Apr 15, 2010

Forex Crunch Aussie Grows with China

Forex Crunch Aussie Grows with China

Aussie Grows with China

Posted: 15 Apr 2010 01:08 AM PDT


China’s GDP was very strong. The currency that benefits the most is the Aussie, which settled above an important line. Update on this strong currency.

Growth in China was very strong – an annual rate of 11.9% in the first quarter of 2010. This is better than Q4’s growth of 10.7%, and also better than early expectations. This figure isn’t alone:

Update: 10:00 GMT – it seems that the fresh worries about Greece are endangering the Aussie’s achievements.

China’s industry, which buys materials from Australia, showed an annual growth rate of 18%, very strong as well. Additional figures also came out of China, showing that this giant is pushing forward. When Australia’s main trade partner is growing, the Australian economy can be safe and sound.

It’s important to note that a second-tier Australian figure, inflation expectations from th Melbourne Institute, also supported the Aussie. It climbed to 4.1%, after many months around 3.2%. This is the highest outcome since September 2008 – since the big outbreak of the crisis. Higher inflation expectations mean a bigger chance for a rate hike. There are doubts about the next meeting of the RBA, after the fifth rate hike.

Indeed, the Aussie can feel better now. AUD/USD struggled with the 0.9327 resistance line many times in recent months, and approached it near the end of last week once again. The bailout plan for Greece sent it with a weekend gap over the line, near 0.94, but it quickly fell down, going as low as 0.9223.

A new attempt began before the releases from China, and it seems to work now. AUD/USD went as high as 0.9364, and trades above 0.9327. The current range is between 0.9327 and 0.9405, the 2009 high.

Even higher, 0.95 was a support line back in 2008. It’s followed by 0.9650 which served as a resistance line back then. The all-time high of 0.9849, reached in July 2008 is next line, and AUD/USD parity is too far now.

If fresh fears on the Greek bailout plan arrive to the markets, like the court challenge prepared by German professors, the Aussie could give drop, not so fast though, and receive support at 0.9260.

I continue the being bullish on the Aussie.

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Forex Daily Outlook – April 15th 2010

Posted: 14 Apr 2010 01:00 PM PDT


We have Chinese data to start the day, and then another bunch of American figures to rock the markets. Let’s see what’s up for today.

The dollar has been losing ground across the board, but it’s not alone – also the yen suffers from risk appetite behavior. Yen crosses, including GBP/JPY are on the rise. Le’ts see the events:

The Aussie, which is advancing higher, will receive interesting figures from Australia and abroad. The MI Inflation Expectations will probably follow last month’s result of a 3.2%. Later, many numbers will flow from China. The GDP is the most important one.

Chinese GDP is predicted to rise at an annual rate of 11.8% in the first quarter of 2010, stronger than 10.7% in the previous quarter. China is Australia’s main trade partner.

For more on the Aussie, read the AUD/USD forecast.

In Europe, the ECB Monthly Bulletin will shed some light on the overall situation of the European economies. The Euro continues to ride on the Greek hopes.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

Another day of many American figures

Unemployment Claims are expected to correct last week’s jump to 460K and get back to the level seen two weeks ago – 439K. This will indicate the Non-Farm Payrolls.

The Empire State Manufacturing Index is expected to advance from 22.9 to 24 points. The Philly Fed Manufacturing Index is very similar, but tends to have a stronger impact on the markets – it’s predicted to edge up from 18.9 to 20 points.

TIC Long-Term Purchases, which represent the flow of money into the US, are expected to double this month from 19.1 to 39.2 billion, indicating growing confidence in the US economy.

Also in the US: the NAHB Housing Market Index will probably tick up from 15 to 16 points. Also note a speech from James Bullard, which can move the markets after the London session.

Another speech is due late in the day: SNB Governing Board Vice-Chairman Thomas Jordan can comment about future intervention policy and shake USD/CHF.

That’s it for today. Happy forex trading!

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