The currency strength and weakness shows both risk and risk-off currencies getting stronger, which tells us the markets are trying to seek value all over. Over the last week we had multiple central bank announcements and updates to forward policy which is causing some repositioning across assets.
Let’s take a look at some key data points coming up:
Europe, UK and the United States release their latest figures on manufacturing and services PMI’s. In Europe, Germany will be hoping to see services come back towards 50.0 after seeing previous numbers revised lower.
Australia CPI is forecast to climb to 2.9% from 2.8% which could cause concern for the RBA who are already cautious around cutting rates.
The Swiss National Bank is forecast to leave rates unchanged at 0.00%.
Let’s take a look at the table.
Strong Currencies
My currency strength meter highlights these currencies as the strongest as of last week:
AUD: The Australian dollar on the chart against most currencies has pulled back but not enough to create serious changes to the scoring. Longs must be taken with caution here, when a currency is at +7 it can reverse its strength.
EUR: The EUR has made its way back on to the buy side of the currency strength meter. Strong German data this week could propel this further.
CAD: The Canadian dollar moved from the reversal zone of -7 to -3 this week showing signs of a strong reversal, this is a currency I could look to trade against the much weaker ones.
Weak Currencies
Looking at the opposite side of the strength meter now, these are the weakest of last week:
NZD: The kiwi seems weak across the board especially against its fellow antipodean the Aussie.
USD: The USD remains unchanged. However the currency is trying to form a strong comeback, from a technical perspective it is yet to be confirmed, so keep an eye on it this week.
Markets to watch
Based off of the above these are the currency pairs on my trading watchlist:
Bullish | Bearish |
AUDNZD | NZDCAD |
AUDUSD | USDCAD |
EURNZD | |
EURUSD |
The Australian dollar is the top dog at the moment but that could change, longs must be taken with caution. NZD on the other hand looks weaker and could be one to target for opportunities.