Currency Analysis Report 11/14/19 – The Kiwi Surprises Everyone

The Reserve Bank of New Zealand has already cut interests rate three times this year with the most recent cut being in August.  Back in August the Bank of New Zealand cut rates by 50 basis points.  The drastic cut shocked the Markets because the Markets were only a 25 basis point reduction.  At that time, Reserve Bank Governor Adrian Orr hinted at further easing by any means necessary in order to hit their inflation rate targets.

Twelve out of 15 analysts polled by Reuters expected the Reserve Bank of New Zealand (RBNZ) would cut rates to 0.75% this week from the current 1%.  However, nobody saw it coming yesterday evening.

The New Zealand dollar surged Wednesday after the country’s central bank defied expectations for an interest rate cut, and left policy unchanged. The kiwi dollar NZDUSD, +1.2954% jumped 1.1% to 0.6402 U.S. cents. In a statement, the Reserve Bank of New Zealand said at it was leaving the Official Cash Rate at 1% as economic developments since August “do not warrant a change to the already stimulatory monetary policy setting at this time.”

Expectations had widely been calling for a cut of 25 basis points, said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note to clients.

Source

The RBNZ left the door ajar for further policy easing saying it was “prepared to act” if required. The central bank’s own projections imply a 50/50 chance of a cut next year.

So where is the Kiwi headed next, lets go to the charts?

Monthly Chart (Curve Time Frame) – monthly supply is 0.7600 and monthly demand is 0.6300

Weekly Chart (Trend Time Frame) – the trend is still down.

Daily Chart (Entry Time Frame) – the chart suggests you can’t consider going long until price closes above 0.6450.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Currency Analysis Report 10/13/19 – Rough Week For The US Dollar

Not only is the world’s
currency the US dollar, but it’s one of three safe haven currencies in the
world (the other two being the Swiss Franc and the Japanese Yen).  And as long as the US economy grows, relative
to other economies and US interest rates remain positive and/or higher relative
to other central banks around the world, the US dollar should continue to
appreciate.

However, late last week we received news regarding the US-China trade talk that Chinese Vice Premier Liu He said China was willing to reach an agreement with the United States to minimize further escalation in trade tariffs. The feeling appeared to be mutual by Trump going into the discussions,

 which was later followed up with Trump said his negotiators reached a “substantial phase-one deal” that will delay the implementation of more US tariffs on Chinese imports. On the news the dollar’s weakness ignited a rally in the euro with the single currency rallying 0.5% to a two-week high. In addition, the British pound rallied after British and Irish leaders meet to have a treaty agreed to allowing the England to leave the EU in an orderly fashion by the end of this month.

As a result of good news on the US-China trade front and a potential amicable Brexit, the dollar had its biggest one day drop in five weeks late last week. So is this just the beginning of a bigger drop for the US dollar, lets go to the charts to find out?

Monthly Chart (Curve Time Frame) – monthly supply is at 101.50 and monthly demand is at 90.

Weekly Chart (Trend Time Frame) – the trend is still up.

Daily Chart (Entry Time Frame) – the chart suggest it’s not time to go short the US dollar and to wait for price to hit 100.25.

However, if price breaches the 98.00 level, the chart could be suggesting to prepare to go short.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Forex Analysis Report – 10/6/19…More Downside Risk On USD/INR (Rupee), But First…

Last year, a deep
sell-off in emerging markets and a widening domestic fiscal deficit,
exacerbated by rising oil prices, pushed the rupee down nearly 9%.  This year, it’s the continued trade war
between the US and China that hurting the Indian economy and currency.  

India is taken a “any
means as necessary” approach in trying to help its stagnant economy.  For example, several weeks ago, India’s
Finance Minister Nirmala Sitharaman announced a cut to corporate tax rates for
domestic companies to 22%. The goal was to increase the profitability of Indian’s
publicly traded company and level the playing field of Indian companies competing
again companies in other countries with a similar tax structure.  However, when a country is trying to jumpstart
their economy, there is no better tool than to cut interest rates.

