EURAUD Trend & Momentum - 17-Nov-2014

AUD and  NZD has been much stronger against most of major currencies including GBP, EUR, USD and JPY. While those major economies are still struggling about economic growth or market liquidity though US economy is relatively competitive, AUD or NZD can be fundamentally stronger against other major currencies. Australian interest rate is expected to be risen early next year.

 Although AUD fundamentally has room to stay stronger, trend & momentum indicates EURAUD will be reversed to be up in this week.

Are we in Stagflation? 15-Nov-2014

Imagine that your money in the bank account is gradually decreasing time to time.

Obviously, you never see your savings decreasing, instead, you see the savings increasing according to the interest rate. In this meaning, your savings will be same or even more amount time to time.

However, consumer price is increasing time to time as well as your savings are increasing. Question is which of them is increasing in larger scale? If interest rate is greater than inflation, you implicitly win the spread between interest rate and inflation. If opposite, you implicitly lose.

This figure shows the spread of annual interest rate and inflation rate after FX impact adjusted.

Scores of the economic zones, US, UK, Europe have stayed in negative since Lehman crisis. Japanese and Australian scores have been up and down since that time. Currently, only Chinese economy has positive score.

It implies that value of money is relatively decreased in those major economic zones except for China.

Normally, once inflation is going up, the interest rate is also going in order to limit the inflation. But it seems major economy is vulnerable to deflation back again, and this may lead the interest rate being kept at record low level for coming years.

In this situation, diversification into other asset classes can be hedging strategy against inflation risk.

AUDUSD Trend & Momentum 14-Nov-2014

AUD has been stronger than major currencies, USD, EUR, GBP or JPY for last one week. NZD has been stronger as well as AUD.

The trend & momentum in AUDUSD shows that it will be turned into downward trend in a coming week. Unless particular news or surprise are coming up early next week, AUDUSD and cross-AUD FX can be adjusted, following to the indicators.

However, GBP, EUR and JPY would be still weaker than other major currencies due to their monetary policies. It means that the strength of trend reversal in GBPAUD, EURAUD and AUDJPY will be limited, comparing with AUDUSD.


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Next Risk Factors - 13-Nov-2014

Needless to say, now global economy is facing the most difficult situation in the history. Central banks in major economic zone, such as US, UK, Eurozone and Japan, have kept interest rate at record low level for long time since Lehman crisis 2008. Not limited to monetary policy, they also brought Quantitative Easing (QE), buying risky assets in the market.

Although those attempts provide liquidity in the financial markets, it is difficult to control speculation in the market, and the worst scenario is ended up with collapse of bubble.

QE is finished in US, Bank of Japan has announced another large scaled QE and ECB still has room to continue QE.

Where is the provided US dollar by QE? It could be any risky assets, however, a story says exposures of subprime auto loan have jumped during the QE in US and it is implanted in such as Asset Backed Security (ABS). You may remember subprime mortgage loan has been collapsed 2007.

What kind of asset will be purchased by next QE in Japan? They announced REIT and ETF are also purchased in larger scale more than now. They are printing yen and buying risky assets. It seems that credit on JPY is likely degraded, and as a matter of fact, JPY has been weaken against most of major currencies since end of last Oct.

How about European economy? We could say the worst situation has gone during Euro debt crisis around 2011-2012. However, economic recovery was less than the market expected, and ECB still may take QE.

China, India Australia or New Zealand, they would be relatively optimistic, aren't they?

Anyway, the most important thing is How to diversify your own assets. Equity, Multi-currencies, Real estates, Metals, Bit-Coin.....

Now back to normal - Forex Signal by QROSS X 13-Nov-2014

You might had not been able to see the trend & momentum indicators on the app due to the technical issues. Now, we see the situation has been back to normal.
Thank you for your patient.

QROSS X support team.

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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Cross-JPY and Stock index Nov-2014

Bank of Japan unexpectedly revealed additional QE on the end of last month, and JPY has been massively weaken against most of major currencies while Japanese stock index, Nikkei 225, has gone up.

This QE may have aspect of JPY devaluation. They plan to increase their exposure of ETF and J-REIT in three times scaled pace. Simply say, if they are buying less credit asset by their JPY, value of JPY will be degraded and cross currency against JPY will be relatively going up.

The stock index have gone up in JPY and reached around 1 year high, however the figure does not look so bullish in the stock index converted into USD.


Source)
http://finance.yahoo.com/q/hp?s=%5EN225&a=00&b=4&c=1984&d=10&e=4&f=2014&g=w
http://uk.investing.com/currencies/usd-jpy-historical-data