A.I. Range forecast for 26-Nov-2020 [AUDJPY | EURGBP | EURNZD | EURUSD | GBPUSD | USDJPY]

The range forecasts of selected FXs for next 24h. The time-line is based on UTC as usual.

[AUDJPY] To the QROSS X Trend and Momentum

Range forecast: 76.409 (-0.43%)  -  77.144 (+0.52%) , for next 24 hours.
Confidence: 73.7%.

[EURGBP] To the QROSS X Trend and Momentum

Range forecast: 0.88877 (-0.28%)  -  0.8943 (+0.34%) , for next 24 hours.

Confidence: 69.7%.

[EURNZD] To the QROSS X Trend and Momentum

Range forecast: 1.6953 (-0.29%)  -  1.704 (+0.22%) , for next 24 hours.

Confidence: 74%.

[EURUSD] To the QROSS X Trend and Momentum

Range forecast: 1.187 (-0.28%)  -  1.1951 (+0.4%) , for next 24 hours.

Confidence: 73.2%.

[GBPUSD] To the QROSS X Trend and Momentum

Range forecast: 1.3329 (-0.18%)  -  1.3419 (+0.5%) , for next 24 hours.

Confidence: 74.4%.

[USDJPY] To the QROSS X Trend and Momentum

Range forecast: 104.12 (-0.13%)  -  104.48 (+0.21%) , for next 24 hours.

Confidence: 72.8%.

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A.I. Range forecast for 23-Nov-2020 [AUDJPY | EURGBP | EURUSD | GBPUSD | USDJPY]

The range forecasts of selected FXs for 24h from the next market opening. The time-line is based on UTC.

[AUDJPY] To the QROSS X Trend and Momentum

Range forecast: 75.643 (-0.22%)  -  75.968 (+0.21%) , by the end of Monday.
Confidence: 71.9%.
The chance of Downside swing is a little more likely than Upside.

[EURGBP] To the QROSS X Trend and Momentum

Range forecast: 0.88843 (-0.41%)  -  0.89316 (+0.12%) , by the end of Monday.
Confidence: 65.5%.
The chance of Upside swing is more considerable while Upside margin is limited.

[EURUSD] To the QROSS X Trend and Momentum

Range forecast: 1.1838 (-0.16%)  -  1.1885 (+0.24%) , by the end of Monday.
Confidence: 66.3%.
The chance of Upside swing is more considerable.

[GBPUSD] To the QROSS X Trend and Momentum

Range forecast: 1.3148 (-1.06%)  -  1.3354 (+0.49%) , by the end of Monday.
Confidence: 66%.
The chance of Upside swing is more considerable while Upside margin is limited.

[USDJPY] To the QROSS X Trend and Momentum

Range forecast: 102.96 (-0.83%)  -  104.49 (+0.64%) , by the end of Monday.
Confidence: 68.5%.
The chance of Upside swing is more considerable.

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Japanese Market sleeping for a coming Golden week, USDJPY vs N225

This year, Japanese people have the longest consecutive national holidays for 10 days, and it started today. Tokyo market will have been closed for next week and on Monday in another week after the next. While Japanese stock market is closed, Forex market is opened in the world and the price naturally moves in Japanese Golden week.

As many investors who look at Japanese market know, N225 and USDJPY are positively correlated though the correlation has been relatively lower than before. Still, compared with other markets, for example FTSE100 vs GBPUSD, CAC40 vs EURUSD or DAX vs EURUSD, the two indexes of N225 and USDJPY have always positive correlations for a reasonable time frame (e.g. 1 year).

The point of this Japan's holiday season is how N225 moves on the first business day after the Golden week, 7-May-2019. Let's have a look at the historical correlation between N225 vs USDJPY, whose correlation period is 250 points for each.

[USDJPY and N225 for last 5 years]

[250 days Correlation USDJPY vs N225]

The current correlation (250D) is at around 40%. Whatever this number is considered, it could anticipate N225 after the holidays follows the direction of USDJPY for next week. USDJPY's latest closing is at around 111.60. Japanese investors would hope the market not to be volatile drastically...

The one side correlation seems be particular in Japanese market, and it is not for some other markets. In European markets, the stock indexes and exchange rates are correlated actually, but the correlation moves in positive as well as negative territories.
Look at other examples in European markets, the below figures describe the correlation between FTSE100 vs GBPUSD.

[GBPUSD and FTSE100 for last 5 years]

[250 days Correlation GBPUSD vs FTSE100]

And the correlation between CAC40 vs EURUSD and DAX vs EURUSD. (Correlation figure only)

[250 days Correlation EURUSD vs CAC40 and DAX respectively]

Their latest correlations are positive, but the numbers are varied from time to time more than Japanese market. However, Europeans do not have such Golden week anyway...

Brexit meaningful vote is soon 12-Mar-2019

After the Brexit negotiation between UK and EU yesterday, MPs are going to vote for Mrs.May's deal tonight.
In spite of the yesterday's agreement that the alternative arrangement for Irish backstop has to be made by December 2020, the agreement seems to be guaranteed from the legal perspective.
GBP once jumped at the yesterday's press conference, GBP dived today and GBPUSD now stays a little lower level before the press conference.

