Texas Trade Report for The Week of 15-12-2013 thru 21-12-2013

Good Morning, Good Afternoon or Good Evening where ever you are in the world. This is the Sunday Weekend Edition of Texas Trade Report reporting for the week of 15-12-2013 thru 21-12-2013. I am Liz S, your currency analyst for this edition. I will be talking about the AUD/USD, NZD/USD, and CAD/JPY currency pairs, gold and oil in these week report. This is sole focus of this report.  Before I can go any further, here is the risk disclaimer.

Risk Disclaimer:
  Trading Forex is a risky business and sometimes you will lose the money that you traded. You are leveraged 50:1 or even more. There is the risk of loss of the money have invested. Never invest money that you are not committed losing. There is a possibility of losing your original investment. If you are not sure about investing, seek the help of a registered investment adviser.

Also, the purpose of this trading lesson is education. This does not constitute trading advice. Nor do I give out trading signals. All opinions are my own and not Blogger.com nor Google.com.

Onto the focus of this week’s report, AUD/USD is the first pair that I will be looking at for this report.  On Friday, we closed at 0.8965. The Aussie been trending down. As result of the past week’s price action, it has been moving lower.  We are heading into the last policy meeting for the Federal Reserve interest rate decision of this year as well on 18 December, Wednesday at 19:00 GMT. This policy meeting will either confirm when the taper will happen or we could see them talk about the taper starting in the first quarter of 2014.  To break the downward trend, we would need to see a break above the 38.6% Fib level at 0.9204 to become bullish and it stays there. The policy statement and after the interest rate decision will leave us with some clues as where they fed is going overall. This looks bearish for the short to medium term at the moment. We have the Chinese HSBC PMI report at 1:45 GMT. Also, we have the CPI on 17 December at 13:30 GMT, Tuesday for the US. We are heading into a week of heavy event risk for the currencies especially the commodity currencies. Caution is needed and we need to know our risk themes heading into the week. We will find out if risk sentiment plays itself out this week or risk aversion comes forward from the interest rate decision from the Federal Reserve on Wednesday at 19:00 GMT. I remain bearish for the time being and have to see signs of a break above the 38.6 Fib level to become bullish.

Onto the NZD/USD, we close at 0.8262 on Friday. This pair is trending downward. The support is at 0.8125 on a daily chart. It will probably test the support level. On the weekly chart has been ranging. I do expect to see more reaction on the Fed’s interest rate decision after the policy statement.  The only event risk for the Kiwi is the Fed’s interest rate decision on Wednesday and US CPI figures on Tuesday. The reaction from the interest rate decision by the Federal Reserve will cause movement to last about a daily. The Kiwi has been very resilient for the most of part of the year with the exception of mid-April through August when the pair fell a lot.  It is possible that we could see the Kiwi close lower this year. For the medium term, bearish is what it appears for now. I am waiting to see if we hit the support level to hold.

Onto the CAD/JPY, this pair has been trading in very tight rising wedge. We closed on Friday at 97.50. We have the Bank of Japan’s interest rate decision on Friday, December 20th at 3:00 GMT. This pair has been in a rising wedge much like USD/JPY counterpart. I hope hear what the Bank of Japan is intending to do. I expect them to continue their stimulus program. This will send a lot Yen pairs higher and result in a devalued Yen. The BOJ has stated that they did not want to buy government debt. It has made it very clear. Also, we should find out how aggressive they are going engage with the stimulus. I don’t expect the BOJ to give a type of real super aggressive stimulus like we had last year at this time. We can break above the rising wedge at 97.69 before any retracement and the BOJ interest rate decision has to be taken into account. The support level is at 93.89 on the daily chart.  It looks bullish for now. I will wait and see what effect of the BOJ’s interest rate decision will have on this pair either sends it higher or lower after their policy statement.

Onto gold, we closed on Friday in the positive and at $1238.10. Gold closed $13.20 higher. Like the commodity currencies, I am expected to see how gold will react to the Federal Reserve’s policy statement on Wednesday at 19:00 GMT. Gold could go lower for the medium term and short term. It is going go higher eventually. It has to break above $1268.11 and stay above it to become bullish. If we hear that the taper begin soon, we could see gold go lower. I think this reaction will be short term. We will wait and see over the longer term.

Onto oil, it closed at $96.93 on Friday and rose on the 15 minute time frame and became bullish. On the daily chart, I do expect oil to rise for the medium and longer. It looks like oil will start to bottom soon. I do expect it that will. It has to break above $98.85 to become bullish and stay above it. Oil has been declining since 31 August 2013. I believe this trend will end soon. It will bottom out and form a solid bottom.
 
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