India’s central bank on Friday cut its benchmark repurchase rate for the fifth consecutive time this year as it continues a concerted push to reinvigorate a stuttering economy.

The Reserve Bank of India (RBI) lowered the repo rate by 25 basis points to 5.15% with five members of its Monetary Policy Committee voting in favor, versus one who backed a 40 basis point cut.

The decision came against a backdrop of weaker growth, a resurgence of financial stability risks and a surprise fiscal stimulus in the form of a recent corporate tax cut.

More aggressive policy moves are expected, however, with the economy having deteriorated for five consecutive quarters, most recently hitting a six-year low of 5% in the second-quarter of 2019.

Source

Monthly Chart (Curve Time Frame) – monthly supply is 73.500 and monthly demand is 63.500.

Weekly Chart (Trend Time Frame) – the trend is sideways.

Daily Chart (Entry Time Frame) – the price has reacted to both supply zones, and has the potential to go much lower, but the chart suggests price has to close below the pivot low for confirmation first that price will go a lot lower.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Forex $1 MM Challenge – Missed My Trade Again On GBP/NZD

The Reserve Bank of New Zealand has already cut interests rate three times this year with the most recent cut being in August.  Back in August the Bank of New Zealand cut rates by 50 basis points.  The drastic cut shocked the Markets because the Markets were only a 25 basis point reduction.  At that time, Reserve Bank Governor Adrian Orr hinted at further easing by any means necessary in order to hit their inflation rate targets.

Fast forward to this past Thurs and the Bank of New Zealand shocked the Markets again.  But this time New Zealand’s central bank on Wednesday held the official cash rate (OCR) at a record-low 1.0%.

NOTE: This was bullish for the New Zealand Kiwi

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said on Thursday that it was unlikely the central bank would need to use unconventional monetary policy tools, although it would be negligent not to be prepared for such a scenario.

“Our current view is that we are unlikely to need ‘unconventional’ monetary policy tools. But we would be remiss not to be prepared,” Orr said in a speech in New Zealand that was released by the bank.

The New Zealand Dollar jumped after the comments, rising 0.3% to $0.6292.

Source

Monthly Chart (Curve Time Frame) – monthly supply is at 2.20000 and monthly demand is at 1.70000.

Weekly Chart (Trend Time Frame) – price also broke the weekly up trendline.

Daily Chart (Entry Time Frame) – the chart suggested to short price at the daily supply at 2.00500, but the trade set-up happened without me for a 2nd time.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Forex $1 MM Challenge – Trade #20 (9-26-19) Sold AUD/USD

U.S. President Donald Trump said on Wednesday a deal to end a nearly 15-month trade war with China could happen sooner than people think and that the Chinese were making big agricultural purchases from the United States, including of beef and pork.

Trump spoke a day after delivering a stinging rebuke to China’s trade practices at the United Nations General Assembly, saying he would not accept a “bad deal” in U.S.-China trade negotiations.

China’s top diplomat hit back at U.S. criticism of its trade and development model in a speech on Tuesday after Trump spoke at the United Nations. Wang Yi, China’s foreign minister and state councilor, said Beijing would not bow to threats, including on trade, though he said he hoped the high-level trade talks next month would produce positive results.

Source

I have a bias that no trade deal will be reached, but I’m going to continue to trade what is real, not what I feel…so I went short on AUD/USD

Monthly Chart (Curve Time Frame) – monthly supply is at 0.88000 and there is no monthly demand is at 0.60000.

Weekly Chart (Trend Time Frame) – the trend is down.

60 Min Chart (Entry Time Frame) – the chart suggests to short price at the 60 min supply at 0.6750.

NOTE: I don’t usually trade 60 min charts, continuing to test my skills on the smaller time frame, so my position was a little smaller than usual. In addition, I may try to get to breakeven sooner than later because I’m really in no man’s land.

