Analytic reviews

According to one of the top-managers of Reserve Bank of Australia, downfall of Australian dollar is yet to be finished despite the fact that AUD was one of the weakest currencies last year. For the last several years it was Australian dollar which dominated over USD but AUD decreased by 15% from its highest level in 2013.  Partially it was due to verbal interventions by Central Band of Australia. These were supposed to decrease the value of national currency in order to help exporters who had difficulties selling their goods. What is more, the downfall was because of the fears over Chinese economy and reduction of bond buying program by US Federal Reserve.

Recommendation: open short position with small stakes in case of a breach and definite fixation under the strong intermediate support level of 0.8910 and we suggest to open additional positions in case the pair falls under 0.8860 with a short-term goal of 0.8820 and a long-term goal of 0.8700.

Andrey Batensky

According to one of the top-managers of Reserve Bank of Australia, downfall of Australian dollar is yet to be finished despite the fact that AUD was one of the weakest currencies last year. For the last several years it was Australian dollar which dominated over USD but AUD decreased by 15% from its highest level in 2013.  Partially it was due to verbal interventions by Central Band of Australia. These were supposed to decrease the value of national currency in order to help exporters who had difficulties selling their goods. What is more, the downfall was because of the fears over Chinese economy and reduction of bond buying program by US Federal Reserve. Central Bank did not change refinance rate and left it on 2,5% which is historical minimum. Finally, in Central Bank of Australia they excluded the probability of refinancing rate to be decreased, because prices increased higher than expected. Central Bank of Australia in its own report did not use “uncomfortably high” level of AUD. According to the bank, if current currency level remains the same it will be considered as a support for economy reorientation.

Andrey Batensky​

Good data from the United States of America will have a positive impact on US dollar

There was a moderate USD correction earlier this week, but it can stop and might get new positive sign today if ADP Employment Report and Non-Manufacturing ISM Report on Business for January are good enough. As it has been mentioned before, the main reason of US dollar increase is the change of vision of US Federal Reserve on the issue of further national economy stimulation. These measures were the reason why US dollar had problems during the last year.

All these changes in US economy evaluation from negative to positive can lead to the normalization of monetary policy and refinancing rate as soon as the reduction of incentives is finished.

Market dynamics will depend mostly on data and statistics from USA today. If non-farm result is higher than 180 000 and Non-Manufacturing ISM Report on Business is about 53,7 or higher USD can start the growth against all the major currencies today.

Semen Kamensky​

Low activity in the market as the lull before the storm

There was US dollar correction against all the major currencies on Monday in anticipation of important data and statistics which will be published between Wednesday and Friday. Not only USA economic statistics will be published, but also ADP Employment Report and non-farm statistics, which may have an impact on USD. What is more, ECB group and Bank of England group meetings will take place, which can either have positive or negative effect.

If to speak about Bank of England and ECB group meetings, we do not expect anything special in their statements. It is expected that interest rates will remain the same and there will be no massive changes in monetary policy. That is why data from USA will have a massive impact on EURUSD and GDPUSD pair dynamics.

If to speak about the possible developments on the currency market we can make a prediction that starting from Wednesday as soon as ADP Employment Report is published there will be an increase in activity in the market. If general statistics from US is good enough it will help US dollar to keep a sustained growth against all the major currencies in a short-run. That is why we believe, it is a good deal to buy US dollars on local minimums in case there is good news from the United States of America.  

Semen Kamensky​

Australian dollar has everything for a sustained growth, even though the biggest bank in the country (The Commonwealth Bank of Australia) has decreased its’ forecast for AUD/USD. It is expected now that by the end of 2014 pair will be priced around 0.8400 instead of 0.8900, as it was predicted before. Decrease in value of Australian dollar is due to positive signs of USD perspectives and reorientation of global economic growth to developed countries. What is more, there is a decline in currency supply by foreign investors and decelerating economic growth in Australia in 2014.

Recommendation: long position with small stakes is our choice if there is a breakthrough of 0.8830 intermediate line of resistance and a well-defined fixation above this price. We increase our stakes, if price gets higher than 0.8890 with the short-term target of 0.8970 and long-term objective of 0.9080.

By Andrei Batensky​

US dollar is still a favorite

US dollar is in the uptrend due to good overall statistics and willingness of US Federal Reserve to continue to cut incentives related to the buyback of government and mortgage bonds. Euro decreased by 1% due to weak inflation statistics from Germany and relatively good statistics in the US.

Traders are waiting for Euro Zone consumer inflation statistics today and if it is weaker than predicted (expected to be weaker) it will lead to USD consolidation against EUR. What is more, if statistics from US is good enough, it will be a good signal for the US dollar future purchase.

There is a day off in many Asian countries today due to Lunar New Year. That is why there is a weak activity in trading Asian and Pacific currencies. In case our prediction is correct, US dollar will continue to increase on the next week as well.

Semen Kamensky​

The Fed's decision to start cutting economic stimulus due to the obvious improvement serves as a sentence for gold to rise. The main reason for the sharp increase in the price of "yellow metal" in 2007-08 was the beginning of the mortgage crisis in the United States and the overall drop in market confidence to currencies. The first pioneers who started buying gold are the central banks, thus hedge their risks against the backdrop of the global financial crisis.

But reaching maximum values ​​in September 2011 due to a lack of support of Eurozone’s breakup and the beginning of the stocks growth as a result of the direct action of the Fed and other central banks, gold's appeal as a safe haven asset started to decline.

Considering the prospects of the gold market in the new year it can be assumed that the precious metal will continue to decline further due to the strengthening of the U.S. dollar. Dynamics of the 10-year U.S. government bonds indicates directly that the yield on them approached a level close to 3%.

Semyon Kamenski​

Activity in the market continues to fall

Before the Catholic Christmas activity in the foreign exchange market continues to decline. An important event ofthe end of the year was undoubtedly the Fed's decision to start reducing the volume of repurchasingof the governmentbonds and mortgage-backed securities by $ 10 billion.

Already in January, the Fed will buy assets valued at $75 billion instead of $85 billion that was bought the last year.

This eventis truly remarkable,and the economic situation in the United States is really changing for the better, as economic statistics shows the last six months.

 
This economic developmentis inspiring for buyers of the dollar, as indeed, most likely, it will continue to grow in the next year.

Anduntil the end of this year we can expect continuation of reduction of activity and as a consequence of increased volatility in the market, as a large number of market participants do not wish to trade before the holidays.
 

Semyon Kamenski​

On Tuesday, the Australian dollar is traded almost without changes since the eve of the holiday, but the weakness of the U.S. dollar supports the Australian currency. Recently the U.S. dollar weakened due to pre-holiday fixation of profit on the largest U.S. and European markets.

Most likely the U.S. dollar is ready for profit fixation after the last week’s growth on the news that the Federal Reserve cuts its bond purchasing program - a key element to support the economy.

Trading recommendation:buy a pair when it breaks through and firmly established above the strong intermediate resistance level of 0.8970 by small volumes, thus adding our positions in case of strengthening above $ 0.9000 with the first target 0.9160 and 0.9320 more distant goal.

Analyst Andrew Batenski

The U.S. dollaris growing against the Euro and the Japanese Yen, as investors continued to react to the decision of the Federal Reserve System onmonetaryeasing to stimulate the economy.The strength ofthe U.S. economic data will continue to mean a lot for the dollar in the coming weeks. According to these data, investors will judge whether U.S. economic recovery has improved, so the Fed could continue reduction of the stimulus program. Nevertheless, in the next few weeks most of the major economies will provide relatively little data due to the holiday season.

Analyst Andrew Batenski​