Australian Bear Raid

What I've read prompts two thoughts:

1. Inflated AUD from QE3 will ultimately hurt our Australian economy
2. If Obama loses the US election his opponent has (I believe) already stated he wants to get rid of Bernake. Interested to know if that means Bernake replacement would put an end to the $40B per month spending on MBS? I thus see some volatility coming out of US elections which I believe are 6th November.

Dab good points it will be interesting if Romney follows through on this matter (if elected) and then who would he replace with Dudley or some other current board member. I suspect it will be interesting to see how this campaign will shape as the implications go directly to the Treas and fed

Almost out of the position. Going from 200K margin and a little over 30K loss down to 4700K margin and current 21K loss is a great stress reliever. I am going to be flat very soon possibly before Minutes

This is a brilliant thread JP, I for one am guilty of focusing too much on techs and not enough on fundies due to never being entirely sure as to what potential reaction the markets will see as a result of any given news/figures.
I hope to learn as much as possible from here.

Cheers dude

Australia's Record Qtrly Job Losses (not by me but a blog I follow)

http://www.macrobusiness.com.au/2012...ly-job-losses/

AUG 7th Meeting minutes and some interesting sentences to note. We will see how these will be addressed or if the general rhetoric is the same.

Members observed that there were signs that growth in the Chinese economy appeared to be stabilizing at a more sustainable pace

Commodity price movements had been mixed over the past month. Spot prices for iron ore and coking coal had declined recently, consistent with a softening in global demand and rising supply.

In the June quarter, the terms of trade were estimated to have declined, though they remained at a high level.
Domestic inflationary pressures eased a little in the first half of 2012, with broad-based disinflation across non-traded goods, such as food and new dwellings, and a range of market-based services, notably domestic travel and accommodation. Following substantial declines over recent years, tradables prices rose in the quarter, with stronger outcomes for cars, clothing, footwear and some household goods. More generally, the outcome for tradables prices suggested that the significant downward pressure on inflation from the earlier exchange rate appreciation was lessening.

. Resource investment, which continued to evolve broadly in line with the Bank's forecasts, spurred activity in a number of industries, while the high Australian dollar and weak conditions in the housing market had weighed on activity in a number of non-resource industries.

Members were informed that additional large resource projects had commenced or received approval in recent months, thereby sustaining the very large stock of work in the pipeline. This had occurred despite some mining companies adopting a more cautious approach to potential

the June quarter following industrial disputes and weather-related disruptions, while iron ore exports had recovered from cyclone-related disruptions earlier in the year.
Investment in non-resource industries generally remained subdued, with firms slowing their investment spending in line with weaker cash flows. Nevertheless, following a period of deleveraging, business credit had picked up over the past few quarters to be growing at its fastest pace in three and a half years.
Employment growth continued to reflect the net effect of strong growth in resource, resource-related, health and education industries, and structural developments that had created pressure for labour shedding in some non-resource industries, including retail trade, manufacturing and construction. Leading indicators continued to suggest modest growth in employment in the period ahead; measures of vacancies and job advertisements had declined over recent quarters, but remained at relatively high levels.

Within this environment, bond yields plumbed new historic lows for many of the major sovereign issuers during July. The decline in yields on Commonwealth Government securities was particularly pronounced, with the 10-year yield briefly falling to a historic low just below 2.7 per cent. Offshore purchases of Australian government bonds appeared to have continued apace and, in part reflecting these purchases, the Australian dollar had appreciated over the past month, increasing through periods of both strength and weakness in ‘risk-sensitive’ assets.


the Swiss National Bank had purchased around €100 billion over May and June, with further sizeable purchases likely to have occurred in July. While some of these purchases were retained in euros, a sizeable share was converted into other currencies, including a modest amount in the Australian dollar. In contrast, members noted that the level of Chinese foreign reserves fell in the June quarter, as capital outflows occurred.

The improvement in sentiment after President Draghi's announcement had seen money market participants in Australia curtail their expectation of further cuts in the cash rate target. Current market pricing did not indicate any expectation of a change in monetary policy at this meeting.

Freshpips,

Thank you and I will have all of this coordinated from time of release to day so that this is very structured from earnings, calls, news, and updates.

Aussie Resource Minister “Some ‘Marginal’ Iron Ore Mines May Face Closure”

 

1. Cites commodity price boom ending .
2. Mining companies must reduce costs while expanding capacity
3. States raising resource royalties ‘ inappropriate’.

Fortescue Metals Group has secured a commitment for a new debt facility of up to $US4.5 billion underwritten by Credit Suisse and JPMorgan that it will use to refinance its existing facilities and provide it with additional liquidity.
…Fortescue said the earliest repayment date for any of its debt is now November 2015, which is well after the December 2013 date at which $US1.5 billion was due to mature previously.

Waiting for RBA and have closed most of the short (open 200,000) but if we get a changed view on the above sentence highlights than Futures will trade through 78.6% and I will short on futures and keep the spot short open.

Certainly paints a different picture to the latest employment data released & seasonally adjusted. Was surprised that one of the comments (Jimbo) on the article indicated that official data is based on a survey and not unemployment claims. Does anyone know where to check if this is the case?

I am running a spreadsheet myself on this but they are good if you ask about sources on giving it as they are very credible and have been for some time since I started reading their stuff.



Sell Stop: /6A futures -10c @ at 1.0350 (just below 78.6%retrace) Target 1.03. I don't expect to get filled as their is some big support both on Futures/Spot but if they come out with minutes that is negative on High rate i will be waiting. Most likely though we could see the screen i posted in AUD/USD of bouncing of this level and then grinding back higher

http://www.rba.gov.au/monetary-polic.../04092012.html

Minutes

STILL READING BUT POINTS OF INTEREST SO FAR.


