Forex Weekly – Identifying Trade
Opportunities with Jimmy Young
Last week Mar 30th – Apr 3rd, 2015
AUD (weakest)
 Metal prices continue to crater (iron ore down sharply and very close to lows)
USD (second weakest)
 Friday’s bearish employment report sunk the USD.
CAD, CHF, EUR (strongest)
 CAD benefiting from a slightly firmer oil price
 EUR aided by slightly higher than expected inflation numbers
GBP, JPY and NZD (neutral)
 Nothing special to report
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Tier 1 Scheduled News Releases
Apr 6th – Apr 10th, 2015
This week there are two Tier 1 scheduled news events:
TUE Apr 7th at 05:30BST: AUD interest rate announcement and statement
Only about 25% of economists calling for an interest rate cut but the futures prices are
putting the chances of a rate cut at closer to 75%.
The economist expecting an interest rate cut point to the collapse of iron ore prices by
about another 20% since the last AUD interest rate announcement. Iron ore exports
make up a substantial chunk of Australia’s exports. This would foretell a weaker Aussie
economy and more of a reason to anticipate an interest rate cut to help the economy.
The economist not expecting an interest rate point to the issue of lower interest rates
causing real estate, particularly Sydney real estate prices, to increase, perhaps more
than the central bank prefers. The not expecting an interest rate camp also says the
Australian Central bank wants to wait and see the AUD quarterly inflation numbers due
out a week after the upcoming interest rate announcement.
Here is our TRADEFINDER spreadsheet to get still more perspective:
THINKING INTEREST RATE CUT
The Central bank talked about lowering interest rates further in the last statement.
Since then the combination of much lower iron ore prices and a weak US employment
report would argue for another interest rate cut. The Central bank also mentioned the
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currency has not declined much versus currencies other than the USD, despite huge
declines in metal prices and Aussies terms of trade. Bottom line; think the Central bank
has enough reasons to cut interest rates another quarter percent.
FRI Apr 10th at 13:30BST: CAD employment report
The Bank of Canada (Central Bank) unexpectedly lowered interest rates at the end of
January in anticipation of a weakening economy. For this reason I favor a worse than
expected Canada employment report.
Here is our TRADEFINDER spreadsheet to get more perspective:
Left blank purposely
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EURUSD
Trade View: BULLISH
TECHNICALS
 Downtrend: retracing; highest close in a month on Friday
EUR FUNDAMENTALS
 Bearish: Quantitative easing (QE); Greece remains a wildcard
 Bullish: Economic numbers improving recently.
USD FUNDAMENTALS
 Bullish: FOMC dropped “patience” from statement two weeks ago; indicating
interest rates will be increased in 2nd or 3rd quarter of 2015. Janet Yellen’s
comments late on Friday were more hawkish than expected.
 Bearish: Statement and Janet Yellen press confidence two weeks ago less
hawkish than expected.
 Bearish: Friday significantly worse than expected non-farm payroll number and
negative revisions
TIER 1 ECONOMIC NEWS
 None
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GBPUSD
Trade View: NEUTRAL
TECHNICALS
 Downtrend: consolidating.
GBP FUNDAMENTALS
 Bullish: Economy strong; GDP revised higher last week.
 Bearish: CPI at zero.
USD FUNDAMENTALS
 Bullish: FOMC dropped “patience” from statement two weeks ago; indicating
interest rates will be increased in 2nd or 3rd quarter of 2015. Janet Yellen’s
comments late on Friday were more hawkish than expected.
 Bearish: Statement and Janet Yellen press confidence two weeks ago less
hawkish than expected.
 Bearish: Friday significantly worse than expected non-farm payroll number and
negative revisions
TIER 1 ECONOMIC NEWS
 None
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AUDUSD
Trade View: BEARISH
TECHNICALS
 Downtrend; very weak
AUD FUNDAMENTALS
 Bearish: Feb surprise interest rate cut indicates a weaker economy ahead.
 Bearish: RBA minutes were dovish two weeks ago.
