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  • #61
  • Jan 30, 2008 6:19pm Jan 30, 2008 6:19pm
Quoting scexglobal
Could you provide the link to the news article please?

EUR/AUD should really be treated more as a carry trade pair. It's not as volitile as some others, but macro-economoic news usually does not influence its movements directly, but indirectly through the stock markets (EUR/USD is the exact opposite).

_________
scexglobal

thanks for the tips on this pair... I normally watch it when I am long AUDUSD and it always ruins my party by going up and capping AUDUSD. Clearly I need to take a closer look...geez. that was almost a disaster.
  • #62
  • Jan 30, 2008 7:13pm Jan 30, 2008 7:13pm
TickerShuffle,

Hope all didn't go completely south. Let me explain my stance on the Aussie:

The article on the AUD depends on the theory of decoupling being false.

Quote:
"While U.S. retail sales during the holiday season rose at the slowest pace since 2002, Australians increased spending in shops over the period at the fastest pace in a decade, according to the nations' retail associations."

The writer ignores that slower US consumption can slow chinese production, which in turn can lessen demand for raw commodities from Australia. dailyfx.com also predicted a few weeks ago that the AUD was entering a VERY long-term bear market, supported by elliot wave theory and a slowing global economy.

Any long-term predictions at this time are at best pure speculation. However, stagflation in the US right now is a possible reality, and could lead to Americans cutting back on spending...

Frankly, considering the US just underwent a total 1.25% cut in interest rates from 4.25%, the response has been fairly lukewarm.

The problem with the article is that it points to Australian fundamentals, when, in fact, these matter very little in carry trades involving the AUD (the writer should know this!). The drivers are the stock markets, general risk sentiment, etc.. The US fundamentals (via the DOW) probably have more to do with where AUD goes. Even when the USD isn't the opposing currency as in the EUR/AUD pair.

Btw, Look at a 10yr EUR/AUD chart. You will see that the pair lifted toward the EUR during the last US recession 2001-2003 (it followed it almost exactly). Also, the EUR reached lows against the AUD during the dot com boom, that it never saw again (1.500 level). Did this have anything to do with the Australian economy? No, US equities were involved, the stock market boomed, investors entered into carry trades.

_________
scexglobal
  • #63
  • Jan 30, 2008 7:28pm Jan 30, 2008 7:28pm
Quoting scexglobal
The US fundamentals (via the DOW) probably have more to do with where AUD goes. Even when the USD isn't the opposing currency as in the EUR/AUD pair.
The recent volatility in all markets has created a LOT of noise, but EUR/AUD is my #1 indicator for risk aversion in the markets.

The recent consolidation in EUR/AUD has seemed to be the back and forth battle about decoupling. On one hand, there is talk of a global recession... on the other hand, there are still very solid numbers in emerging markets and some markets have actually seen economic data improve in Q4.

As for trading the pair, just play the range until a breakout occurs. I personally believe we'll see this bullish pennant formation broken sometime in February and it will coincide with the next big wave of unwinding in carry trades and global equities reaching new lows.

Technically (since that's what this thread is about), it seems wise to buy under 1.6650 and sell over 1.6850. I'm keeping stops a bit tighter on shorts at the high end of the range since that's my personal bias for a breakout.

UPPER: 1.7440, followed by 1.7780 as the targets on any breakout above the range.
LOWER: 1.635, followed by 1.5500 as the targets on any breakout below the range.

I doubt we see the lower end targets until the 2nd half of the year since volatility doesn't appear to be leaving the markets.
  • #64
  • Jan 30, 2008 7:35pm Jan 30, 2008 7:35pm
Quoting youalreadykn
The recent volatility in all markets has created a LOT of noise, but EUR/AUD is my #1 indicator for risk aversion in the markets.

The recent consolidation in EUR/AUD has seemed to be the back and forth battle about decoupling. On one hand, there is talk of a global recession... on the other hand, there are still very solid numbers in emerging markets and some markets have actually seen economic data improve in Q4.

As for trading the pair, just play the range until a breakout occurs. I personally believe we'll see this bullish pennant formation broken sometime in February and it will coincide with the next big wave of unwinding in carry trades and global equities reaching new lows.

