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EUR/AUD reversal?

  • #1
  • First Post: Nov 23, 2007 4:40am Nov 23, 2007 4:40am
Looking at the chart it seems to me that the AUD is about to strengthen again against the EUR. Any comments?
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  • #2
  • Nov 23, 2007 3:26pm Nov 23, 2007 3:26pm
Quoting rudenstein
Looking at the chart it seems to me that the AUD is about to strengthen again against the EUR. Any comments?
I noticed that Eur/Aud is a good hedge against Eur/Jpy. So watch those Yen crosses for a turn on Eur/Aud.
Minesweeper target: 284
  • #3
  • Nov 24, 2007 7:51am Nov 24, 2007 7:51am
crosses? could you please elaborate for a noob?
  • #4
  • Nov 24, 2007 8:17am Nov 24, 2007 8:17am
Quoting rudenstein
crosses? could you please elaborate for a noob?
A cross is a non-USD pair.
  • #5
  • Nov 24, 2007 8:18am Nov 24, 2007 8:18am
Quoting rudenstein
Looking at the chart it seems to me that the AUD is about to strengthen again against the EUR. Any comments?
I think if the carry trades unwind euro will continue to appreciate against auzzie. If the carry trade appreciate AUD should appreciate against most currencies, but nothing is set in stone.
  • #6
  • Nov 24, 2007 8:24am Nov 24, 2007 8:24am
Quoting rudenstein
Looking at the chart it seems to me that the AUD is about to strengthen again against the EUR. Any comments?
It can but you have to also follow gold movements. AUD is highly correlated with gold. When Gold goes up, AUD goes up. When Gold falls, AUD Falls. We have EUR which is a fundamentally strong currency. Whereas, gold has been rising due to the weakness of the US $ and inflation going up. So, at this moment, anything can happen. Any senior traders wish to comment and post their analysis?
Humble Lifetime Member
  • #7
  • Nov 24, 2007 11:40am Nov 24, 2007 11:40am
The correlation with Gold is frankly a bit to vague to make any short term bets... I sense that carry trades have more of an influence over the short term... and right I now I believe that traders are betting more on low interest rate currencies.... and there is also the end of PM Howard's term, who conceded to Rudd (Labor)
  • #8
  • Nov 24, 2007 11:51am Nov 24, 2007 11:51am
Quoting rudenstein
The correlation with Gold is frankly a bit to vague to make any short term bets... I sense that carry trades have more of an influence over the short term... and right I now I believe that traders are betting more on low interest rate currencies.... and there is also the end of PM Howard's term, who conceded to Rudd (Labor)
AUD is highly associated with carry trades and I could be wrong, but when I followed live charts with AU and Gold side by side, I saw a correlation. I could be wrong, I'll look again and I would suggest that you may want to look at the charts also. I can not post charts (sorry), so if someone would be kind enough to post daily charts of AU and Gold, it would be greatly appreciated.
Humble Lifetime Member
  • #9
  • Nov 24, 2007 1:25pm Nov 24, 2007 1:25pm
Ash, over the long term you are right. Gold is tied strongly to AUD, but there are some divergences from week to week.
  • #10
  • Nov 24, 2007 4:14pm Nov 24, 2007 4:14pm
Quoting Ash
AUD is highly associated with carry trades and I could be wrong, but when I followed live charts with AU and Gold side by side, I saw a correlation. I could be wrong, I'll look again and I would suggest that you may want to look at the charts also. I can not post charts (sorry), so if someone would be kind enough to post daily charts of AU and Gold, it would be greatly appreciated.
During the second half of this year there has been little to no correlation between the AUDUSD and Gold. The indicator at the bottom is the correlation calculation. Generally, anything between -0.5 and +0.5 in considered non-correlated. At the moment there is actually an inverse relationship.
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  • #11
  • Nov 24, 2007 5:02pm Nov 24, 2007 5:02pm
Quoting philmcgrew
During the second half of this year there has been little to no correlation between the AUDUSD and Gold. The indicator at the bottom is the correlation calculation. Generally, anything between -0.5 and +0.5 in considered non-correlated. At the moment there is actually an inverse relationship.
Thanks!
Humble Lifetime Member
  • #12
  • Nov 25, 2007 5:30am Nov 25, 2007 5:30am
Phil,

It also occured to me that when Gold goes up the AUD should strengthen
(a well known correlation that hold up over the long term)

... AT THE SAME TIME, Gold going up also indicates that people's appetite for risk is low, leading traders to forgo those carry trades. This in turn would lead to a weaker AUD.

This constellation would lead to a CONTRADTION, unless one realizes that carry trades influence the AUD in the short term, while Gold prices influence AUD in the long term. DOES THIS MAKE ANY SENSE???

Please respond if you think this is hogwash!

Thank you!

rudenstein
  • #13
  • Nov 25, 2007 5:42am Nov 25, 2007 5:42am
Quoting rudenstein
Phil,

It also occured to me that when Gold goes up the AUD should strengthen
(a well known correlation that hold up over the long term)

... AT THE SAME TIME, Gold going up also indicates that people's appetite for risk is low, leading traders to forgo those carry trades. This in turn would lead to a weaker AUD.

This constellation would lead to a CONTRADTION, unless one realizes that carry trades influence the AUD in the short term, while Gold prices influence AUD in the long term. DOES THIS MAKE ANY SENSE???

Please respond if you think this is hogwash!

Thank you!

rudenstein
Rudenstein, the short answer is that I don't know.

I'm sure there are correlations out there that work well until they don't. I try to find stuff that moves and I trade it. I don't devote a single brain cell to wondering why something moved or what else moved as a result. Even if I were smart enough to grasp these relationships I'm not sure I would care to do so.
  • #14
  • Last Post: Nov 26, 2007 4:13pm Nov 26, 2007 4:13pm
Quoting rudenstein
crosses? could you please elaborate for a noob?
Hi, and sorry to be so long in getting back. I do a day job and I don't use my trading machine, or any other machine on which I wish to preserve the data integrity, for browsing any forums. So thanks to PeterM for responding.

I opened short on EurAud this evening for reasons that have nothing to do with Gold. The hourly chart has twice tested resistance at ~1.7150 and RSI is/was showing over-bought. It could be the start of a double top, however it could also be an up-pennant if a local-low forms around 1.68 during the next 12 hours. Apparently there are some big players buying into Japanese stocks such as Sony and the like, and if that carries on over the week then chances are that Aud will continue to sag due to the Yen strength that will result from the equity transactions.

If I don't answer in the next 24 hours it is because I can't get the kids off The Sims
Minesweeper target: 284
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