Australian dollar oversold like never before

Well, maybe I exaggerate a little. There have been much worse times. However, Australian dollar hasn't been so oversold in four years. The worse time was only when the 2008 crisis hit financial markets. Now, being aussie at these levels one naturally wonders how far it can go. In my humble opinion we are about to see a bounce. I am not sure if that will be a major recovery, but a week or two of bullish action on behalf of the currency should take place.

Unfortunately, there is no enough fundamental back up for such a position of mine and I would prefer to wait for the employment data from Australia on Wednesday. This might show what stage Australia job market is in and whether the Central Bank of Australia is going to lower interest rates or not. If the data is bad, no risk aversion will come into play for the time being.

US dollar index at resistance

US dollar index was going down for about a week and rallied sharply on Friday when NFP data was released. If you look at hourly chart you can clearly see that it has hit resistance and is kind of reversing now. For the time being the scenario remains bearish. However, this can change any moment if 10 700 level is broken upwards. Critical support level is at 10 520 level. If that holds and that is also very likely we are going to see double top pattern in US dollar index taken away and new highs made for 2013. The next couple days will be critical and define the direction of the security.

US guys are happy after Friday job report

American guys should be happy now. Bernanke's plan is working. Jobs are being created. Stimulation did not go in vain. Maybe. However, will the trend continue? What happens when the plan of artificially pumping economy stops? Will stocks crash, currencies go in turmoil and God knows what happens to commodities? Maybe. Anyway, the news was good for stocks, US dollar and Canadian dollar. Commodities crashed sharply, except for oil. This security is very much in correlation with Canadian dollar and if Canadian economy is ok, oil is doing well.

Let's wait and see what the next week brings.

Business week financial market analysis

Just wanted to give you a back link to quite good analysis of financial markets done by businessweek.com. Hope you will like it. I will proceed with mine in a short time.
http://www.businessweek.com/markets-and-finance

Australian dollar beaten up Pound rules

I did not intend to look at all the markets today. Just wanted to mention the biggest winners and losers in currency market. Australian dollar does not find support from anywhere. Data coming out is good for nothing and technical support levels do not help the currency either. A downtrend in the security has become an inevitable fact. There is a great chance that aud/usd will go through the bottom and fall to its' 2010 lows at 0.80 area.

British Pound on the other hand is very much strengthened by good fundamental numbers and is beating all of  its counterparts with strong blows. However, let us not forget the key data that is due to come tomorrow and it may change both the fundamental and technical picture not only for the pound, but most currencies and also European stocks.

Commodities down across the board

Today was a bad day for commodities. Gold went down around one percent and silver tumbled even more. Oil did not change much from yesterday and S&P 500 slightly moved lower. All of the above mentioned will be strongly impacted by Friday US release of Non-Farm payrolls. Do not forget to follow that.

The same downward pressure was experienced not only by future commodities, but also by commodity currencies, particularly Australian dollar and New Zealand dollar. All the gains from yesterday were entirely erased. We have to see what GDP comes out today from Australia. It might revive the rally in both currencies.

It was a bad day for Japanese Yen too. That's what we expected anyway. They need to stop their stimulation program before Yen can recover.

In general, Euro, Swiss Franc and British Pound were the strongest today. This trend might change on Thursday when EU and England release interest rate decisions.

Good bye for now.

Monday analysis of financial markets

Markets showed pretty much volatility today, particularly during American session. It is quite unusual for Mondays, but as US Manufacturing Index came lowest in four years one should not surprised to see such big market moves as we saw today. So, what happened in which market?

Currencies

You should not be surprised that US dollar was the weakest in Forex market. Poor data always causes currencies to crumble. Commodity currencies such as Australian dollar and New Zealand dollar reigned. European currencies such as Euro and Pound were in the middle.

Commodities

Gold rose, oil went up a little and silver also moved upwards moderately. If mister Bernanke's plan of stimulation turns out to be bad these precious commodities will continue climbing even more in the future.

Stocks

Indexes of stocks went down. No wonder. Economy is cooling, paper money cannot increase growth and if it does the result is temporary at best.