As 2012 mercifully ends and 2013 begins, forex trading opportunities already are being shaped by a shift in the global political economy. Forex traders who take a top-down macro-economic perspective will be able to identify these significant opportunities. First, China looks like its retreat from growth is stabilizing. This will impact global growth expectations. The Eurozone sovereign debt crisis appears manageable, certainly with a degree of continuing anxiety but without a breakup of the Eurozone. The U.S. era of expanding debt and central bank easing policies appears to be on hold and may be in retreat. Let’s explore some of the opportunities these forces are set to unleash in 2013.
AUD/USD — The Australian/U.S. dollar emerges as a currency pair that will be worth trading. During 2012 the Reserve Bank of Australia cut rates by 150 basis points, yet importantly held off on cutting rates on Nov. 5, leaving the rate at 3.25%. This non-rate action has released bullish expectations for global growth. As a leading commodity producer, the Australian economy is very sensitive to global growth. If the RBA doesn’t cut rates in February 2013, it may be an omen that the global era of rate cuts is over. If China stabilizes, traders can target the AUD/USD pair with a trajectory of retesting the highs of 1.10 (see “Aussie highs”).