Activity in the rest of Asia, including Japan, had softened, as weaker conditions in China and major developed countries had weighed on exports from the region, especially from the higher-income Asian economies. In India, the fact that inflation remained high in the face of a declining pace of economic growth might reflect structural impediments to growth.


Members observed that spot prices for iron ore and coking coal had fallen sharply of late, largely reflecting weakness in China's steel market as well as an easing in a range of factors that had temporarily disrupted the supply of coking coal. Since mid June, iron ore spot prices had fallen by a little over 35 per cent and coking coal prices had fallen by almost 25 per cent. Members noted that these price falls were likely to be reflected relatively quickly in export prices

The RBA index of commodity prices had declined by 7 per cent over the previous month (on the basis of spot price movements).
After a surge in mining investment in the March quarter, growth in business investment was estimated to have moderated in the June quarter. However, the latest ABS capital expenditure survey, which was conducted in July and August, suggested that the outlook for investment over the current financial year remained very strong, notwithstanding a more recent reassessment by some resource companies of the prospects for projects to which they had not yet committed.

If the fall in the iron ore and coking coal prices were to be sustained, it could lead to somewhat lower mining investment, but given the large LNG and other mining investment projects already under way, the staff still expected there to be a substantial increase in resource investment over the next year or so.
Leading indicators of labour demand had softened a little further, though they were consistent with modest employment growth over coming months.

Wage growth was strongest for skilled professions and for workers in Western Australia more broadly. Growth was moderate in industries more directly exposed to household consumption expenditure.

There was little new information on prices over the past month. Liaison suggested that the introduction of the carbon price had not yet had a significant effect on downstream price pressures, with only isolated examples of suppliers attributing price increases to the carbon price. There was no evidence that the carbon price had raised medium-term inflation expectations.

The Board's decision to leave the cash rate target unchanged at 3.50 per cent in early August had been widely anticipated, with money market yields little changed at that time and over the rest of the month. Members observed that market pricing suggested that no change in the cash rate was likely at the September meeting, but that the cash rate was expected to be reduced to around 3 per cent by the end of 2012.


BAMMMMM there it is

and ESM also purchased sovereign debt issued by these governments (which would entail some conditionality). As a result, Spanish and Italian bond yields of shorter maturity had declined significantly. At the same time, yields on debt issued by many of the major sovereigns remained at historically low levels, as did those on government bonds in Australia.

In contrast, the Chinese equity market had declined further, to be at its lowest level in more than three years.
While the Australian dollar depreciated slightly over the past month, it remained near its recent highs, despite significant falls in some commodity prices and a weaker outlook for the global economy. Members noted that most model-based estimates of the currency generally placed a large weight on the terms of trade. With the terms of trade still high by historical standards, these models suggested that the Australian dollar may have been somewhat overvalued, but not substantially so, although members also noted the significant uncertainty that surrounded this assessment

The Board's decision to leave the cash rate target unchanged at 3.50 per cent in early August had been widely anticipated, with money market yields little changed at that time and over the rest of the month. Members observed that market pricing suggested that no change in the cash rate was likely at the September meeting, but that the cash rate was expected to be reduced to around 3 per cent by the end of 2012.

the Australian banking system remained well placed to service the needs of the Australian economy. Members noted that pressures in wholesale funding markets had eased since late last year and the large banks had further reduced their use of offshore wholesale funding as growth in deposits continued to outpace growth in credit

While the Australian banks remained exposed to swings in global financial market sentiment associated with the problems in Europe, the changes in their funding, liquidity and capital positions over recent years suggested their resilience to these swings had improved.

The ratio of non-performing loans had continued to decline, though the improvement was only gradual, reflecting the difficult conditions being experienced in some parts of the business sector Banks' bad and doubtful debt charges had declined more substantially since the peak of the crisis period but now appeared to have troughed, and this had contributed – along with higher funding costs and lower credit growth – to a slower rate of profit growth in recent reporting periods
The staff forecasts had been for resource investment to peak some time in 2013/14, at around 9 per cent of GDP. Recent announcements curtailing projects were likely to have only a small effect on the expected profile for mining investment in the near term. However, members observed that concerns about current high costs and a softening in commodity prices may have implications for resource projects still under consideration.


The Australian dollar had depreciated slightly over the past month, but remained close to its post-float high. Members discussed the possibility that the high level of the exchange rate was weighing more heavily on the economy than might be expected. Overall, despite the ongoing structural change, the unemployment rate had remained relatively low to date

Since the last change to monetary policy in June, the Board had concluded that the stance of monetary policy resulting in interest rates being a bit below average was appropriate, given low inflation and the weaker outlook for growth globally. Developments since the previous Board meeting suggested that the global economy remained subject to significant downside risks. Of particular note this month was the recent sharp decline in some bulk commodity prices. At the same time, though, the domestic economy appeared to be growing at around trend pace and there were signs that the effects of earlier reductions in the cash rate were still working their way through the domestic economy.


End..

Now flat on AUD spot with a total loss of $19,240 AUD Futures has not filled yet..

I am beyond happy I was able to get out at levels to make this loss from last Thursday that is now basically cut in half to now..Even though this is a smal loss I am happy about the trade it shows that I have grown from the days where I just panic and get out instead of knowing that their are better prices to get out lower..

Flat at the moment.....across the board.

And like I stated in the very first post on AUD bear Raid RBA will cut rates end of Year and this is when the dominoes will start to fall into place...