I like how FE always challenges all of us. While I ‘definitely’ need some encouragement by the way your words are always appreciated Mike! its good to have some one that challenges your perspective, thinking. And that is the engine and the reason how we were able come this far in such a short span of time. As FE pointed out I’m not old enough to be a professor nor do I possess the knowledge to be one. Sorry to dissapoint you Mike :8: but I’ll keep it coming maybe years down the road I might get there. Enough the rant so lets get to work. Shall we ?
I like that you /FE/ brought this pair AUDCAD into the discussion, going short on AUDCAD in the medium to long term I think we should explore few different venues before reaching a conclusion. And by this I don’t mean you want to go ahead with this pair, and I know that it is just an idea.
In my earlier post on CAD and when I put China into the equation I actually wasn’t sure what was China’s biggest import. But I knew that they were the biggest buyer of commodities. But before we get into it lets take a look at their total import and export line chart from 1990-2014. I specifically wanted to include the years where China had tremendous growth. If you compare the two both export and import haven’t been growing rapidly as it did in the past 1 or 2 decades. The growth for import has stayed flat from 2012 and export has seen a big plunges in between.
China’s main imports are electromechanical products takes up 43% . The country is also one of the biggest consumers of commodities in the world. Among commodities the biggest demand is for crude oil takes up 12%, iron ore (5%), copper, aluminum and soybean. Australia is a net exporter of iron ore & concentrates /52,697A$m last year/ to China. While Canada isn’t their net importer for crude oil China sure seems to be the biggest buyer of crude oil. If you look at demand and supply theory and how it dictates price I think it is safe to assume that economy of both countries Australia and Canada in a way dependent on China direct or indirectly.
Speaking of supply and demand and how it determines the price , lets imagine a scenario where US economy growth accelerates further up and China slow down causes global commodity prices to plunge down even further. While US economic growth could give positive outlook on Canada’s economy /export to be more specific/ now however Canada can’t sell their commodities at a price that it used to in the past due to falling demand in commodities. What impact will it have on Canada ? It’s definately not a win win situation that we’re talking here. While US may benefit from cheaper energy commodity prices from Canada it is going to impose downward pressure on inflation - low energy price translates to low transportation cost therefore reducing the overall cost - /downward pressure on inflation/. Now for any central banks around the world as we all know by know the key measures they look out for to assess the need for interest rate hike or cut is inflation rate and labour condition. If the inflation runs below forecast in this case for US Fed might keep postponing rate hike.
I did not say your knowledge is not enough for being a professor, I only said you are too young for it and instead of reading books, you chase girls. This is all okay! So no worries. If you would like a title, aim for a “Dr.”, you can gain it faster! “Dr. Rookie”. That would be something, heh?
The analysis were great again. One thing: in the document you attached about Canada/oil price etc. There was a part about transportation costs. I do not have the document with me now, would be good to read but we should not forget if oil price goes down and transportation costs goes down it is only bad for the oil industry. Other parts of the economy would gain on that one.
And do not worry, encouragement also comes every time it is needed
Good trades to everyone guys I will be sitting on the side today as I cannot be mostly at my computer
Well looking around at the market so far now, which is just a bit into London, I see ALL the Comms taking a hit. Interesting.
And that leads me into this. I’ve been wanting to get a picture of what this week looks like. These are my notes, coming from you guys hard work on the COT.
[B]COMMS[/B]: looking bearish.
AUD still in negative territory.
NZD bearish. Interesting how Commercials turned from negative to positive.
CAD bearish-neutral. Comms turned from negative to positive.
[B]MAJORS[/B]: looking bullish, USD mostly.
GBP neutral -bearish. Comms now buying. Seems they like to see it going down to lower prices.
EUR still bearish.
CHF possible bump up for short term. Maybe be the run-to currency, if nothing else attracts.
JPY possible bump up for short term. Fundamentals not good though.
Well I’m still on the sidelines. Welcome FE. We’ll watch together. I found a pretty comfortable seat here in the stands. But boy do I wish I would have made more with the GBP. And I know I called that one. Everyone thought they were out of the race a couple weeks ago, and never to return. Remember “underdog” watch.
So this week I’m thinking the Majors are gonna take it. By how much? I think that will depend on if GBP somehow rises, and if the brothers EUR, CHF make some charge up also.
The Comms took last week. And I think they might be done for a little while now. shrug
The time now is about 0910 GMT.
This is what I see. Comms (all on the right) are down. They are down on a 15 min time period, 1hr time period, and even 4hr time period. On the daily time period we see the AUD is the only one in the negative. Pretty much means everyone is selling them to all the other ones.
I think that daily chart means the most to me. That gives us a bigger picture than the other ones. We are seeing what transpired in a days worth of 5 minute intervals. The 4hr chart shows us what happened in the last 4hrs. And that is every 5 minute intervals. It does change every 5 minutes. So, the 15 min chart changes the most. Always unpredictable. And then as we move on out we see slower changes. We can see what happened in the last hour. Then we can see what happened in the last 4 hours.