GBPUSD

If the deal is rejected tonight's vote, it is likely to vote if UK proceed with Hard Brexit or extend the Brexit date though the extension won't guarantee preventing from Hard Brexit. According to Mr.Juncker, the president of European Commission, there is no more room to negotiate. It implies the market could foresee Hard Brexit in case of rejection against Mrs.May's deal at tonight's vote.

It's worth to prepare for the possibility of Flash Clash tonight.

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"Asian Forex traders attracted to Bitcoin because of its higher volatility" sounds nonsense only to me?

Some articles have said Asian Forex traders, so called Mr/Mrs.Watanabe symbolically, have been shifting from fiat FX trading to crypto FX trading, betting on BTCUSD, ETHJPY, LTCEUR ...  It is also said that those traders are attracted to higher volatility compared to the lower volatility in fiat FX market. It would be a true fact that crypto's volatility is higher than fiat's one. The volatility of BTCUSD could be about 10 times more than the volatility of GBPUSD for last 6 months.

Well, if you are more experienced traders, you would agree that the volatility is not (only) a reason to choose underlying assets. Before making conclusion which of fiat FX or crypto FX are more reasonable underlyings, let's take a look some fundamental data. Here is a comparison between BTCUSD and GBPUSD in Bid/Ask quotes and the spread, observed at one of regulated brokers today.

Quotes: BTCUSD and GBPUSD

It tells that the spread/quote is about 65 times in BTCUSD against GBPUSD. In case of investing USD 10,000 for each BTCUSD and GBPUSD respectively, the immediate cost for BTCUSD is about USD 98 while one for GBPUSD is about USD 1.5.
Some Watanabes would claim that they expect higher volatility driving their profit and absorbing the cost. So let's take another measure of the expected profit in case of one-sigma moved to a favour direction. Using daily volatility for last 6 months, it is estimated below.

P/L by one-sigma up

Oops, BTCUSD performs more than GBPUSD even after the expensive cost. (Gap = USD 365)
It is the fact, but does it mean we should invest in crypto FX rather than fiat FX?

The brokers usually allows investors to leverage, so see how much investment will bring same return in fiat FX as crypto FX. It is not a big deal. In this case, if you leverage only about 8.7 times on the fiat position, you will get same returns by one-sigma up.

Leveraged on the fiat position

Brokers offers more leverage on fiat FX while far small leverage is allowed on crypto FX, so you could only put your money USD 10,000 at the account.

Ok, but some might argue that BTCUSD performs same as GBPUSD but does not need such leverage. We took the case for upside this time, but how about the downside risk?
Under the same condition, but in case of one-sigma down, the P/L is estimated below:

P/L by one-sigma down, leveraged on the fiat position

You lose USD 147 more from BTCUSD position while both BTCUSD and GBPUSD have same returns from one-sigma up. This is naturally because the Bid/Ask spread is wider in BTCUSD.

Relatively lower volatility at fiat FX can be compensated by just 8.7 times leverage. The downside risk is smaller in fiat FX than crypto FX, to expect same upside. If you do not have very specific preference, it seems be more reasonable to trade fiat FX rather than crypto FX, doesn't it?

I have no intention to stop Mr/Mrs.Watanabes trading crypto FX, but probably worth to rethink about it.

Brexit just made another market turbulence but see it in longer term

Brexit brought another turbulence into the financial market, GBP diving around 10% against JPY,  USD and massively down against other currencies.

This is absolutely massive scale, but is it so fresh? It is not. Nowadays, many people tend to forget something past so quickly as perhaps flood of information from the internet and media. Remembering just 1 year and a half ago, Swiss Franc (CHF) shot up around 15% against GBP, obviously whose scale is more than Brexit impact.

Lehman crisis had a clear message of credit market overestimated, and in fact that one biggest bank collapsed in public. So it is normal that people do not want Lehman's shares any more. 

Unlike insolvent, nothing will change from next Monday for British people's life drastically. To establish Brexit deal. it will take more than 2 years.

It is clear that British economy entered the unexplored zone meaning uncertainty. Detailed pros and cons are not on the main topic of referendum, but more or less driven by populism. Further research and publication make clear that economic effect at Brexit. Even a single sentence in EU constitute may clash GBP value.

It is understandable to sell GBP as its expected uncertainty, but why they buy JPY?  Looking at sovereign ratings or banking industry's ratings, there is no sign of strong-buy JPY. It had been traditionally always happened, but without economic reason, it is another sign of bended market.

As another trend, Gold price has started rising after years of downward trend.

By the way, keep eyes on Spanish election on Sunday

>> Brexit could influence Spanish election amid surge in support for hard-left party

British Pound remarkably low against major currencies 25-Feb-2016

Since the beginning of this month, GBP has sharply gone against major currencies such as USD, JPY, AUD or NZD though GBP peaked out in last Autumn of 2015.

