2011 Currency Power Analysis 2

Salve a tutti,

2011 just ended and it’s time to analyse how currencies behaved. We’ll do that by using our PotenzaFX Powerlines indicator applied to a weekly chart.

The year ended with the following “leader board” (between brakes we put the gain in positions since the beginning of the year):

  1. JPY (+4)
  2. AUD (-1)
  3. USD (+3)
  4. CAD (-2)
  5. GBP (+2)
  6. NZD (-2)
  7. EUR (+1)
  8. CHF (-5)

It’s been a difficult year and we can divide it into two parts. Before and after the Summer. During the Summer we have seen difficulties of the Eurozone growth (along with the stock market), Gold reaching new historical highs and then falling till the end of the year.

The whole picture can be a little confusing so it’s better to briefly analyse currency by currency (following the order of our leader board).

JPY – Japanese Yen

JPY (like USD) is inversely correlated to the stock market meaning that it gains strength when the stock market loses ground. We can easily see how 2011 can be divided into two parts. One with a bullish stock market (and a weak JPY) and the other one with a bearish stock market (and a strong JPY). We can also notice that the JPY touched the ground soon after the earthquake/tsunami in Japan, before starting a very strong recovery a few weeks later.

AUD – Australian Dollar

The Australian Dollar has been strong for most of the year (other then during “our” Summer period). But unlike the Euro it is still strong versus the USD and closed the year at about the same level where it started.

USD – US Dollar

For the US Dollar we can do an analysis very similar to the one we did for the JPY (they are usually very closely correlated). We can divide the year in two parts: before and after August. The USD has always been a little weaker than the JPY during the entire year (and the USDJPY record lows say a lot about that).

CAD – Canadian Dollar

The Canadian Dollar has been quite weak for most of the year. But the second half of the year has seen a quite steady recovery of its strength. I want to remember you that the CAD is usually directly correlated with Oil that is just back to $100.

GBP – British Pound

The GBP had a mixed year, not very clear to read and it won’t until we’ll definitely found out how it is going to be related to the EUR. Actually is it surely in a much better situation. Its strength is in between the JPY/USD and EUR. We’ll see in the coming year how things will evolve. If the “friendship” between EUR and GBP is at the end or if it is just a “pause”.

NZD – New Zeland Dollar

The NZD has been very strong for most of the year. Even stronger than its cousin AUD. But now it is quickly recovering and it may perform very well in 2012.

EUR – Euro

The EUR started badly and ended badly as well, being weak for most of the year. We are almost at this Summer’s levels. So no good news for it. It’s difficult to say what will happen in the coming year but I think we’ll see a weak EUR (and so a weak stock market) for the first half of the year.

CHF – Swiss Franc

The CHF is usually directly correlated to Gold. And like Gold it had a year divided in two. New record highs and then a sharp fall from the end of the Summer, following a Swiss National Bank’s strong intervention. Right now the Swiss Franc is very very weak. And in this kind of scenario the only thing that can happen is a recovery :) So my expectations are for a stronger CHF and Gold at least for the first part of the coming year.

That’s all for 2011. I hope it’s been a profitable year for all of you. If not, well, now you have “PotenzaFX” to help turning 2012 into a great year.

We can’t forecast markets but having a good real time picture of what’s happening is a great advantage. All our indicators are conceived mainly for that 😉

We wish everyone  a happy New Year.

Buon 2012!

Andrea e Paolo

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2 thoughts on “2011 Currency Power Analysis

  • Drago

    Andrea, this year you and Paolo did a lot of great job! It is been a year full of great tools and a lot of knowledge! I hope that it is been a good year for you both and that you have been rewarded for your efforts.
    I’d like to wish to you, Paolo and all your followers a great and full of happiness 2012!!!