I’ll try to update this as we go thought the week and see how it changes. Then you will probably understand more.
I would really like more of those screenshots during the week Mike!
I’ve just closed my NZDUSD short few positions that I had going from last friday. Up 10% for the month. I’ll sit aside for the time being as well. You have been very patient Mike , no need to rush there’s going to be plenty of opportunities good ones coming soon…
Yeah, come on and sit with me here on my left. FE just joined me on my right. We’ll watch the game together.
You didn’t bring the popcorn, chips, or anything? Oh…I see, you got the drinks! Alright!
You got it buddy. I’ll get those out to you as much as I possibly can. It is definitely an aggregate picture of who’s doing what against each other.
I got to thinking…Philip! I need to go back and check what the signals are for this week. I think it’s the pound going up. Must look again. I wanted to lump that in my picture with the COT sentiment post I gave a little bit ago. I’m so very curious to follow that!!
And btw…it does feel strange…but GOOD to see my account not drop any. And I cannot log anything in my trades journalS. I put in there, “see you next month”. I do feel left out. But, I know it’s for the best.
Maybe this is teaching me to WATCH WHAT I TRADE. At least I know that I’ll learn that more than anything.
But the most important part of my business will be the goals I set forth. Then to abide by them. Then to succeed in them.
Ok. So, this is what I’m thinking.
Majors should take it this week. USD should have at least one winning day. One of the Comms should have at least one winning day. The other days probably will lean towards Majors. And hopefully Philip will be right and we see the GBP start breaking out, and take a day. I have a feeling also that the CHF, JPY, even EUR could take some names on a day.
Look, I’m just trying to see if my thinking will somehow match what the outcome will be. When I look back, then I’ll try to remember if my thinking is right or wrong. It would be good to know whether our sentiment feelings will come close to what the market sentiments end up being. And that’s mostly due to the work being done on the COT report, fundamental research, and trend watching stats.
Sure we can get surprised from time to time. Cause we all know that no one really knows whats gonna happen. But, hopefully we can get to [I]being in tune[/I] with the market for the most part.
I just want you to know that I am playing, on the demo. And I put in (right around beginning of US session) Philip’s signaled trades. I will let them run this week. So that would be…GBP/NZD, GBP/CHF, GBP/JPY. And I also have USD/CAD in also. I am trying to beef up this account. Means nothing, but figured it would be the right place to try out what Philip got.
Keep you up on those.
well I am in actually many trades, I meant sitting on the side today as I was not at my computer! Mike the screenshot is great, thanks for it. Which program is it? I am happy you will post it more often, maybe we do not need it every twenty minutes but every couple of days are great!
And Mike, thanks a lot for testing the system! It is very valuable information and help for everyone. Make it like Philip, right away entering on Monday morning and exiting in the end of the week. Later on we can make changes of course but for testing and comparison it is good enough.
And here is an article about the often mentioned CAD:
Canadian Inflation: Hot or Not?
EDIT: guys, I have just read now the above attached article! It fits perfectly to our discussions! And vote in the end!
I like one of the greatest strength from Peter is that he shows us always new sites, analysis etc. I am in this side way behind you guys. My main source is babypips.com, I do think they cover on one site the most things. Besides that I cover only 2 business sites and 1-2 TV channels for the headlines. Peter brings here something new always to learn!
On the other side, I agree with Philip. I do not like to be so self-confident as we have a lot to do, but I do agree that Dr. Rookie describes it better. Both articles have nice language and little quality. Typical marketing stuff. If we can use the articles for some ideas, it might be the charts. The charts in one article and table in the other one is good. But no worries Philip, rookie singed a contract and he all rights are reserved for this thread.
Peter, I have a question, as I even question if the COT Index is right in the article. Please check the first article, right in the beginning by discussing how to calculate the COT report. I mean it might be a new way or something but definitely not how I learnt it.
So Peter, we are waiting also on your setups for the week! You are our most appreciated FX Men member and as a very respected member of the thread we just wanna see those trade setups! I read so many different forecasts on GBP, what is your view?
Hi FE, not much news for GBP this week - except maybe Mr Carney may pass some remark.
There are few fundamental reasons to short GBP, the ‘after shocks’ re the vote will take a long time to play out. There is a general election next year, it’s possible there may be some debate on devolution etc - but I am mindful of how the market waited until closer to vote time before any panic set in.
The big news last week, almost unnoticed, was the earnings - BOE will have noticed, they will also have noticed the down unemployment.
I see the vote count unchanged also.
I suspect the rate - rise genie may make another appearance.
I don’t trade much on Mondays, though did a small scalp on GBP/JPY long this morning.
