Forex for June 4, 2012. Prediction and Analysis

Jubil-easing

The Eurozone crisis continued to deteriorate last week with fears about the economic effects of the crisis taking centre stage. Eurozone unemployment reached 11%, the highest since the euro came into circulation and the latest manufacturing surveys for March were weak for Europe, China, the UK and even the US. The severity with which investors have ditched risky assets and moved into bunds, Treasuries and Gilts suggest that the markets are now pricing in the potential for a global recession. Without official action it’s hard to see how we can break out of this cycle of risk aversion, and this week there are three pivotal central bank meetings including the Reserve Bank of Australia, the European Central Bank and the Bank of England.
No fireworks from the ECB

At the end of last week rumours that the ECB was buying Spanish sovereign debt helped to boost risk assets. EURUSD closed the European session just below 1.24 after falling as low as 1.2280 after the NFP release, and Spanish bond yields closed at 6.53%, 17 basis points lower than the peak they reached earlier in the week. This highlights two important things: 1, the markets are deeply oversold, especially risky FX and European equities. 2, if there is remedial action by the ECB or other European authorities then there could a powerful relief rally.

Thus this week’s ECB meeting (on Wednesday) will be the most important event in the currency bloc this week. We don’t think the ECB will be too radical. ECB head Draghi was speaking last week and reiterated that governments should do more to stem the crisis. He also added that conditions in the markets are not as stressed as they were in November prior to the Bank’s LTRO auctions. This is true to an extent. While Spain has come under intense pressure along with Italy, the core European nations like France, Netherlands, Belgium, Austria etc. have not seen their bond yields come under selling pressure form the markets. In fact the French-German 10-year bond spread has actually been narrowing suggesting that there is demand for French bonds even with after the Socialist victory in the Presidential election. The ECB is likely to say that it will offer support to Europe’s banks to prevent them from going under, but Draghi and co. are likely to stop short of offering a more sustainable solution to this crisis.

Of course the Bank could also cut interest rates; currently they are 1%, a record low for the currency bloc. The manufacturing sector PMI remained in deep contraction territory in May and the unemployment rate surged to a record high of 11% in April. Added to that the flash estimate for May CPI fell to 2.4% from 2.6% in April, this could give the ECB more room to cut rates. However, the Bundesbank is still a powerful hawkish element in the central bank and it is likely to resist such a move until the situation deteriorates even further. This is bad news for the periphery that needs lower interest rates. However, the lack of action from the authorities is likely to weigh on the euro, which could benefit their export markets (if they manage to stay in the currency bloc, that is).

There were signs last week that Germany might be willing to adjust fiscal targets after an official in Berlin said that Spain is unlikely to meet next year’s 3% fiscal deficit target. But the radical action that some expect including Eurobonds or using ESM funds to re-capitalise Spanish banks don’t appear to have made much traction in Brussels. If the ECB is fairly muted in its response to the crisis this week then the baton is passed to the EU leaders when they meet at the end of June for the next EU summit. So the markets are left waiting for political action, and Europe’s politicians don’t walk to the market’s beat. This combined with the Greek elections on the 17th are likely to keep uncertainty high and leave risk assets vulnerable to more downside. There is a pre-election poll blackout in Greece from this weekend in the two weeks leading up to the elections, which only adds to the uncertainty and increases the chance of a sell off. Added to that Spain issues 2014, 2016 and 2022 bonds next week. Any signs of weak demand for its debt could cause a fresh bout of risk aversion.

The euro had a dreadful May after it fell 6%. It is now looking very oversold from a technical basis. However, the fundamental picture remains bleak and the euro is still sensitive to headline risk – both positive and negative. If it can make its way back to 1.2510 then we may see a deeper pullback towards 1.2710. However, below 1.2350 opens the way to retest 1.2290 then 1.2150 and eventually 1.20. Without remedial action from the ECB or EU authorities it is hard to see how this pair can resist further downward pressure.
Increased chances of more QE from the BOE

The extremely weak PMI data at the end of last week, which showed the manufacturing index plunge to its lowest level for three years along with the escalation of the Eurozone crisis, has increased the chances that the Bank of England will expand its QE programme when it meets on Thursday. We believe that the Bank will do more QE in the coming months and the sharp deterioration in the manufacturing PMI could be enough to prod the Bank into doing more this week, which is not the market’s central scenario. The minutes from the May meeting suggested that the decision to remain on hold was finely balanced, and even Adam Posen, who recently moved to the neutral camp after having consistently voted for more stimulus, said that his decision was tough.

The Inflation Report was also more dovish than some expected, with growth for 2012 revised lower. Although inflation is expected to remain higher than the 2% target this year, the Bank sets policy with a 2-year timeframe and it expects inflation to fall below target in the coming years. Thus, with the much worse than expected PMI number it could shift some members to take action now to prevent deflation later.

