Thoughts on macro trends with major pairs

in #finance6 years ago

So I trade based on the dollar and I'm getting conflicting technical patterns with some pairs. Whenever I am in this position I use fundamentals.

Here are some weekly and daily charts so you know what I mean.

Greenback Weekly & Daily

http://i64.tinypic.com/2w6sz1s.jpg

http://i66.tinypic.com/ir1iqq.jpg

Aussie Dollar Weekly & Daily

http://i64.tinypic.com/snghm9.jpg

http://i64.tinypic.com/a1nvba.jpg

USDCAD Weekly & Daily

http://i68.tinypic.com/6jhlro.jpg

http://i66.tinypic.com/2a7smyv.jpg

USDJPY Weekly & Daily

http://i68.tinypic.com/1idceq.jpg

http://i63.tinypic.com/108ic80.jpg

Gold Weekly

http://i63.tinypic.com/2ylnuc5.jpg

So here is where I get confused. AUDUSD is testing the weekly support line which may turn it into a resistance line. However... If the US Dollar is going to enter monetary tightening then this means that the Aussie needs to strengthen more in order for AUDUSD to still go down.

USDJPY is also retesting the weekly support line BUT I know that if greenback goes down then so should USDJPY. This makes sense. If USDJPY and AUDUSD should be inverse right?

Here is the reason I believe that Greenback will enter monetary tightening. Unemployment is below full employment. We have 3 to 4 rate hikes with June pretty much being guaranteed. The S&P 500 is continuing to go up (which means that firms have extra cushion). Treasury bond yields are rising. Inflation is 2% or above which was the fed was aiming for.

I'm pretty sure the June interest rate is already priced, but the other 3 might not be. I am worried about the foreign tariff's. If steel tariff's go into place then that could be bad news for Aussie. If Aussie doesn't strengthen then the trend line might still be a support, but who knows. Also if tariff's do come into play then we can see USDJPY can Gold climb higher. They tend to climb higher during global political turmoil.

Oil prices are rising which means that there might be an artificial increase in US inflation (I remember hearing the fed mentioned not to pay attention to monthly CPI data because it could be wrong). I try to keep track of the difference between the change in disposable income and the change in oil prices monthly and quarterly. As long as the oil futures prices are decreasing lower than disposable income than I think consumers can still retain purchasing power. As unemployment goes up though I can imagine this will become harder and harder as monetary tightening progresses. I am curious if Canadians retain their purchasing power because one of Canada's biggest exporter is oil. Hopefully marijuana will become Canada's next biggest export!

I was taught that gold is a safe haven for the dollar which helps keeps the dollar in check, but does this also work for the S&P 500? Most high dollar investors look to get residual income. The Benjamin Graham strategy is to find blue chip stocks that pay the highest dividends and then when the S&P 500 becomes volatile store the money in bond yields. Why would an investor that is looking for residual income store their money in gold?

Regardless the gold weekly chart is looking like it's creeping closer to breaking the monthly/weekly resistance line. If the dollar starts to climb much higher the price structure might break though.

I realize that I am all over the place, but I didn't want to make multiple posts addressing my multiple thoughts. If I missed anything let me know!


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