Weekly Outlook – March 8th-12th

Great Monday again people!

As we get ready for a new week of trading, we are already seeing heavy weakness of Yen across the board. Within just a few hours of the market open today, we have seen Yen weakness causing USD, GBP and EUR to all strengthen against the japanese yen. Though it has retraced abit since its highs just a few hours ago, early market hours, especially on the week open can  often give you some good signals. There is an even a gap on Eur/Jpy given by my broker during market open which is rather unusual as of late, but something to notice perhaps? So, what could this mean for us? As in with the overall Yen weakness, since it is also the post NFP day, giving the asian markets time to react since NFP report came out on Friday?

Now, what i can rationalize is with 2 things;

1) There is strong USD accumulation with a better than expected(slight) report on NFP, where risk averse funds are heading from the JPY to the USD.

2) There are signs that the market is willing to take more risk with a better than expected(slight) report on NFP, where funds seeking more risk are heading to more riskier assets such as Aud, Nzd from BOTH the Jpy and the Usd.

The 2nd opinion has more of my vote, but it will be too early to tell but i will have this at the back of my mind as i look into trades today and possibly for the week.

What happened last week

Ok, let’s talk about what has happened last week and see what could be our possible theme/trend for this ongoing week. To do so, let us compare all our major currencies’ performance against the USD;

1) Eur – 0% – (No Movement!) – How often do you see that over a weekly data, right to the pip?
Once again, with market congestion, an overall range of about 300 pips but no actual price change.

2) Gbp – -ve 0.16%
Contrary to what I thought, the GBP hasn’t lost that much as the media claims that it has last week. With range of almost over 420 pips, the actual price change was only about 24 pips. Made some strong gains after midweek.

3) Jpy – -ve 1.63%

4) Chf – 0%
Obvious similarity to Eur with its strong correlation, actual price change was only 2 pips but the overall range was about 240 pips

5) Cad – +ve 2.38%

6) Aud – +ve 1.28%

7) Nzd – -ve 0.31%

8 ) Gold – 1.31%

For the 3rd week running, we are seeing gold and the Com-dollars rise in strength against the USD. 2 weeks ago, we saw a decline in strength and for data last week, we are seeing a disparity as CAD has done really well(mainly due to oil which we will come to later) though NZD has dropped in value.

What is happening with the USD?

Once again, let’s see if this week can be the week which will cause USD weakness, and how, if possible, if we can infer that from our USD Index charts.

On the daily front, we see similar sentiments as to what we have been observing for quite sometime now;

Congestion Period of USD Index over last 2 weeks

Things are looking slightly more conclusive on the weekly chart;

Weekly USD Index showing signs of reversal?

As we can tell, there is absolutely almost little or no range for a good 4 weeks and it is showing further signs of reversal with a doji right as of last week.

What is happening with Oil?

Oil, after a very long correction since its highs of almost $84.00 since Jan 11th, is now finally back up and showing strong sense of a price surge yet again. As of this point in writing when the screenshot was taken, oil is just about peeking above the highs of $82.00 formed since 21st Oct last year. If this level breaks, which i feel it will, our next test zone is at $84.00, range of about 200 pips.

Oil Strength, rally to set new highs?

Big News for this week – READ THIS!

I know that this is a long post and it is jam packed with information. I take hours to write this while trading and i want to give you timely up to date information, which is why my blog market analysis is widely read by many traders. Now, i want to make a statement for trading this week.

This might be the week we are waiting for; where i see USD weaken and oil rise in value, which will give us significant rally on our com-dollars and gold. With inflation, a so-so NFP report, rising oil prices and rising com-dollars(though mixed), the directions are all lining up nicely.

So, if we see oil break the $82.50 mark, buy all the com-dollar pairs as we discussed before (not based on USD) and perhaps start shorting some majors as well(lesser priority)

These are mid-long term trades, so don’t over leverage and expose yourself too much. Remember, i can always be wrong.

Fundamental News Events

This week, we have some so-so news events and some good news events affecting the NZD, CAD and CHF currencies. Due to the length of this post, i will cut this short here and write about my thoughts on the news events again in another post.

Happy Trading,
Seeni

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