The pound followed the euro lower last week, but managed to stage a recovery on Friday after falling below 1.5300. We believe that a breach of this important support zone would be a very bearish development for this cross, and may open the way to 1.50 and then potentially to the 1.45 lows from 2010. However, this pair is starting to look oversold, so any remedial action from the European authorities to sort out the sovereign debt crisis could boost sterling, and negate any of the negative impact from more QE from the BOE.
QE lift off in the US?

The third consecutive miss in the payrolls report for May increases the pressure on the Federal Reserve to take some remedial action when it next meets later in June. The US created 69k jobs last month, much weaker than the market had been expecting. The April figure was also revised to 77k from 115k. This is starting to look like the summer slowdowns we have experienced over the last three years, which have spurred QE and Operation Twist from the Fed. There was very little good news in the report. The under-employment rate rose to 14.8% from 14.5%, weekly wages expanded by a meagre 0.1%, the work week fell and the rise in the unemployment rate erased recent months’ of gains. The gold price surged after the report and had risen $70 by the time London closed. The strength in the yellow metal was viewed as the market pricing in the prospect of more QE. So when the Fed meets in 2 weeks will it pull the trigger on more stimulus?

The reason to do more is compelling: the deteriorating economic outlook at home and the escalation in the sovereign debt crisis in Europe. But what could the Fed do that they haven’t tried already? While the market seems to prefer fresh money being pumped into the economy, the Fed may be less willing to do this as it could hurt inflation expectations, especially if the European crisis is “solved” in the coming months. Instead it may decide that the drop to a record low in the 109-year Treasury yield last week has done enough easing for the US economy so it may start with a more cautious route such as extending Operation Twist. This requires the Fed maintaining the size of its balance sheet (should be dollar neutral) while buying securities further down the curve to keep rates lower for longer. The market may be more sensitive to outright QE, which could boost risky assets and weaken the dollar. If the Fed chooses to do more Twist the impact on the market may be fairly muted, as this is the less aggressive option open to the Fed. However, if the Fed embarked on some targeted action towards the housing market, for example fresh purchases of mortgage backed securities then we could see risk respond well.

Next week Bernanke testifies to the US lawmakers on the economic outlook. This will be watched closely as he explains to the Congress the decline in the data, especially the deeply disappointing and de-moralising jobs report as politicians gear up for election season. His words will be scrutinised to see if there are any signs of more policy action from the Fed. This could keep the dollar volatile on the 7th June. The dollar declined slightly on Friday after reaching fresh 2-year highs last week. However, while the Eurozone crisis remains the focus then in the short to medium term we think the dollar could strengthen further. However, in the second half of this year the outlook for the dollar is less clear. A deteriorating economic outlook and a Presidential election is a formula for a weaker dollar in my book. But right now Spain, Bankia and a lack of action from European authorities are dominating.
The RBA could cut again

The data out of Australia, the UK and Europe has disappointed to the downside in recent weeks, however at this stage it looks like the RBA and BOE may be the only Banks to take immediate action. A drop in retail sales in April combined with an 8.7% fall in building approval permits for the same month highlight the deteriorating back drop for the non-mining sector of the Australian economy. After the 50 basis point cut at its April meeting the risks are the RBA waits until July to see the impact of the previous cut, but we still think that the RBA could react when it meets on 5th June. The market expects a 25 basis point cut to 3.5%, which would be the lowest level for rates since Q1 2010. We agree with consensus and believe that the RBA will choose to err on doing too much in case the external environment gets worse. As a commodity producer, Australia is reliant on the external environment, so the weakness in both Chinese and European data may be enough to force the RBA’s hand. However, if it does cut rates then we think it will signal that it is on pause unless the situation deteriorates further. Overall though, the Aussie dollar’s and the RBA’s rate trajectory may be determined by the Eurozone crisis and the future of Chinese growth.

If the RBA cuts rates then we could see AUDUSD initially dip to 0.9500. However, the Eurozone crisis is likely to have a larger impact on the Aussie in the medium-term. If there is continued stress then we could see it fall back towards 0.9120- the 200-week moving average, while remedial action from the European authorities could see it lead a rally in FX markets.

Sekedar perkiraan,
sulit untuk prediksi hari senin.
Sementara EU akan naik, smp msk pasar Eropa.
Jika tdk break 2458, EU akan kembali turun.
Jika break 2458, EU akan bertahan menunggu “reaksi” pasar Amerika.
Perkiraan sy, EU tdk break 2458.
Sell EU sa’at pasar Eropa, SL 50 point.

TRADING WITH PAIRS CORRELATION

Secara umum trader memandang korelasi pair hanya sebagai kendali resiko atau juga digunakan untuk mencari peluang Carry Trade yang mana kedua hal ini sudah pernah saya singgung pada posting The Magic of Pairs Correlation (13 Oktober 2011, 12.47 pm). Jika kemudian kita sedikit merubah sudat pandang tersebut maka trader dapat melihat manfaat lain dari korelasi pair untuk meningkatkan peluang menang pada forex market.

