish report from the IEA on global oil supply and demand which further harmed the Canadian economy’s outlook for the near future.

This coming week we have the Manufacturing and Wholesale Sales announcements on Tuesday and Wednesday which are expected to be lower than previous data and the on Friday we have the Core CPI and Core Retail Sales which are expected to be better than previously released data.

I am looking to buy the CAD unless oil prices move upwards.

 

 

 



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