Now that we’ve got that out-of-the-way ( the Fed’s sill little rate hike, and of course the nearly “not covered” debt ceiling debacle) we can move on. It’s time for more “mind bending macro market analysis” considering that these last few calls have been bang on the money. In short…..the U.S Dollar “plunge” shall continue, as both gold and The Euro continue to move higher. Further riches will be made with this simple concept burned into the back of your skull like a bad tattoo.
Let’s have a quick look at the weekly chart of my old friend AUD/JPY and refresh our memories, as to how this currency pair can help you gauge risk appetite with another simple concept.
AUD/JPY UP = Risk on.
AUD/JPY DOWN = Risk off.
You can see how AUD/JPY has been trading completely flat for the past 10-12 weeks as U.S Stocks have really only taken a small leg higher during the same period of time. U.S Stocks are always ALWAYS the last to go when risk appetite ( and the machines on Wall St ) switch from “buy” to “sell”. Always.
AUD/JPY has been up against very solid resistance for an extended period of time, and if “all was well” would surely have broken through, and climbed higher along side U.S Equities some time ago.
Such is clearly not the case as this currency pair has “literally” miles to fall. And fall it shall.
I am currently tracking this pair but not getting excited about entry “short” until I see a nice solid read candle and a decisive break lower. Even 85.00 and lower to truly seal the deal.
You see how this works right? I’m “tracking / observing” market activity with a pre conceived notion of at least two ( if not two hundred ) things.
- AUD/JPY ( a significant indicator of risk appetite in markets in general ) is trading in a range against significant over head resistance.
- A significant break lower should “clear the field” and is suggestive of a much larger shift from “risk on to risk off” across markets in general.
Eezy Peezy when you have a plan. Do YOU have a plan? There could be 1000 pips below this currency pairs current price.
Damn rights I’m still short USD. Damn rights I still own NUGT. Damn rights I’m killing it long EUR/USD.
Any questions today? I’m back in the saddle.
Mate hope google was awesome, would love to see pics even extra terrestrial beings you may have met there…haha
Really good post on the aud jpy as this has been a pair i have struggled with.
I will watch this trade and look to enter when like you said close around 85? if correct.
I just had a quick question, is this a good barometer in regards to usd weakness, yen strength, if so would you go long on the jpy or euro?
or both when the dollar finally pops.
Also another question, do you look into commitment of traders info much… I look at it but find it a bit misleading as they are still bullish on top heavy dollar…
Google blew my mind..data driven attribution and “machine learning” the larger topics at hand. I didn’t really get a chance to show the guys my spaceship blueprints or any of my genetics data but hey….so it goes.
This “turn” is long and painful. Gold…EURO….USD Stocks etc…..everything grinding along -frustrating all market participants.
This is why I have suggested ( to stock holders ) to just get out / trim / take profits etc as…..there is little likelihood of further upside and, “even at that” – maybe a couple points or two. It’s not worth the heartache.
Forex wise….try your best not to lump “too many currencies” into your planning and be sure to differentiate the “funding currencies” ( use and jpy ) from the “commodity currencies” ( aud,nzd,cad ) and then the “euro related” such as EUR and GBP.
AUD will give yo no signals for USD – no. AUD represents risk for a couple reasons ( carry trade back when AUD interest rate was 4.5% as well as the fact that AUD is a commodity driven economy / currency ). JPY is a funding currency so when risk comes off…..JPY that was borrowed at 0% comes flooding back to Japan in fear of rate hikes / losing your shirt on all that free money. This is why the pair moves so HUGE when risk comes off. U got it?
I don’t look at COT. EVER. NEVER.
Thanks got it…
In recent interviews with Jim Rogers (almost every interview on youtube for the past few months), he constantly repeats a few points, one of which is that he’s holding a lot of US dollars because he thinks the USD will rise as the global turmoil gets worse and “may even become a bubble”, even stating that dollar index at 110 is “hardly a bubble”.
He also thinks gold will drop below 1000 because he says gold has yet to have a 50% correction.
What’s your opinion on this? Think Jim may be on to something here?
The last little snippet I posted of Jim’s clearly suggested otherwise ( as I’ve always known his view to be ) but…..in reading a few more recent articles..”even Jim” now sounds like he’s on the fence as to which way things go.
This all from Feb 2nd:
The strong dollar story can’t last, so it won’t. The Trump administration has clearly signaled that the day of the strong dollar is over. When you see a coordinated attack on the dollar from the White House, the Treasury and the Fed, you can bet the dollar will weaken. That means a higher dollar price for gold.
The dollar may get one last boost from a Fed rate hike in March, but after that, even the Fed will acknowledge that they got it wrong again and start another easing cycle with happy talk and forward guidance.
For now, investors should not stand in front of a moving train. Keep cash ready and be prepared to move into gold, bonds and the euro. In fact, it’s not too soon to leg into those positions now.
If you could point me towards something more recent where good ol Jim is “pro USD” and short Gold – please do!
Nono… Jim doesn’t sound like he’s “on the fence” at all. In fact, he’s made it VERY clear, since late last year, time and time again, that he holds a large amount of USD, and confidently explains it’s going to go up higher and higher until it turns into a bubble.
Here’s just 2 examples, timestamped:
But really, just watch/listen to almost ANY of his youtube vids and interviews these past few weeks and months, and you’ll hear him repeat the same points again and again, one of which is that he expect the USD to rise much further.
Jim isn’t short gold by the way, he’s just expecting it to go under $1000 where he plans to buy more.
Wonder if all this sounds shocking to you @[email protected]
Also, the passage you quoted is by Jim Rickards, not good ol Jim Rogers.
Jim Rogers?? This guy is a total quack in my view.
Sorry…got my lines crossed. He’s a talking head, and always will be.
Rickards is the real deal.
Please consider the time frames as well…as Jim is near dead. This is not “actionable” advice.
I’m looking at things on a “macro level” sure…..but not from the perspective of an 80 year old retired guy with billions.
Ah okay, so we were talking about different Jim’s lol.
Quite surprised to hear your opinion of him is that of a quack though. I thought he was always a highly respected (legendary?) investor, even by people like Peter Schiff and so on. And unlike Jim Rickards, he doesn’t sell anything (apart from a few old books), who sells courses/programs etc, which might imply a more unbiased opinion/agenda whenever he publicly shares his views.
Would love to hear why you think he’s a total quack, but I guess that’s out of the topic of this blog post.
Maybe another time, or in private if we get the chance to 🙂
Anyway, as usual, thanks for sharing your views Kong!
been keeping an eye on this…. Mate this was an awesome call soooo early in the piece. It has broken over 160 pips!! You picked it so early well done
I’ve been at this for some time now so……it gets redundant.
The currency market “tells all / sees all”- you’ve just got to spend that extra bit of time pulling it apart to understand how it all fits together. I hope I’ve helped.
You’ve got this man.