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EURAUD Looking Up

by Ashraf Laidi
Apr 27, 2009 10:33 | 11 Comments

EURAUD Looking Up - EURAUD Apr 27 (Chart 1)

While both the Aussie and euro have shown to come under pressure against USD and JPY during risk aversion, it is the Aussie that underperforms relative to the euro during these times of falling risk appetite. Daily technicals show continued stabilization in the oscillators, while the weekly chart shows a more clearly bullish formation. Note that FX markets have grown more risk averse than their equity counterparts (as seen in the short-lived gains in risk currencies such as GBP, EUR and CAD). As equities start to exhibit further pullbacks, expect EURAUD to extend gains towards 1.8440 and 1.8550. Support seen standing a. 1.8185, backed by 1.80.

 

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Comments (Showing latest 10 of 11) View All Comments
Ashraf Laidi
UK
Posted Anonymously
16 years ago
Apr 29, 2009 11:21
TAREKALEX, the daily correlation bween EURJPY and stocks has risen from 0.66 (since March to 0.72 since April 15). Since I expect stocsk to drop back down later next month, i see eurjpy down towards 118 later this summer. but very minimal chances of 115 so far.


GEORG, i dont closely follow ZAR, but AUDZAR has been in mainly consolidation zone since September (6.30 and 7.0). ZAR was badly damaged in past year due to unrest and its eroding production of gold. But just like the Aussie, ZAR has rallied significantly against USD since March, which was the beginning of the RISE in risk appetite.


AMIR, thats the million $$ question. i cannot imagine the FED sitting there, releasing the same statement as last month (no additional purchases) and allowing bond yields to rise further. I see 70% chance Fed announing purchases of more treasuries.. but the QUESTION is will that be ENOUGH to drag down the dollar and help gold? not so sure at the moment.

Ashraf
Amir AK
Cairo, Egypt
Posts: 6
16 years ago
Apr 29, 2009 8:14
Hi Ashraf,

You have outlined boths scenarios weather the Fed decides to expand its QE in any form (buy back LT treasuries or ask treasury to issue 50yr bonds) or if it doesnt and the impact on markets. Which scenario are you more biased to? And how would you trade the markets accordingly and how would you hedge your position? Thank you.
Georg
CapeTown, South Africa
Posts: 2
16 years ago
Apr 29, 2009 7:48
Hi Ashraf, one thing I find confusing is the strength of the South African Rand. The ZAR and AUD have been highly correlated against the USD over the last few years, but of late the ZAR has outperformed the AUD even though one would think the ZAR would be much more sensitive to risk aversion. Any thoughts on this?
tarekalex
alex, Egypt
Posts: 14
16 years ago
Apr 29, 2009 0:41
hi ashraf
iwant know is there chance to eur/jpy fall to 115.
as long target

thanks
Ashraf Laidi
London, UK
Posts: 0
16 years ago
Apr 28, 2009 17:15
Tradenet,

EUR, GBP, AUD, NZD, CAD and NOK are called risk currencies because they usually rally diring RISING risk appetite and fall during falling risk appetite. There is a whole chapter in my book (chapter 5 called Risk Appetite in the Markets) illustrating the remationship between risk currencies, VIX, equities and credit spreads. rising risk appetite prompts funds to go from lower yieldig currencies (USD and JPY) and into risk currencies. Although GBP is low yileding currency, it still behaves as a high yielder due to concentration of financials in UK equities.

Ashraf
Tradenet
Michigan , United States
Posted Anonymously
16 years ago
Apr 28, 2009 16:41
Hi Ashraf.
You made mention of risk currencies in the Hot chart above (GBP, EUR & CAD), can you briefly explain this, why they are so called and how they affect the market. Thanks so much and regards to the Queen.
Ashraf Laidi
London, UK
Posts: 0
16 years ago
Apr 28, 2009 10:50
Glory, EURCHF is tricky because the downside is likely to resume as long as stocks fall down. BUT, since we have been warned time and again by the Swiss National Bank about excessive CHF strength, 1.50 could be the line in the sand. Also, note that 1.5050 is BOTH a 55 and 100-day moving average. so if you are long EURCHF, place stop at 1.4980, with interim upsid etarget at 1.5080 and 1.5120.

Ashraf
glory
Singapore, Singapore
Posts: 10
16 years ago
Apr 28, 2009 10:42
Hi Ashraf,
Refering to previous hot chart on EURCHF with a target of 1.53, which did not materialise, do you see with current level of 1.5045 (lowest 1.5034) as the near bottom and more upside to come?
kleooo
BG, Norway
Posts: 17
16 years ago
Apr 28, 2009 10:23
Hi Ashraf
Do you have an idea where the NOK/CHF is going?
Ashraf Laidi
London, UK
Posts: 0
16 years ago
Apr 27, 2009 20:50
Taha, 1.90 appears like a major but viable resistance in the medium term. AUDJPY and NZDJPY also ooking bearish.

Ashraf
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