Lakukan modifikasi Pairs Correlation menjadi Cross Pairs Correlation, dalam contoh kali ini saya gunakan GBP/USD berkorelasi dengan USD/JPY dan EUR/USD dengan GBP/USD, dari kedua kombinasi tersebut diperoleh Cross Pairs Correlation Signal pada EUR/GBP.

Sebagai contoh aplikasinya silahkan baca kembali posting 31 Mei 2012, 09.18 pm (Sekedar info … dst) dan hasilnya adalah sebagai berikut :

NB : Perhitungan profit ” tidak termasuk spread ” dan menggunakan patokan jam server !, pada kondisi floating minus maka terserah kepada masing-masing trader untuk menentukan besarnya Stop Loss.

BUY EUR/GBP @ 0.8043 pertama kali pada 01.06.2012 : 07.33 memberikan profit 34 pips (0.8077) pada 01.06.2012 : 08.50
entry BUY terakhir @ 01.06.2012 :12.49 memberikan profit 51 pips (0.8094) pada 01.06.2012 :20.58.

BUY EUR/USD @ 1.2350 kemudian floating minus hingga 63 pips @ 1.2287 pada 01.06.2012 : 12.48 (hold or SL, terserah trader)
entry BUY terakhir @ 01.06.2012 : 13.20 memberikan profit 105 pips (1.2455) pada 01.06.2012 : 13.35.

SELL GBP/USD @ 1.5352 profit 85 pips (1.5267), 01.06.2012 :09.20.

Besarnya imbal hasil :

BUY EUR/GBP 85 pips + BUY EUR/USD 105 pips + SELL GBP/USD 85 pips = 275 pips
atau minimum 212 pips jika dikurangi dengan Stop Loss max 63 pips.

Kesimpulan : Dengan menggunakan tingkat resiko yang sama dapat memperoleh imbal hasil yang lebih besar jika trading “lebih dari satu pair secara simultan” !, pada contoh ini yaitu 01.06.2012 : 07.33. Jika trader biasa trading dengan standart lot (1 lot) maka pada transaksi tersebut diatas dapat membaginya secara rata-rata yaitu masing-masing 0.3 lot. Not bad bukan untuk ” sarapan pembuka ” awal bulan USD 9/ pips ?

Morning has broken, like the first morning (of course on every week) !
I love Monday morning, nge-gym dulu yuk …. see’ya

Bagi trader yang sedang menantikan turning point dari EUR/USD, saat ini bisa mulai mengamati pergerakannya. Jika EUR/GBP mampu menembus 0.8043 ini merupakan trigger yang bagus untuk Open BUY EUR/USD

@luky ini postingan anda 31 mei,saat ini eur/gbp sdh tembus 0.8043
1.apakah turning point,Buy eur/usd sdh berlaku?apakah ini hanya Koreksi saja,atau sdh berubah arah trend nya?
apakah msh perlu konfirmasi2 lainnya?
mohon penjelasan nya lbh lanjut.

2.Jika Luky berkenan tlg di jelaskan Knp Turning PointEUR/USD menggunakan EUR/GBP di angka 0.8043? dari manakah menentukan angka 0.8043 tsb.
Terima Kasih

Salam Profit & Happy Trading

@agusjogja, yang haus ilmu trading forex ….pa kabar ?, doakan semoga HDCI jadi mampir ke Yogyakarta pada bulan Agustus 2012.

1. Signal EUR/GBP @ 0.8043 sudah tereksekusi (termasuk trigger pada EUR/USD) dengan hasilnya seperti pada penjelasan posting tersebut. Perlu diingat kembali bahwa pada sistem trading Cross Pairs Correlation, entry positon dilakukan secara ” simultan ” pada waktu yang bersamaan dengan cara melakukan pending order.

2. Menggunakan EUR/GBP karena dari hasil pengujian Cross Pair tersebut memberikan korelasi hasil yang paling memuaskan (validitas minimal 80 %) untuk kurun waktu tertentu.

Mencari signal entry dengan Cross Pairs Correlation secara manual memang agak rumit dan butuh waktu yang tidak sedikit, karena itu saya sendiri telah memprogramnya sebagai trading tools. Cross Pairs Correlation sendiri merupakan pengembangan dari Basic Pair Correlation sehingga strategi ini banyak digunakan dan dipelajari pada tingkat expert trader.

Happy Trading

@luky, kabar saya selalu baik…saya doa kan agustus12 Luky jd dtg ke yogyakarta,memberikan sesuatu yg membuat saya tdk menjadi “haus” lagi…
Berarti menentukan EUR/GBP 0.8043 nya dari mana?susah dijelaskan ya?

saya tunggu ilmu2 yg lain nya
terimakasih
Salam profit & Happy Trading

hati2 yg main di insta forex dari tgl 1 juni smpai skarang di tempat kami account g bisa di buka kemungkinan kolab