The only way to be happy is by shorting the EURAUD
Actualizado
AUD perspective:
Positive:
- The Australian economy is weakening, BUT compared to the European "experts" it is holding up quite well (very difficult I know)
-> there is no sign of a recession in Australia so far, quite the opposite of the Eurozone, I had already predicted the inevitable recession in my EURCAD trade idea here
- Retail sales came in stronger than consensus expectations (+0.3%) at +0.9%.
- Inflation came in WAY higher than the market or the RBA expected, forcing the Reserve Bank of Australia to raise rates at least 1 if not 2 more times.
- The market is pricing in the fewest rate cuts for the RBA in 2024 (none at all)
- due to the shaky sentiment, the AUD should not appreciate in a one-way street, but rather steadily and constantly
BUT: as the old saying goes: "A good kangaroo only jumps as high as it has to."
Negative:
- The trade balance has weakened somewhat recently
- Any risk-off episode (e.g. an escalation of the Middle East conflict) would hurt the AUD
- China is increasing its fiscal packages for the economy, but so far the recovery of the Chinese economy has been rather sluggish.
I don't need to say much about the sad outlook for the euro, as I have already covered this sufficiently in the previous trade ideas, whereby all my predictions have materialised
-> Eurozone inflation fell to below 3% as I forecasted in July
-> the ECB had to massively reduce its GDP forecasts (which are still too high)
-> Germany is in a prolonged recession and will continue to be so into next year
Sad for the Eurozone economybut good for my EUR shorts, these are making me very happy :)
Positive:
- The Australian economy is weakening, BUT compared to the European "experts" it is holding up quite well (very difficult I know)
-> there is no sign of a recession in Australia so far, quite the opposite of the Eurozone, I had already predicted the inevitable recession in my EURCAD trade idea here
- Retail sales came in stronger than consensus expectations (+0.3%) at +0.9%.
- Inflation came in WAY higher than the market or the RBA expected, forcing the Reserve Bank of Australia to raise rates at least 1 if not 2 more times.
- The market is pricing in the fewest rate cuts for the RBA in 2024 (none at all)
- due to the shaky sentiment, the AUD should not appreciate in a one-way street, but rather steadily and constantly
BUT: as the old saying goes: "A good kangaroo only jumps as high as it has to."
Negative:
- The trade balance has weakened somewhat recently
- Any risk-off episode (e.g. an escalation of the Middle East conflict) would hurt the AUD
- China is increasing its fiscal packages for the economy, but so far the recovery of the Chinese economy has been rather sluggish.
I don't need to say much about the sad outlook for the euro, as I have already covered this sufficiently in the previous trade ideas, whereby all my predictions have materialised
-> Eurozone inflation fell to below 3% as I forecasted in July
-> the ECB had to massively reduce its GDP forecasts (which are still too high)
-> Germany is in a prolonged recession and will continue to be so into next year
Sad for the Eurozone economybut good for my EUR shorts, these are making me very happy :)
Nota
📊🇩🇪The German Inflation data will be weaker today than the consensus expects it.-> wonderful for my EUR Short!:)
Nota
📊🇩🇪As forecasted the German Inflation data was much weaker (3.2) yesterday than the consensus (3.5) expected it.Easy game✅️
And my EUR Shorts just keep printing, I love it!😉
Nota
📊🇪🇺The Eurozone CPI today will of course also come in weaker than the consensus expects it.-> Watch the magic! 😉
🔮As I already forecasted in July (!)
("In december we will have a CPI in the eurozone at around 3%")🔮
✅️And here we are, at the start of december, with a sub 3% reading today✅️
Nota
📊🇪🇺As forecasted Inflation data from the EU came in lower than consensus expectations✅️🔮 We are now as predicted in July
(Quote: "and reach the 2% target in the first half of 2020 at the latest.")
closer to the 2% target than the market and the ECB in particular dared to dream a few months ago 🤫
📉The 🇪🇺EURAUD🇦🇺 short is performing well and is currently in profit with nearly +300 pips.
As soon as the support at 1.64500 breaks, all hell will break loose and I expect a push of another 200 pips downwards (for now)✅️
Lets see!
