AUD/USD Fundamental Analysis March 2, 2015 – Forecast

The AUD/USD dipped 9 points against US dollar to trade at 0.7795. The continued decline in Iron Ore prices weighed heavily on the Aussie. Private sector investment met expectations. The Australian dollar has given up all of its recent gains slumping back below US78c as the US dollar regained momentum.  Driving the losses was a surging US dollar, which appeared to gain strength from better-than-expected durable goods data and rose to a one-month high against a basket of leading currencies.

US inflation data was soft on the surface, though core inflation — which strips out the volatile energy and food categories — rose 0.2 per cent in January, above expectations for a 0.1 per cent lift. Investors will be watching the data closely in coming months for any sign of inflationary pressure that could result in a mid-year rate hike from the Federal Reserve.

The price of iron ore is near a new five-and-a-half-year low after extending its losing streak to four days overnight. At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US62.50 a tonne, down 0.6 per cent from its previous close of $US62.90 a tonne.

EUR/JPY Fundamental Analysis March 2, 2015 – Forecast

The EUR/JPY was flat in the morning session with a bearish outlook trading at 133.70. The euro gained in the Asian session as traders bought up the cheap commodity after falling to trade below 1.12 on Thursday evening.  This morning’s Japanese data dump showed that Consumer prices excluding fresh food rose 2.2 percent from a year earlier, the statistics bureau said. That was less than the median projection of 2.3 percent. Stripped of the effect of a sales-tax increase last April, core inflation — the BOJ’s key measure — was 0.2 percent, below the BOJ’s target for 2 percent inflation.

The slowing inflation highlights the challenge for the central bank in reflating the world’s third-biggest economy. Kuroda told parliament on Thursday there’d been no major negative shift in inflation expectations, standing his ground on a view laid out last week when he said further measures weren’t warranted at this point.

Some policy makers at the BOJ view further monetary easing to shore up inflation as a counterproductive step for now, amid concern it could trigger declines in the yen that damage confidence, people familiar with the talks said earlier this month.

NZD/USD Fundamental Analysis March 2, 2015 – Forecast

The NZD/USD gained 16 points to trade at 0.7548 as business sentiment printed better than expected while building consents missed projections. The kiwi is extremely strong offset a rally by the US dollar which soared in late trading on Thursday.  New Zealand business confidence improved in February as recent gains in dairy prices turned sentiment around in the agriculture sector, and as low interest rates stoke hiring and investment expectations. The New Zealand dollar is heading for a 0.4 percent gain against the greenback this week, ahead of what might be an extended rally for the US currency as the prospects for the world’s biggest economy remain strong.

The US dollar index, a measure of the greenback against a basket of currencies, climbed to a five-week high as inflation and durable orders figures beat forecasts and stoked expectations the Federal Reserve will have to raise interest rates at some point. Testimony by Fed chair Janet Yellen this week sent mixed messages to investors, as she said any rate hikes would depend on the strength of economic data. The second estimate for fourth-quarter US gross domestic product is expected to show the world’s biggest economy grew at an annualized pace of 2 percent, according to a Bloomberg survey

USD/JPY Fundamental Analysis March 2, 2015 – Forecast

The USD/JPY is down 18 points after climbing on Thursday evening as the US dollar rallied. Data this morning was lackluster except for one bright spot, which was industrial production. Inflation and retail sales missed expectations. The JPY is trading at 119.24. In the US on Thursday consumer prices posted their biggest drop since 2008 with a surprising 0.7 per cent fall in January. Headline prices were down 0.1 per cent over the year. The weakness was driven by the slide in energy prices.  The all-important durable goods report rose by 2.8 per cent in January after a 3.7 per cent slide in the prior month.

Investors continue to bet on when the Fed will raise short-term rates, which have been held near zero since December 2008, analysts expect an increase to come this year. Markets are encouraged by Wal-Mart’s plans to boost wages for its US employees, which could add pressure on other companies to do the same. On Wednesday, TJX Cos. announced it also would increase wages for its US workers, following Wal-Mart’s lead.  A pickup in wages could make the Fed more comfortable about raising rates this year.

Japan’s industrial output increased the most in more than three years while retail sales slid and inflation slowed, underscoring strength in export industries and weak domestic demand.

Production jumped 4 percent in January from the previous month, exceeding forecasts with the biggest gain since June 2011, according to trade ministry data. Retail sales fell 1.3 percent, household spending dropped and the central bank’s main inflation measure slowed to 0.2 percent, excluding sales-tax effects.

The US Dollar Rally Weighs On Asia

Wall Street closed narrowly mixed as lackluster economic data and oil concerns weighed on investor sentiment. European markets closed up hitting record highs, led by surge in Standard Chartered shares. Asian stocks were mixed today where key benchmark indices in Hong Kong, Indonesia and Japan rose by 0.06% to 0.07%. Key benchmark indices in South Korea, Singapore and China fell by 0.04% to 0.19%.

