The Global Currency Forecast 2015 by Scandinavian Capital Markets (SCM).

The outlook for the EURUSD in 2014 was for the prices to move within a 1.2753-1.4225 zone with a downside break of 1.2753 favoring further price decline to 1.2319 followed by 1.2185, and 1.2050. The range for EURUSD in 2014 was 1.2096-1.3992 and the pair closed at the low of 1.2096 and more importantly well below the 200 month simple moving average (SMA) which is at 1.2237. For 2015, the EURUSD risk remains for further price decline in the weeks and months ahead as a monthly open and lower close below the 200 month SMA will confirm further price decline to 1.1580, 1.1423, 1.1295, 1.1096 and 1.0033. As to the upside, only a monthly open and higher close above 1.3322 will confirm further rise is once again underway initially targeting 1.3522 and the 2014 high of 1.3992.

GBPUSD

GBPUSD fall continues to unfold as our November 2014 outlook confirmed a weekly open and lower close below the 200 week simple moving average (1.6032) would witness further price decline to 1.5721, 1.5373 and eventually 1.4812. November prices closed at 1.5641, below the 1.5721 prior target as our December outlook confirmed lower prices was underway to 1.5373 and 1.4812 in the weeks that followed. December prices opened 1.5641 and closed 1.5577 thus confirming continued decline to 1.5371. As of this writing, GBPUSD has reahed 1.5324 and remains offered into the months and weeks ahead. For 2015, GBPUSD risk remains for significant price decline as a weekly open and lower close below 1.5373 followed by a monthly open and lower close below 1.5373 will confirm continued downside risk to 1.4812, 1.3904 and 1.3623 into the months ahead. As to the upside, only a monthly open and higher close above 1.6037 will turn the outlook to neutral with modest upside risk to 1.6477. Currently, we continue to hold GBPUSD September 2, 2014 short trade from 1.6565 for 1.4812, 1.3904 and 1.3523 targets.

AUDUSD

AUDUSD’s fall from the April 2013 high remains active as prices will continue to move lower in the week’s and month’s ahead with the 200 Simple Moving Average (SMA) currently at 0.7780 as the next downside target. As to the upside, only a monthly open and higher close above 0.9334 will turn the outlook to neutral with modest upside risk to 0.9629. For 2015, AUDUSD will continue to move lower as USD makes broad gains with an AUDUSD monthly open and lower close below 0.7780 confirming further downside risk to 0.7203 followed by 0.6006.

USDJPY

For 2015 USDJPY will likely continue to move higher with 122.55, 124.13 and 128.83 as the next upside targets into the weeks and months ahead while only a monthly open and lower close below 99.48 will turn the outlook to neutral with modest downside risk to follow.

USDSEK

The multi-month rise from 6.3221 continues to unfold as risk remains for further price rise in the weeks and months ahead is favorable. For January 2015, look for a monthly open above 7.6662 and higher close to confirm further price rise is underway to 8.0492 followed by 8.5375 and 9.3270 in the months ahead. As to the downside, only a month open and lower close below 7.2585 would turn the outlook to neutral with modest downside risk to 7.0827.

USDCAD

USDCAD rise from 0.9405 continues to unfold with 1.2199, 1.2323, and 1.3062 as the next upside targets in the month ahead. For 2015, look for a monthly open and higher close above 1.2323 to confirm further price extension to 1.3062, while to the downside, only a monthly open and lower close below 1.0335 would change our outlook to neutral.

UAXUSD – Spot Gold

Gold continues to consolidate the multi-year rise from $212 as 2015 will witness prices consolidating within a $889-1,526 zone as a sustained break of this zone will witness further price extension in the direction of the break. For 2015, look for $889-$1,526 range as a month open and lower close below $889 will witness further price decline to $777.41 followed by $645.94. As to the upside, a monthly open and higher close above $1,526.85 will confirm further price rise is once again underway initially targeting $1,637.83 and 1,745.90. Though still in a multi month consolidation phase, the spot gold market remains net long as this net long sentiment could witness a very painful downside correction or squeeze similar to that recently witnessed with crude oil prices. Look for a monthly open and lower close below $654.53 to witness a dramatic decline or near collapse of the gold market with prices eventually reaching $263.45.

Crude Oil (WTI)

Barring any significant cuts in production from OPEC or any geo-political events which could impact oil prices, crude oil prices will remain low throughout 2015 and risk for further price decline towards $33 is favorable. For 2015, look for a WTI monthly open below $52 and lower close to support further price decline to $33.18 while to the upside only a monthly open and higher close above $86.40 will remove any downside risk.