 Bearish: Iron ore prices collapsed recently.
USD FUNDAMENTALS
 Bullish: FOMC dropped “patience” from statement two weeks ago; indicating
interest rates will be increased in 2nd or 3rd quarter of 2015. Janet Yellen’s
comments late on Friday were more hawkish than expected.
 Bearish: Statement and Janet Yellen press confidence two weeks ago less
hawkish than expected.
 Bearish: Friday significantly worse than expected non-farm payroll number and
negative revisions
TIER 1 ECONOMIC NEWS
 TUE Apr 7th at 05:30BST: AUD interest rate announcement and statement
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NZDUSD
Trade View: NEUTRAL
TECHNICALS
 Unclear: breakout above consolidation but no follow through.
NZD FUNDAMENTALS
 Bullish: No interest rate cuts; Central bank is critically concerned about lower
interest rates increasing house prices.
 Bearish: milk prices rumored to be set to slip further.
USD FUNDAMENTALS
 Bullish: FOMC dropped “patience” from statement two weeks ago; indicating
interest rates will be increased in 2nd or 3rd quarter of 2015. Janet Yellen’s
comments late on Friday were more hawkish than expected.
 Bearish: Statement and Janet Yellen press confidence two weeks ago less
hawkish than expected.
 Bearish: Friday significantly worse than expected non-farm payroll number and
negative revisions
TIER 1 ECONOMIC NEWS
 None
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USDCAD
Trade View: NEUTRAL
TECHNICALS
 Consolidating; seems stuck in a range for now
CAD FUNDAMENTALS
 Bearish: Feb surprise interest rate cut indicates a weaker economy ahead.
 Bearish: oil prices appear ready to slide again following last Friday’s drop.
 Bullish: Bank of Canada (BOC) Governor Poloz speech on Thursday, March 26th
was less dovish than expected.
USD FUNDAMENTALS
 Bullish: FOMC dropped “patience” from statement two weeks ago; indicating
interest rates will be increased in 2nd or 3rd quarter of 2015. Janet Yellen’s
comments late on Friday were more hawkish than expected.
 Bearish: Statement and Janet Yellen press confidence two weeks ago less
hawkish than expected.
 Bearish: Friday significantly worse than expected non-farm payroll number and
negative revisions
TIER 1 ECONOMIC NEWS
 Friday April 10th at 13:30BST: CAD employment report
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USDJPY
Trade View: NEUTRAL
TECHNICALS
 Sideways; consolidating
JPY FUNDAMENTALS
 Neutral; Central bank monetary policy steady
USD FUNDAMENTALS
 Bullish: FOMC dropped “patience” from statement two weeks ago; indicating
interest rates will be increased in 2nd or 3rd quarter of 2015. Janet Yellen’s
comments late on Friday were more hawkish than expected.
 Bearish: Statement and Janet Yellen press confidence two weeks ago less
hawkish than expected.
 Bearish: Friday significantly worse than expected non-farm payroll number and
negative revisions
TIER 1 ECONOMIC NEWS
 None
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LAST WEEK SUMMARY
The USD traded higher on Monday and Tuesday, following through on its strength in the
later part of the prior week. The shine came off the dollar following Wednesday’s
bearish US ADP payroll report. The USD gave up all of the week’s remaining gains and
went into the red on Friday following a much lower than expected US non-farm payroll
number and negative revisions to the prior two months.
THIS WEEK’S TRADE VIEW
Buy EURAUD. The EURUSD pair closed at a one month high close on Friday and the
AUDUSD had the least gains of all the majors by far. I like the idea of the EUR
outperforming the AUD this coming week.
Fundamentally, long EUR is vulnerable to unexpected negative Greece news; on the
other hand, positive news about Greece could help the EUR as well.
Fundamentally, the Aussie central Bank pointed out that the Aussie should probably be
weaker than it actually is; so playing off of that and also I expect the central bank to cut
interest rates this week in response to the collapse of the price of iron ore the past
month.
Best,
JIMMY
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