Data out of Japan this morning showed that Industrial production was up 4.0 percent on month in January, the Ministry of Economy, Trade and Industry said on Friday. That beat forecasts for an increase of 2.7% following the 0.8 % increase in December. On a yearly basis, industrial production dipped 2.0% but that also beat forecasts for a decline of 3.1% following the 0.1% increase in the previous month. Industries that mainly contributed to the monthly increase include business oriented machinery, transport equipment and electrical machinery. According to the survey of production forecast in manufacturing, production is expected to increase 0.2% in February and drop 3.2% in March. The inventory ratio in January shed 3.5% on month, falling for the second consecutive month. It showed an increase of 8.8% on year. The average of household spending in Japan was down 5.1% on year in January, the Ministry of Internal Affairs and Communications said, standing at 289,847 yen. That missed forecasts for a decline of 4.1% following the 3.4% contraction in December.

The Japanese yen declined against the US dollar on Thursday evening as the greenback rallied. The JPY is trading at 119.24 in the Asian session dipping 18 points as traders bought up the cheap yen. Against the euro the yen was trading at 133.70.

The Aussie dollar fell below the 78 price level as the US dollar reached 95.35 on Thursday evening, but declining in the Asian session to 95.19 as traders sold off the dollar to book profits. Iron ore prices continued to fall weighing heavily on the AUD. Its neighbor the kiwi performed much better gaining 16 points to trade at 0.7548 after a jump in business confidence.  The kiwi has been a favorite among investors because of the nation’s relatively high interest rates. The Reserve Bank is only given an 8 percent chance of cutting the 3.5 percent official cash rate at its next policy meeting in March, whereas its Australian counterpart is given a 54 percent chance of lowering its 2.25 percent cash rate when it next meets on Tuesday.

In Europe the pound and euro both gained in the Asian session. The euro climbed after touching a low below 1.12 on Thursday and is trading at 1.1212 while the pound recovered 33 points in the session trading at 1.5438 well of its high above the 1.55 price just a few days ago. Consumer confidence in the United Kingdom held fast in February, the latest survey from research firm GfK showed on Friday with an index score of +1.That was unchanged from the January reading, although it was shy of expectations for +2.The February score also matches the highest index reading since August. Among the individual components of the survey, confidence about personal finances climbed to its highest level since last May.

USD/JPY Forecast February 27, 2015, Technical Analysis

The USD/JPY pair initially fell during the course of the session on Thursday, but found enough support below the 190 level to turn things back around and form a fairly positive looking candle. Ultimately, the market looks as if it’s ready to test the 120 level, but we recognize that area as being resistive. Pullbacks offer buying opportunities, but we think the market will probably be better traded off of the short-term than the long-term at this point. With this, we are bullish and have no interest whatsoever in selling as the US dollar continues to strengthen.

AUD/USD Forecast February 27, 2015, Technical Analysis

The AUD/USD pair broke higher during the course of the session on Thursday, testing the 0.79 handle. We did up falling from there though, and forming a relatively significant bearish candle. With that, the market looks as if it has support at the 0.77 handle, so we need to break down below there in order to start selling again. Ultimately, we believe that this market should go to the 0.76 handle which was the recent well. Longer-term, we expect to see the 0.75 level being tested. We believe that the 0.80 level above is massively resistive.

EUR/CHF Forecast February 27, 2015, Technical Analysis

The EUR/CHF pair fell during the session on Thursday, as the 50% Fibonacci retracement level offered enough resistance to turn the market back around. Remember, this is a market that is the epicenter of the Swiss National Bank and its recent actions. Because of this, the market looks as if it should continue to go lower but we also recognize that the 1.05 level is a large, round, psychologically significant number, and also has been resistance in the past. Because of this we feel that the market will probably fall and find support there.

Once we get below there though, this market could really start to take out to the downside, and we believe that the next target will be the parity level. Keep in mind that the pair was been supported at the 1.20 level previously by the Swiss National Bank, but once they abandon the currency peg this pair fell apart. That massive resistive red candle should continue to keep this market area should overall, and the fact that we finally started to sell off again is a good sign that perhaps the sellers will come back into play.

Any rally at this point time would be looked at as suspicious, and we of course would be looking to sell resistive candles. Short-term charts could be used as well as longer-term charts in order to enter this marketplace to the downside. As far as buying is concerned it’s very difficult to do so just simply because the Euro has so many issues that should keep continue keep the value of it down. The Swiss franc of course is considered to be a safety currency, so as long as there are concerns in Europe, this pair should continue to go lower as Europeans tend to use Switzerland as a safe haven.

In fact, we have no scenario in which we are willing to buy this pair right now, as there is just simply too much that could go wrong with that trade. Ultimately, we believe that this market heads back to parity and below.

EUR/GBP Forecast February 27, 2015, Technical Analysis

The EUR/GBP pair broke down during the course of the session on Friday, breaking out to a fresh new low. Because of that, the market looks like it’s ready to continue going lower, and aiming for the 0.71 handle is exactly what we are doing. We believe that rallies offer selling opportunities as they would represent value in the British pound. The Euro has far too many issues with it to be bought at this point, so therefore we are simply looking to sell rallies on short-term charts, and of course sell breakdowns below the bottom of the range for the session on Thursday.

EUR/JPY Forecast February 27, 2015, Technical Analysis

The EUR/JPY pair fell hard during the course of the session on Thursday, as the yellow box on the chart indicates massive resistance all the way to the 138 handle. Because of this, it is not a surprise that we broke down and as a result if we can break below the bottom of the hammer, we are sellers as the market should then go down to the 130 level. If we rally from here, we will be looking for short-term selling opportunities again as the area above the 135 handle is massively resistive.