Nota
🟢The trade is developing nicely, nearly 500 Pips up till yesterday✅️✅️My other EURAUD short already hit the target, a nice +510 Pips of Profit✅️
🏛🇦🇺The RBA decision today was dovish (again!) so a retracement in the pair is logical.
➡️If it retraces more (1.66-1.67 area would be great) I will short it even more✅️
Nota
🏛🇪🇺 This week we have the ECB meeting and, as mentioned, it will be revising its growth and inflation forecasts massively downwards! 📉-> in addition, there are many, many other enormously important data points ahead (FED, CPI, etc.) that will really shake up the market, so taking a partial profit at this point (+300 pips) mcould make sense🟢
🟢 -> Personally, I will not take a partial profit (as my other EURAUD short has already reached its target, see below) and let this trade continue ✅️
Nota
🟢The trade is developing excellently: the support at 1.62 seems to be breaking and the next target would be the region around 1.60.From there it is not far to the take profit.
-> I am very optimistic that the trade will hit the target in Q1 24✅️
Nota
🟢 EURAUD hangs on the support as if it life depends on it (and it does!) 🟢 it will probably fall right trough the 1.614 support this week✅️
📊🔮 The next focus will be on the EUR inflation data this week. It will show a rise in inflation and lift it back towards the 3% mark.
-> This could put the ECB in the wrong boat, as this boost will only be temporary due to base effects and a one-off effect from the German energy price brake.
The February and March inflation data at the latest will clearly show the misconception of the ECB about higher inflation in the long term ✅️
Nota
📊🇪🇺Also PPI Data out of the Eurozone will come weaker today than the consensus expects it.-> Great for my EURAUD Shorts!✅️
Nota
📊🇪🇺As forecasted the PPI Data out of the Eurozone was weaker than the consensus expected it.-> easy✅️
Nota
📊🇦🇺Employment data out of Australia disappointed to a great extent.➡️-64k overall and -100k full-time Jobs is as bad as it can get.
➡️A big blow for all hopes of a further rate hike from the RBA in february and the question is now if we see further hikes in 2024 at all or if this hiking cycle has ended.
📊🇦🇺The Aussie CPI data out on 31. January will be a big factor here, lets see!
📉For my EURAUD Trade the data today was suboptimal. It could possibly push it further up after a strong retracement already has ramped it up.
I'm still sticking with my longterm target, but I have to admit it will take longer to achieve it✅️
Nota
🏛🇦🇺 The RBA bared its hawkish teeth today and firmly pushed back market expectations for a first rate cut in May.-> I agree: unlike the ECB, the RBA is in no hurry to rush ahead with hasty rate cuts
📊🇦🇺 Next week's labour market data from Australia will very likely confirm this view🟢
Nota
This week we have the📊🇪🇺PMI (Purchasing Managers' Index) from the eurozone and the
📊🇦🇺 Labour market data from Australia, two extremely important data points for the EURAUD.
Meanwhile, the pair is getting closer and closer to an extremely attractive short zone.
-> I will wait for this week's events to pass before possibly building another short in EURAUD🟢
Nota
🔮My crystal ball tells me:📊🇪🇺The EUR Inflation data (CPI) will come weaker today than the consensus expects it.
-> wonderful for my EUR Short!🟢
Nota
🔮 As predicted, the 📊🇪🇺EUR inflation data was lower than expected by consensus.-> The EUR subsequently saw weakness
-> EURAUD is (slowly) heading south again🟢
-> All conditions (for the ECB) to cut interest rates are met ✅️
🏛🇪🇺 Nevertheless, I expect the ECB (out of sheer stubbornness) to wait until June for the first rate cut.
-> If Lagarde hints at interest rate cuts for June AND July today, the beatings for the EUR will continue until morale improves💥💥💥
Nota
📊🔮My crystal ball tells me:
EUR CPI (inflation data) today will be lower than consensus expected.
-> This is excellent for my EUR shorts🟢
🔮 As predicted a year ago, 📊🇪🇺EUR inflation will already hit the ECB's inflation target of 2% today (contrary to the ECB's completely abstruse forecasts)
🔮My forecast:🔮
The ECB will cut interest rates again in September✅️
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