Monday, 25 February 2013

Shocks & Surprises Weekly FX Observations

Weekly Caveat Reminder: what follows are merely statistical observations about currency trends and  movements. My belief is that fx markets are, absent exceptional circumstances, usually efficient, which is why no way of forecasting their short-term movements with any consistent success has ever been discovered.  So whilst I believe that these observations are interesting, and that knowing the trend is likely to be useful, if  you trade fx and lose money, you have no right to blame me for any losses (And, sadly,  no justification for the charitable instinct that  I should be rewarded from your profits.)

Watch List / Trend Breaks
Turkish Lira: Joins the Watch List. The strengthening trend in place since mid-Sept came under challenge at the end of last week for the first time since October. It has broken through its floor of 1.7821, but it is too early to say for sure that it has broken trend.
Sterling:  Joins the Watch List for a different reason.  The weakening trend established in mid-January and accelerating strongly since, is beginning to look over-blown: during the last week, the fall came to 3.5SDs above trend - most unusual. The ceiling has fallen to 1.594 to the dollar, but it would be surprising if current levels of 1.516 were not lifted in the coming days.

Strengthening Trends
US Dollar: The strengthening trend against the SDR which has been in place since early-January continues to gather momentum. It is now at its strongest point since July 2010.
Rmb: The very gentle strengthening trend, which has been in place since early Oct 2012, is still in place, without having yet quite morphed into stability.
Euro: The weakness of the last two weeks is not yet sufficient to put the Euro on the Watch List: the strengthening trend which has been in place since mid-Sept is still in place, with the current floor still around 1.31 to the dollar.

Weakening Trends
A$: The weakening trend which emerged in early Feb is still in place. I would not expect it to be stronger than 0.96 any time soon.
Yen: There is no threat to the strong weakening trend, in place since mid-December.  The current ceiling of 85.7 is coming down rapidly.
Gold: The weakening trend established in early January continues to gather pace. The ceiling is dropping quickly, and is now at 1685 to the oz.
CRB Commodities Index: Visuals to the contrary, statistically the index showed a weakening trend since early December, and this is now emerging quite clearly. The index broke 298 as expected last week, and now has a ceiling of 297.

No comments:

Post a Comment