I see you do not like trading Mondays and Fridays either. Wow I always have a bad feeling being on the other side with my bias vs. you. It is one of the few things that makes me uncertain. I do not know, I just cannot find much reason to be bullish on GBP/USD…
I have an important question which I had in mind and probably is already too late to ask after being a couple of months in the thread. You said many times you do not like buying the Cable on Fridays. Until last Friday I always thought you mind “you do not like going long on the pair on Fridays”. However it can have too different meaning, it can also mean “you do not trade the pair at all on Fridays”. Which one is true?
Can you please look answer the problem mentioned on COT index in post 1075? I find it very interesting. Of course it does not have to be today, but I was a bit surprised on the description of the index.
If I ever write a book I’ll make sure to include you guys :59: your kind words are always appreciated Peter, FE, Mike and Philip.
Here’s the continuation of my article that I put together from various sources yesterday a response to FE’s post on going short on AUDCAD in the long term…
If we put China into the equation both Australia and Canada are inevitably dependent on the biggest buyer of raw materials and commodities direct or indirecty as they’re both commodity currencies.
China has been growing at a rapid and steady rate for the past decade or two and as with any economies there’s going to be ups and downs. While I don’t assume China heading into a deep crisis as Eurozone or Japan anytime soon, we will certainly see it slowdown a bit- slowdown compared to how it was performing for the last decade or two but stabilization when compared with other economies. Nevertheless the demand for commodities will fall therefore long term outlook for AUD and CAD looks rather bearish.
That is unless one of these two countries start diversifying their portfolio not be wholly dependent on the export of commodities. And I suspect Australia might be at a better position as opposed to Canada in that respect. On a recent G20 meeting held in Brisbane a billionaire who made his fortune from exporting iron ore to China and is the CEO of the third biggest company that explores and exports iron ore to China said in an interview that he sees an opportunity in Chinese market for Australian beef that there’s a relatively high demand as middle and upper income classes expand and said he will diversify his companys portfolios. According to Rabobank China already the biggest consumer of meat, may double beef imports by 2018 as rising wealth changes diets.
According to the Department of Agriculture, Australian red meat exports to China in 2013 accounted for 17% of total exports and volume surged higher up 444% year-on-year. Since I couldn’t find a seperate chart to visualize this increase in red meat exports I’ve attached the total exports line chart of both Australia and Canada from year 2000-2014 for better comparison.
If you look at the overall trend the bigger picture Australias export have been growing at a rather steady rate and we can actually see the surge in exports somewhere in 2013, inbetween 2012 and 2014 was probably due to surge in red meat exports. However as for Canada things have been rather choppy, there was a deep plunge in exports in year 2009 to 2010 probably due to US crisis but things seem to be picking up since then. I think the total exports line graph of Canada shows how vulnerable CAD really is and its dependency on US and energy commodity exports and its price. I think we can relate this to a scenario where we talked earlier in my previous article where falling demand in energy commodity and therefore price fall imposes a negative outlook on CAD in general regardless of how well US economic growth accelerates further up.
Now from investors point of view both offer relatively high rates AUD slightly higher - 2.5% with AAA credit rating /Fitch/ stable outlook , CAD - 1.0% with AAA rating /Fitch/ stable outlook. Battling the two it doesn’t look like its going to be an easy setup to me for swing trades, but I assume AUD stands somewhat higher chance at beating CAD down, so going short on AUDCAD in the long term to me if you ask me is probably not the best idea. I suspect even USD will have a hard time battling AUD down, if the downtrend continues and extends in the long term.
I read the article on CAD inflation was a good read introspective FE and I also agree with your views on natural gas and that we shouldn’t go long on natural gas on the the basis of cold weather only as there’re many things to take into account. I’m thinking and it was just an idea work in progress but when I do feel like I’ve got something solidI will share my thoughts with you guys.
I remember how Mike was looking out for the underdogs the idea came when I was writing up the post my thoughts on AUDCAD short. How about AUD Mike ? I’ve been looking to short any JPY pair but I got out of USDJPY too early and now I feel like the pair is in an exhaustion state, it seems like the pair is overhyped how high can it really go ? Then I turned to GBPJPY although Scotland voted no for independence there’s still much political uncertainty. That I don’t want to be involved with. It maybe too early to get all panicky, but better to be safe than sorry seems to be the best best for me for now on pound. Then AUD came to my mind , how about going long on AUDJPY ?
If Australia repositions itself and diversify their exports with AAA credit ratings and stable government in the long run they may run on top or beside the dollar. Japan is looking to implement another consumption tax hike, in the medium term that tax hike will turn yen to depreciate in value as things cost more and economic growth and output stays the same or lag behind. In that case I think AUDJPY long setup might play out quite well. What do you guys think ? Mike ? Does AUD seem like an underdog to you ? I certainly think it is the safest bet in that regard. But before I place any long orders I’ll check the indicators on Australia Japan and China and will report back to you guys!
“Dr. Rookie”. That would be something, heh?
