Euro Rally According to Plan !

27 February, 2012

FxMax Signals Performance

The FxMax signals section continues to perform strongly +27.8% realised profit on a monthly basis. + 66% with current open trades included.
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Euro Rally According to Plan !

The Euro continues to appreciate sharply in line with our forecast from 2011, for this to be the year of a very significant price shift higher for the world’s largest economy currency.

The recent gains are unlikely to be undone, with any correction period likely to be relatively shallow, if at all. The world is caught short, and desperately has to exit losing positions, while the real economy of Europe, and especially exports, will continue to do very well in any case.

We have this perfect storm if you like of very bullish underlying fundamentals, and a market that is short, for bizarre fears of contagion that were never at all probable. Expect further sharp gains.


The Australian dollar languishes as we get the “worse”, or was it just the “bad”, outcome from today’s leadership ballot?

We may have entered a sustained period of consolidation against a still expected to decline further US dollar. Such a period of consolidation could see the Australian dollar continue to fall significantly on the crosses, particularly against the world’s new reserve currency, the Euro.

The political and central bank back drop to the Australian dollar has never been great, and these forces are very much in the minds of investors today. The world may also begin to notice that far from an out-performing economy, we are in fact the great under-performer of Asia.

Buy the Australian dollar on the dip, but not aggressively just yet.

Clifford Bennett

Chief Economist
White Crane Group

Clifford Bennett
Chief Economist
White Crane Group

Sydney, Australia.
+61 (0) 423 950 427
clifford@whitecranegroup.com.au
www.whitecranegroup.com.au

Did You Notice, What a Change, No Scary Greece Headlines !

24 February, 2012
 

 

Did You Notice, What a Change, No Scary Greece Headlines !

Yes, that’s right, for the first time in perhaps two years you can open your news browser or newspaper, and while it is there somewhere perhaps as an average or small story, as you scan the headlines and its obvious, Greece just isn’t there.
 

I proclaim the Euro bears totally defeated.

The Black Swans haven’t flown south for winter, they have been burnt to a cinder by the heat of one of the world’s greatest ever bull markets, from robust “new first world” of Asia and Latin America economic growth, to things steadily improving in the “old first world” of Europe and the US, clearly definable bull trends as forecast in global equity markets, and now it is the Euro’s turn!

The Bullish White Crane View of the World continues to pay dividends.

We have said it before, but just quickly, the Euro is a still a prosperous economic region for the private sector with corporate profits up 10% last year, and they will be again this year, the Euro-zone probably has the world’s second best central bank to the Chinese, and it is the only viable alternative reserve currency to the still in decline US dollar, and to top that off the Euro represents the world’s largest economy, significantly larger than that of the US.

Remember the “strong dollar policy” of the US,
is in fact the “orderly decline of the dollar policy” and has been such for many years now.

Expect the Euro to continue to rally sharply from current levels, as the false and misguided notions of the disintegration of Europe are priced out, and the more probable reality of positive economic growth in the year ahead, on top of all the afore mentioned factors, only begin to be priced in.

My Euro target for this year remains US$1.5200.


The Australian dollar continues to languish just a little under the weight of the immediate political uncertainty, but the medium term outlook remains extremely strong, and our target for this year remains US$1.1700. The long term targets remain, as they have for several years now, US$1.2000 US$1.2800.

In the short term the Australian dollar has most likely already seen the low in what has been a modest correction phase. As with the Euro the dominant risk is at all times very much to the upside.

Clifford Bennett
Chief Economist
White Crane Group

 Apology we have had technical problems with loading the "going extremely well" Directions section today.
This will follow in a separate e-mail.
 

Clifford Bennett
Chief Economist
White Crane Group

Sydney, Australia.
+61 (0) 423 950 427
clifford@whitecranegroup.com.au
www.whitecranegroup.com.au

Australia Politics have their impact, but for how long ?

23 February, 2012

Australia Politics have their impact, but for how long ?
 
AUDUSD   1.0620
This market is heavier than may have otherwise have been expected at this phase of the economic cycle, but then again as I have been saying for quite some time, while the external sector is fantastic, the domestic scene is a shambles.

