SPOT FOREX
AUD – AUSTRALIAN DOLLAR
On October 6, 2009, Australia became the first G-20
member to raise its interest rate and the economy is still doing well. However,
the Australian dollar is expensive and there are some changes happening: China has been trying to slow its economy,
serious flooding had a negative impact on Australia's
economy, and the U.S.
appears to be picking up. Prices are currently showing two-sided trading, but I
am reluctant to buy dips below the 15-day average at these high prices -
watching for now (updated 1-10). The inability of prices to hold above the
15-day average on January 19th may be a sign of weakness (updated 1-20). On the
other hand, the stubborn support at 98 cents is impressive - watching for now
(updated 1-21). Prices are still showing a positive imbalance, but are
struggling to go higher. A close below 98 cents would look weak (updated 1-28).
Today's higher close is an obvious breakout (updated 2-1). Today's lower close
near the old high is suspicious - standing back (updated 2-4).
GBP – BRITISH POUND
The news for the U.K. economy had been pretty good
until they got hit with a negative GDP report on January 25th. . . Prices were
showing two-sided trading and the range narrowed. It was impressive how they
held above the 200-day average (updated 1-6). The higher close on January 7th
is a fresh sign of strength (updated 1-7). January 18th is probably a good day
to step out and watch for a while (updated 1-18). The higher close on January
31st is an impressive sign of strength, especially after last week's weak GDP
report (updated 1-31). Now that we are near the old high, this seems like a
good place to step out and watch (updated 2-2).
EUR - EURO
On July 23rd, 84 of Europe's
91 banks passed their stress tests. That was seen as good news, but concerns
about Europe's debt levels remain. Germany's economy is strong, but concerns about Ireland, Portugal,
Spain, and Greece are
keeping pressure on the euro. On November 11th, the euro posted its lowest
close in six weeks and, so far, prices still look weak
(updated 12-20). Possible support at $1.30? - good time to be out (updated 12-22). Prices are doing a good
job of staying above the 200-day average - a nice sign of strength (updated
12-29). We changed our mind as this looks like two-sided trading - standing
back (updated 1-3). We know prices are slipping below the 200-day average, but
we are standing back as this still looks like two-sided trading (updated 1-6). That
was a good call - still watching (updated 1-14). The surge in prices higher
since January 10th is an unexpected and impressive change in the dynamic. But
that doesn't mean that this would be a good place to buy - watching for now
(updated 2-1).
JPY – JAPANESE YEN
The yen had an impressive rally from May to the
end of October, mostly due to concerns about the rest of the world. In August,
Japan's Finance Minister were talking about how the expensive yen was hurting
the economy, but prices continued to rise until November 1st, when they peaked
at their highest level in 15 years. In November, prices fell back from their
lofty levels and have showed a wide range of two-sided trading since - watching
for now (updated 1-19). The quick sell-off on January 20th after one day above
the 15-day average is a sign of negative price imbalance (updated 1-20).
Today's higher close looks like more two-sided trading - glad to stand back
(updated 1-24). On January 27th, the yen closed lower after Standard and Poor's
cut its credit rating, but prices snapped back higher the next day - a new sign
of strength (updated 1-28). Prices are balking near the old high and we never
have liked the fundamentals - this may be early, but we are content to step out
and watch (updated 2-2). Today's big reversal near the old high is suspiciously
weak, but we would like more clarity before
taking any action (updated 2-4).