Scandinavian Capital Markets SCM is a Sweden based asset and fund manager founded 2010. The company was founded by a group of traders and former portfolio managers to help investors diversify their portfolios and provide a profitable alternative to other asset classes with risk-adjusted returns. The company’s global wealth management seeks to identify and capitalize on intermediate-term price movements in a broad range of major currencies through global macro investing using a combination of fundamental, technical and systemic trading. The company is registered under Swedish Financial Supervisory Authority (Finansinspektionen) 

Investment Philosophy

The team has based on several years of research and trading effectively developed automated and discretionary strategies that incorporate macro-economic views and technical analysis that seek not only to outperform major benchmark and stock indices but also to generate uncorrelated and risk-adjusted returns that offer true diversification.

Investment Team

The investment group consists of a highly competent trading team of currency traders, market analysts and skilled portfolio managers including former Head of Portfolios from Barclays, Citigroup and Lloyds TSB. The team utilizes more than 25 years of trading experience within the banking and institutional investment sector which has made it well suited to generate risk-adjusted returns irrespective of market climate.

Scandinavian Capital Markets Social Media presence:
Twitter: @ScmFX
LinkedIn: linkedin.com/pub/scandinavian-capital-markets-scm/52/2bb/33b
Facebook: facebook.com/ScmForex

Market Place

MKTPlace is a leading digital and social media platform for traders and investors. MKTPlace offers premiere resources for trading and investing education, digital resources for personal finance, news about IoT, AI, Blockchain, Business, market analysis and education resources and guides.

At the beginning of last year, the Members of Congress in the US, Edward J. Markey, stated algorithm trading or high frequency trading clearly corresponds to a high level of risk to the safety and permanence of the capital market in the US and the fact it should be truncated as soon as possible. And he isn’t alone in saying HFT does indeed pose considerable risks to the trading infrastructure.

Many financial analysts claim to back this same assertion with the proof taken from recent market events, such as the Flash Crash along with the loss Knight Capital as a result of a software malfunction. Mentioned below is the summary of the overall risk associated with high frequency trading:

• The sheer speed of the trade puts most trading styles at a considerable disadvantage
• High frequency trading intensifies market volatility
• Most of the ‘other’ types of investors usually run away from it
• HFT volume has a risky high proportion of the total traded volume

But it is also important to understand the fact not everyone agrees with the analysis made in regards to the potential dangers of high frequency trading. It is true the machines have taken over when you talk about modern trading. They have taken the place of human specialists or the smart market makers and a majority of the trading quotes, offers and bids which come flowing in today flow in through high frequency trading computers and systems.

And it is also true the Flash Crash that occurred back in 2010 is a great example of the dangers posed by high frequency trading when Waddell & Reed incorrectly keyed a trading order which resulted in a terrible market dive. HFTs went scurrying out of the scene as the market fell for a short period of time and there were no bid being placed and there were significantly big price dislocations demonstrated by the 10% market freefall.

A Drop in High Frequency Trading

Despite the fact that several trading companies get to enjoy the high speed benefits of HFT, it has been seen that there has been a considerable drop in profitability using HFT. If you look at the reports from 2011 and 2012, you will see that those years saw considerable drops (7.8 billion shares each day to 6.5 billion shares). The drop was of 17%. Another thing to consider is the fact HFT is all about speed and co-location.

HFT providers such as Citadel, Virtu Financial and GETCO have to all constantly bring in new technology and upgrade processing units to match each other’s speed. According to a report, it was revealed GETCO spent a total of $37 million on upgrades.

Lower volumes are bad for HFT solely because of the fact the lower the amount of the orders that enter the market, the fewer the opportunities to make a bid/offer. Another problem that isn’t highlighted much is the fact the amount of traders who want to willingly use HFT is dropping. One of the major concerns with HFT today is the fact that it might blow out of proportion in the capital markets, just like what happened at Knight Capital. Companies employing HFT and the HFT vendors have both failed to display a successful effort to manage and control high frequency trading.

The only things you need to have are state of the art evaluation and tracking control systems to prevent events like the Flash Crash from happening again. Because if HFT isn’t controlled, the losses could easily keep piling up and then you would need to place a more drastic countermeasure: a ban on HFT, which most traders suggest should happen now. But if you talk about the future and improvements, then taking a drastic step like banning it now could overcomplicate the situation.

The science of HFT systems and processors enable the computers to analyze and predict your moves in the market which mean there could be landmines everywhere you look. It is no surprise the framework of modern trading has been forever altered. A human hand that just takes a couple of seconds to conduct a trade now is replaced by a machine which can do the same trade in a millisecond or a microsecond.

The fact is HFT can neither be called bad nor can it be called good and that’s the way it’s going to be in the future as well.

Market Place

MKTPlace is a leading digital and social media platform for traders and investors. MKTPlace offers premiere resources for trading and investing education, digital resources for personal finance, news about IoT, AI, Blockchain, Business, market analysis and education resources and guides.