Compared with the level at the end of 2015, GBPJPY got the sharpest decline more than 12.0% down, GBPUSD is following down at 6.0%, and even against AUD and NZD, GBP has gone down 5.0% and 3.6% respectively.

Due to the rate cut of AUD and NZD for a last few years, GBP and other currencies have been relatively stringer against AUD and NZD whose interest rates are more stable now than before.
However, even though their rates had been cut, the policy rate in

Australia is still 2.0% and it is 2.5% in New Zealand while the rate in England is only 0.50%. Also looking at the credit rating of sovereign debts of them, S&P rated AAA (stable) for Australia, AA (stable) for New Zealand and AAA (negative) for United Kingdom. Simply thinking, Australia has better credit rating and more interest rate, which of Australian or English debt do you want to invest?

We cannot miss out that global stock markets have been downward and volatile since the beginning of the year. The market shows

some symptoms of financial crisis, particularly strength of JPY and weakness of GBP. Remember Lehman crisis 2008, JPY had been the strongest currency in the market.
What happened in crisis probably happens now again, it is still a question from the view of investment because Japan has S&P rating only A+ (stable) and negative interest rate at -0.1%. Do you want to invest?

2015 was geopolitically unstable year, and 2016 will be economically and (geo)politically unstable due to the volatile market, US president election, Brexit, Spanish goverment, ...


Keep yourself to follow the global economy more efficiently, why not use Newsensus. Available on Google Play.

GBPUSD Trend & momentum 26-Oct-2015

The trend and momentum indicates GBPUSD is expected upward trend in this week. From the point of view of market consensus, USD could be weaker due to the revealed monetary easing from China and Eurozone last week. It will be burden for US Federal Reserve to increase their intrest rate soon.

GBPUSD trend & momentum 25-Jun-2015

GBPUSD had gone up until around the end of last week, and it has been down ward trend since beginning of this week. GBP and USD, both are considered as strongest currencies in the current market.

Trend and momentum of GBPUSD indicates it still has room to go down by the end of this week. But it is expected trend reversal to upward trend for a coming next week.

Mansion house speech by Chancellor and BOE governor 10-Jun-2015

Today, the chancellor George Osborne and Bank of England governor Mark Carney will have the annual speech at Bankers and Merchants dinner in London.

Back to the last speech, the governor mentioned the interest rate could go up in next months. But the rate has actually stayed at the record low 0.5% for the year.

Considering the deflation last month, though it may be temporary phenomenon, the interest rate is unlikely expected upside. If any clear direction is indicated in today's speech, forex market can be driven sharply whichever upside or downside.

Osborne’s Mansion House hot topics: rigging, ringfences and RBS

By the way, the trend & momentum of GBPUSD indicates it still has upside but it is limited as expected trend reversal toward later this week.

GBPUSD Trend & momentum + IMF warning US 5-Jun-2015

GBPUSD has hiked since earlier this week, and it has likely reached a peak in short term. The trend and momentum indicates it still has a little upside, but it will be reversed to downward trend toward early next week.

By the way, according to some sources, IMF has cut US growth forecast and they are concerned about rate rising too soon. It implies USD is less competitive than before this news is revealed.

(Guardian) IMF cuts US growth forecast and fires rate rise warning
(Financial Post) IMF’s warning to the Fed could throw Canada’s rate stance off kilter
(Bloomberg) IMF Urges Fed to Postpone Rate Liftoff to First Half of 2016


GBPUSD trend & momentum chart

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GBPUSD Trend & momentum + BOE announcement ahead 3-Jun-2015

GBPUSD has gone up since later yesterday, and it stays at around 1.532 at the moment. The trend and momentum indicates it still has room in upside for short term.

By the way, Bank of England will announce the interest rate decision and asset purchase facility tomorrow morning in British time. Interest rate is expected to be unchanged at 0.50%. GBP is still relatively stronger against most of major currencies, and the latest consumer price indicated deflation. Considering those circumstances, Interest rate is expected flat or small possibility of downside.


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GBPUSD Trend & momentum 2-Jun-2015

GBPUSD stays near 2 week low level 1.522 today. The trend & momentum indicates GBPUSD is expected to be reversed into upward trend for a coming week.
 Although some economic figures will be released from both UK and US in this week, the impact from those factors are likely limited as they do not directly affect to the monetary policy. (Except, rate decision will be taken by Bank of England, but this is most likely unchanged.)
 To find out more market news, download Newsensus app .

GBPUSD trend & momentum 20-Apr-2015

The trend and momentum indicates GBPUSD is in downward trend in this week, reversed from the upward trend for the last week.In US economy, the interest rate is one of major key factors affecting to cross USD pairs. It is still unclear the interest rate hike within this year, and the market could jump if the consensus stop expecting the interest rate going up.

Cross-USD Trend & Momentum 9-Nov-2014

USD has been stronger against most of major currencies, EUR, GBP, AUD and particularly JPY due to BOJ announced additional QE since end of last month. Japanese stock market also has shot up.
Although fundamentals imply USD can be stronger in economic situation while Europe and Japan central bank keep QE, some market analysts and Trend & Momentum signal indicate USD will be less strong against other currencies.


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