Most traders regardless of whether they think a change of leadership for the Prime Ministers job matters or not, will at  the least be concerned it may well matter to other market participants. Therefore caution on the Australian dollar will be the name of the game over the next several days.

While exporters can be expected, and should scoop up all the Australian dollars they can on every dip, we may see global investors stand back for the moment.

There is good buying interest around that 1.0605 level, but it has to be said that there may be short term risk to 1.0520, perhaps even 1.0460 as an outside chance. The market remains immediately under pressure while resistance at 1.0670 contains, and clearly so on the day while below 1.0635. Major support 1.0605, then minor 1.0585, and strong a again at 1.0520. Any move above 1.0670 1.0705 would suggest the selling had evaporated and the absolute low of this consolidation period had been seen.

Continue to favour the upside in a long term sense, though respecting some immediate downside pressure due to political uncertainty, which is likely to last for 3-5 trading days.


EURUSD   1.3245
It is a very nice strong consolidation period we are in at the moment. The boundaries are 1.3150 1.3320 on the wide, and more probably 1.3215 1.3285. Immediately we are in an extremely tight range of 1.3130 1.3165, with a lot of energy building here, and favour an upside break. Once we breach resistance at 1.3285 1.3320, the market will run very quickly to significantly higher levels. Targets short term would be 1.3600 1.3900.


Clifford Bennett
 

 

Clifford Bennett
Chief Economist
White Crane Group

Sydney, Australia.
+61 (0) 423 950 427
clifford@whitecranegroup.com.au
www.whitecranegroup.com.au

FxMax Signal Update

FX Markets Were Open And Are Pointing The Way !

21 February, 2012

FX Markets Were Open And Are Pointing The Way !

What excuse will there be to be short Euro after the Greek deal is signed off !

On top of that the outlook for Europe is decidedly better than the consensus had expected, and even the bears are having to start to take notice of the White Crane Group contention that real demand from Asia and Latin America will continue to support European exports, and therefore the Euro-zone economy as a whole. Not only this, but both China and Japan on the weekend highlighted that they both recognize the need, and are willing, to do more to support the Greece rescue fund efforts via the IMF. In other words the “new first world” of Asia, and probably South America to a smaller degree, will continue to demand European products while feeding capital into the region as well.

The world’s largest economy, the Euro-zone, significantly larger than the USA, is in fine albeit lean shape at the start of what should be a surprisingly great year for Europe. The strengthening of the Euro reflects a sigh of relief from those who mistakenly expected markets to collapse around now. The strength of the Euro is therefore a very positive omen for global equity markets as well.

We really are looking at the scenario I have long mapped out for this year, one of strong equity markets, strong commodity markets, and one of the best years ever for the Euro and the Australian dollar.

Clifford Bennett

Clifford Bennett
Chief Economist
White Crane Group

Sydney, Australia.
+61 (0) 423 950 427
clifford@whitecranegroup.com.au
www.whitecranegroup.com.au

Getting Exactly The Euro Rally As Forecast

20 February, 2012
 

 

Getting Exactly The Euro Rally As Forecast

The Euro will continue to strengthen substantially. This is only the beginning. Expect a long term historical re-pricing of the Euro to much higher levels, especially against the US dollar.

This is necessary so as to accurately reflect the new value of the Euro as representing the largest economy in the world, one where corporate profits are strong and continuing to increase, one where unemployment has probably just peaked, and its newfound status as the most fiscally responsible economic union henceforth, and last but not least its roll as the only viable alternative reserve currency to the US dollar. Furthermore I continue to highlight, against the consensus, that Euro-zone GDP will grow by 2.00% this year. The market has severely mispriced the Euro lower on completely misguided notions of severe recession, disintegration, contagion, and all of these erroneous beliefs now have to be repriced out of the market as well.

We are looking at just the start of our forecast Euro Grand Bull Market.