My target is right before the weekly demand zone, but I may not hold as this trade is a greater than 12:1 Reward to Risk trade and I’m looking for just a minimum of 3:1.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

It Doesn’t Matter If The BOJ Cuts Rates

Bank of Japan Governor Haruhiko Kuroda expounded the virtues of negative interest rates Tuesday in comments that will keep market players on high alert that the central bank will take action in October.

Speaking days after a BOJ meeting that raised expectations for additional stimulus to come next month, Kuroda said he was still closer to taking action than he was in July.

“I don’t think we need to rule out cutting negative rates as a policy option at this point,” Kuroda said to reporters in Osaka, following a speech to local business leaders there earlier in the day.

Economists and BOJ watchers are still trying to gauge whether last week’s call for the review is more a signal of looming action or more a delaying tactic.

Source

I think BOJ will lower rates, just like the ECB, the US, Bank of Australia, Bank of New Zealand, Bank of Indonesia and many others are doing as they all face a slowing global economy.  However, although all those other currencies are dropping in value, with the exception of the ugliest prettiest dude at the party, the US Dollar, I anticipate the Yen to continue moving higher.

Like the Swish Franc, the Yen is also safe haven currency as well.  However, because Japan is such a large exporter, over many decades of account surpluses, it has become the largest net creditor to the world. So during times of uncertainty, capital flows out of other currencies and into the Japanese yen, causing it to strengthen.

So where is the Yen headed next, lets go to the charts?

Monthly Chart (Curve Timeframe) – monthly supply is at 0.0103 and monthly demand at 0.00805.

Weekly Chart (Trend Timeframe) – the trend is sideways with upside momentum.

Daily Chart (Entry) – the chart suggests to go long if and once price breaches the daily supply at 0.00912.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Forex Relative Strength Analysis Report For Week Starting 8/11/19

Some of the world’s currencies are accepted for most international transactions. The most popular currencies are accepted for most international transactions are the U.S. dollar, the euro, and the yen. However, the U.S. dollar is the most popular.

And in the foreign exchange market 90 of forex trading involves the U.S. dollar. Thus, when assessing the relative strength of the most popular currencies in the world, it’s always against the U.S. dollar, using the dailytime frame chart.

The “major” forex currency pairs are the major countries that are paired with the U.S. dollar (the nicknames of the majors are in parenthesis).

AUD/USD – Australia dollar (Aussie) vs. the U.S. dollar

EUR/USD – Euro vs. the U.S. dollar

GBP/USD – British pound (Sterling or Cable) vs. the U.S. dollar

NZD/USD – New Zealand dollar (Kiwi) vs. the U.S. dollar

USD/CAD – U.S. dollar vs. the Canadian dollar (Loonie)

USD/CHF – U.S. dollar vs. the Swiss franc (Swissie)

USD/JPY – U.S. dollar vs. the Japanese yen (the Yen)

Based on the moving averages and the last daily closing price, relative to the moving averages,

the currency relative strength relative to the US dollar is the following:

Two Weeks Ago

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Currency Analysis Report 8/9/19 – The Kiwi Got Squashed

The New Zealand dollar is known in the forex world after its national icon, the flightless bird called the Kiwi, which is also pictured on the country’s $1 coin.

Image result for new zealand $1 coin

The Kiwi remains under pressure as lingering U.S.-China trade tensions continue to weigh on sentiment.  The Reserve Bank of New Zealand has already cut interests rate twice this year and Bearish traders were betting on another ¼ point cut this earlier this week. But the news that came out this week, even shock the Bears.

The New Zealand Dollar was crushed Wednesday after the Reserve Bank of New Zealand (RBNZ) slashed its interest rate further than markets expected and gave guidance that was more ‘dovish’ than anticipated, but analysts say there’s more losses ahead because the bank is likely to cut again before long.

The Reserve Bank of New Zealand cut its interest rate by 50 basis points to a new record low of 1.25% Wednesday when financial markets had looked for only a 25 basis point reduction, taking the market by surprise and prompting traders to dump the Kiwi currency by the bucketload.

