Hi everyone,
The big news from the past week is that the FED has indicated that they will ‘more than likely’ pause any further rate hikes. This means that currencies, like the NZD, which had a surprise rate hike larger than expected will more than likely strengthen against the dollar for the foreseeable future. Not necessarily soon, but I do feel we now have a bias of shorting the USD. (This of course as long as the banking crisis/non crisis, depending who you ask, stays away).

This week let’s have a look at the relationship between the NZD and AUD.

The New Zealand Dollar (NZD) and the Australian Dollar (AUD) are both currencies used in the South Pacific region and are often compared and traded against each other in the foreign exchange market. As both currencies are commodity currencies, meaning that their value is strongly influenced by the prices of commodities, (especially those that are exported by both countries such as iron ore, coal, and agricultural products). The correlation between the NZD and AUD is largely driven by their shared exposure to commodity prices, which can cause their exchange rates to move in the same direction.

Both currencies are highly sensitive to global economic developments and geopolitical events, which can also influence their exchange rates relative to each other. For example, if there is a sudden change in global economic conditions that affects both Australia and New Zealand, such as a downturn in global demand for commodities or a major political event that impacts trade relations, the exchange rates between the NZD and AUD may move in tandem.

While there may be some correlation between the NZD and AUD due to their shared exposure to commodities and other economic factors, their exchange rates can also be influenced by a range of other factors and can move independently of each other at times, including;

-Differences in economic data: Even though both countries have similar economies and are closely linked, there can still be differences in their economic data, such as employment, inflation, and GDP growth rates. If one country’s economic data is significantly better or worse than expected, it can cause its currency to move independently of the other.

-Differences in interest rates: The Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) set their own interest rates, and they may not always move in tandem. If one central bank raises or lowers interest rates while the other does not, it can cause a divergence in the exchange rates between the two currencies.

-Political events: Political events can also impact exchange rates. If there is a significant political event in one country, such as a change in leadership or a major policy announcement, it can cause its currency to move independently of the other.

-Market sentiment: Market sentiment can also play a role in exchange rate movements. Even if economic data and other factors are relatively stable, if investors have a more positive or negative view of one currency over the other, it can cause a divergence in the exchange rates between the two.

 

Let’s look at some other key charts.

DXY chart:
Price is testing a big area. I’m still expecting a test and then a breakdown of price on the DXY, but it might not be soon.

DXY

Energy & Metal Prices;

Energy

metal

Gold;
As predicted in the live session this week, Gold hit an all time high before falling away. I don’t think the ‘run’ is over though.

Gold

Oil;

oil

Bitcoin;
31000 is a big area. Does it break through or struggle and fall away? I think the break above will mean a prolonged move up. 

BTC

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Red flag news:
Nice quiet week, but we do have GBP interest rate news on Thursday.

News

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MAJORS

EUR/USD: Long from 1.078. I’d also long if we get a break above 1.1090 (see video)

USD/CHF: Short from 0.94100 (keep an eye on the gold chart for clues)

GBP/USD:  Long from 1.2300.

AUD/USD: Wouldn’t short now. Looking for it to break 0.67900 now to long.

NZD/USD: Similar to AUD/USD. I’m looking for it to break 0.6300 in order to long.

USD/CAD: Looking to short if it breaks below 1.3310.

USD/JPY: 134.00 is a key level. I’d prefer to short below this.

CROSSES

EUR/GBP: Interesting to long from the current area. (See video).

EUR/AUD: Long from 1.57200

EUR/CAD: Positive CAD news this week, so be careful. 1.4700 to long if it struggles and slows down.

AUD/CAD: 0.9100 is key. (See video)

GBP/NZD: Long from 1.9600

GBP/AUD: Long from 1.8200

GBP/CAD: Long from 1.6800 (Again, careful of the CAD)

GBP/CHF: Short from 1.135000

*EUR/CHF: Same as my last post -“Not my favourite pair, but at the KEY parity level now. I’d look to long if it breaks above this level”.

AUD/NZD: Short from 1.0800

As always, remember correlation! -Especially when taking more than one JPY trade!

M3 -Shorter timeframes.

I do my analysis on daily and weekly charts first and make a note of the MAJOR areas of support and resistance. Then copy them onto Pierre’s Earth and sky template. Then I make a note of the weekly & monthly pivots points and add them to the charts. You will see lots of opportunities line up during the week. The important thing then is to select a bias for the next few days and do NOT take trades if the price is too near a trend line or pivot. Ideally, you want to buy when the price is near a major support and or pivot point line and has the potential to make at least 40 pips. Vice versa for a short.

New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.

We are NOT a “tipping service” our aim is to teach you how to trade for yourself.

Watch the video below for more detailed explanations of this week’s analysis and trade plan (click the 4 arrows bottom right to view full-screen):

Regards
Thinus