The support area 1.3080 to 1.3130 will intensify considerably now, and should hold any pullback. More likely immediate support at 1.3165 will now hold for further upward acceleration. Minor resistance is at 1.3255, then 1.3330 and 1.3485. This market is on its way to 1.4600 1.4900, then 1.5200 1.5600 in a big picture sense. Very bullish !


Australian Dollar Up Up and Away!

The Australian dollar is right now launching into its next great upswing stage. If you are an exporter you have no excuse for not hedging. The market gave you every opportunity around parity and lower.

A nation of just 23 million people sitting on one of the world’s most valuable pile of rocks, in the midst of the greatest economic expansion the world has ever seen. Where else did you think the currency was going to go. Of course if you had listened to the mostly US driven media headlines and commentary about China being a pack of cards and Europe about to dis-integrate, then you may have missed the chance to buy this year’s most valuable currency. At White Crane we stuck to recommending buying every dip, and it is working, and will continue to work. The Australian dollar forecast at the start of the year was for 1.1300, when it was at parity, but the quick start to the year had us upgrade that forecast for this year to 1.1700. Yes, it would be one of the biggest currency moves in history, and that is how good the fundamental backdrop to the Australian dollar is.

The Australian dollar will continue to be strong because our mining companies developed to world leaders in their industry, allowing them to take full advantage of the economic miracle that continues to run apace just to the north.

Despite poor government and a central bank that simply doesn’t understand, the Australian dollar and the economy will continue to be carried high by the mining industry.

Strong support 1.0670 1.0720 is now likely to hold any pullback, and more likely the immediate support at 1.0745 or even 1.0785 will now hold for continued strong gains. Expect upward acceleration rather than any pullback. Resistance is at 1.0855 then 1.0965, but this market is clearly going a lot higher with one of the nicest and most constructive consolidation phases I have seen in any market for quite some time, now coming to an end.

Clifford Bennett


 

Clifford Bennett
Chief Economist
White Crane Group

Sydney, Australia.
+61 (0) 423 950 427
clifford@whitecranegroup.com.au
www.whitecranegroup.com.au

Great Recovery as Expected for Euro and Australian Dollar

           

Got exactly the scenario we outlined for the Euro of “short term pain, followed by long term gain”. Well, we have yet to see the long term gain from here, but we may well be in day one of a substantial bull market.

Our Euro support at 1.2980 remained intact, and now we have this very strong first impulse wave to the upside. While several days consolidation in the range could be expected before the favoured break to the upside, it is important to note that the dominant risk is now at all times to the upside.

The fundamental argument for a significant Euro rally for the rest of the year could not be better. Europe has dealt effectively with the sovereign debt challenge, will have the most fiscally responsible economies in the world over the next 1-3 decades, and continues to experience rampant demand for its good s and services from Asia and Latin America, as well as the forecast pick up in economic activity in the US. All this and the market had been bearish? So the catch up to the far better reality than the consensus had forecast, is likely to see rapid price gains.

The US dollar will continue to trend lower. Remember the “strong dollar policy” is in fact, the “orderly decline of the US dollar policy”. Also the reason for the as forecast strong state of the US economy at this time is the rest of world demand for American goods and services, particularly out of Asia and Latin America. Asia and Latin America lead the global economic cycle and have done so for many years.

While some will begin to suggest that the US is now leading the world out of global recession risk, (you should never read anyone who says this ever again by the way, as it confirms they have no idea), the truth is the US economy will and can only remain strong if the dollar continues to move lower to a level that more accurately reflects its true worth in the world, on a par with the Euro and the Yuan once it freely floats. So despite economic well being returning to the US, the US dollar is expected to remain under significant pressure, as greater wealth is created elsewhere in the world and global portfolios continue to be re-weighted away from the US dollar.

The Australian dollar can only go from strength to strength in an environment of stable and high yield, not to mention the burgeoning resources boom, still in its early stages and with another 5- 15, perhaps 30, years to run.

Keep buying both the Euro and Australian dollar, against a US dollar still in long term decline.

Clifford Bennett

Clifford Bennett
Chief Economist
White Crane Group

Sydney, Australia.
+61 (0) 423 950 427
clifford@whitecranegroup.com.au
www.whitecranegroup.com.au