Image result for Reserve Bank Governor Adrian Orr

Reserve Bank Governor Adrian Orr hinted at further easing by any means necessary in order to hit their inflation rate targets.   Based on where I think the global economy is headed over the coming 12-24 months, I’m personally bearish as well on the Kiwi.

On the monthly chart, there is a nice head and shoulder pattern.

So based on a measured move, price could go sub .5000, which is an extreme.

So I will settle for distance that is half the measured move, but at the moment, on a smaller time frame, I can find a level to enter to go short.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Currency Analysis Report 8-5-19…The Thailand Baht Is Doing Very Well

The foreign exchange market is where currencies are traded. When investors trade foreign exchange (forex or FX for short) they’re buying and selling currencies over the foreign exchange market.

The forex market is the largest and most traded financial market in the world. The forex market has grown to a daily trade volume of over $5 trillion a day which is over 200 times bigger than the New York Stock Exchange.

I try to stick to the major currencies and the minor currencies. The majors are the currencies of the major global economies – the US, Japan, UK, Euro Zone, Canada, Australia, Switzerland and New Zealand and stay away from the exotic currencies because they are a lot less liquid and prone to “slippage” and it also means they have wider spreads than the majors and the crosses.  However, I at least pay attention to them…at least from a distance.

The Thailand currency is call the Baht.  And as strong as the US dollar has been against all the major currencies this year, I was shock to read that the Baht has been outperforming the US dollar this year (+5%) and year over year (+8).

But this isn’t necessary good for the Thailand as their exports have become more expensive and so will ultimately hurt their economy.  This is why Trump has been fighting with China for the last 1.5 years.  Our trade balance with China is so lopsided as a result of China continuing to depreciate their currency whenever it suits their best interests.

Anyway, back to the Baht, is there any hope for the country of Thailand in regards to a cheaper Baht, lets go to the charts to find out?

Monthly Chart (Curve Time Frame) – monthly supply is at 35.750 and monthly demand is at 29.000.

Weekly Chart (Trend Time Frame) – the trend is down.

Daily Chart (Entry Time Frame) – the chart suggests to short price on a pull back to the daily supply at 31.350 with a target just above the top the of the monthly zone.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Forex $1 MM Challenge (8/4/19) – Recent Japanese Yen Trades

Safe havens currencies retain or increase in value during risk off environments, meaning when economic turbulence is upon us. Three major safe haven currencies are the U.S. dollar, the Japanese Yen and the Swiss Franc.  In the past several months we have witnessed a divergence in the equity markets.  While all major equity markets around the world are doing down, the US market is the only one holding on for dear life. So in a risk off environment commodity type currencies decline in price as a result.

On July 1st I when short two different Japanese forex pairs.

Forex $1 MM Challenge – Trade #16 (7-1-19) Sold USD/JPY

Monthly Chart (Curve Time Frame) – monthly supply is at 121.00 and monthly demand is at 97.000.

Daily Chart (Entry Time Frame) – the chart suggests to go short at the daily supply at 108.60.

NOW – Price stopped me out before pushing lower this past week.

Forex $1 MM Challenge – Trade #17 (7-1-19) Sold CAD/JPY

Monthly Chart (Curve Time Frame) – monthly supply is at 0.05600 and monthly demand is at 0.04600.

Daily Chart (Entry Time Frame) – the chart suggests to short price at the daily supply at 78.000.

NOW – this trade is still in play at this time.

Both trade set-ups were a Reward to Risk of 5:1. So although I was stopped out on the USD/JPY, if the CAD/JPY ends up hitting my target, my account will go up 4%.

The game of trading is a probability game, which you most trades have less than a .500 batting avg (win/loss ratio). However, as long as your avg win is greater than your avg loss, your equity curve should be positive. Let me illustrate, if my avg. win is 3X my avg. loss, all I need is a minimum win % of 25% to be profitable. And if your avg. win was 20X your avg loss, you only have to be right 5% of the time. This is why I stopped sweating my losses years ago because my losses lead to my wins. Until next time.

My Journey Into Forex – Part 3 of 3 (The $1 MM Challenge) – Part 2

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.