Technically (since that's what this thread is about), it seems wise to buy under 1.6650 and sell over 1.6850. I'm keeping stops a bit tighter on shorts at the high end of the range since that's my personal bias for a breakout.

UPPER: 1.7440, followed by 1.7780 as the targets on any breakout above the range.
LOWER: 1.635, followed by 1.5500 as the targets on any breakout below the range.

I doubt we see the lower end targets until the 2nd half of the year since volatility doesn't appear to be leaving the markets.
Agree completely with everything, expect that if we do breakout to the 1.7 - 1.8 range, I don't think we will recover to the 1.5500 level in 2008, it could stay higher much longer, especially if a global recession arrives.
  • #65
  • Jan 30, 2008 7:55pm Jan 30, 2008 7:55pm
can anybody identify some correlations with the us economy with the canadian, just started at my new commodity brokerage job and my boss wants me to study the pair as he has lots of canadian investors.

i.e. any tips for the cad/jpy cross?
  • #66
  • Jan 30, 2008 8:14pm Jan 30, 2008 8:14pm
The most basic and widely accepted correlation between the Usd/Cad is that higher oil prices will support the CAD.

Recently when oil prices shot up near $100/bbl the pair lagged behind and was an excellent opportunity to buy the loonie. Anyone who did got paid in full I might add.


As for the Cad/jpy, it will generally follow all the other carry trades, which are under pressure currently
"Timing Is Everything. Really I Swear It Is"
  • #67
  • Jan 30, 2008 11:04pm Jan 30, 2008 11:04pm
what do people think of shorting the kiwi if it cracks .78, with a stop around 0.7825-0.7830?

this based on;
1) after the fed cutting rates it broke 78 and shot up but it found no support and those looking to unwind carry sold into the rally, this providing a strong resistance level
2) its following equities and given the selloff in the us its likely Europe will follow suit and provide more selling pressure?

or am I completely wrong?
  • #68
  • Jan 30, 2008 11:47pm Jan 30, 2008 11:47pm
There's a ton of volatility right now. If I were short I wouldn't put a fixed stop, instead I would wait for a 4HR candle close above 7835. This is not a trade recommendation.
"Timing Is Everything. Really I Swear It Is"
  • #69
  • Jan 31, 2008 7:19am Jan 31, 2008 7:19am
I saw a news a flash that the senate passed the stimulus package on CNBC, but it wasn't "the" senate, it was the house senate, so my move was premature.

The idea was that with americans with an extra 100 billion to spend, would be good for china, commodities and the Aussie. Trade in the Asia area is strong, shipping is not showing a slowdown like US transports - and the bonds in Australia are giving more return than anyone can ask.

Anyway, the trade was half-cocked and I am lucky I got out with my shirt. In retrospect I see I could have looged over +60 pips on the short if i waited, but c'est la vie.

I'm still kicking...looking for a decent trade.
  • #70
  • Jan 31, 2008 11:47am Jan 31, 2008 11:47am
Unbelievable. Was that the definition of a whipsaw? hehe

It worked on me. Can't believe over 150 pips now....

AARRRGGGHHHH!
  • #71
  • Jan 31, 2008 11:53am Jan 31, 2008 11:53am
Quoting TIckerShuffl
Unbelievable. Was that the definition of a whipsaw? hehe

It worked on me. Can't believe over 150 pips now....

AARRRGGGHHHH!
Worked perfectly on EUR/AUD for me (and thankful those longs were closed last night). I wanted to re-enter at 1.6620, but got a chance to enter at 1.6540 where I originally planned.

Longs should be good from anywhere around current levels as price bounced off the longterm 38.2 Fib on EUR/AUD at around 1.6530. Bias still long above that price point.
  • #72
  • Jan 31, 2008 12:10pm Jan 31, 2008 12:10pm
Yeah I was looking at it long, and it popped 20 pips before I could click buy, so I am staying on the sidelines until these "railroad tracks" on the daily make up their mind.

I am thinking more long AUDUSD and AUDJPY for 2008 once the market stabilizes.
  • #73
  • Jan 31, 2008 12:24pm Jan 31, 2008 12:24pm
Quoting TIckerShuffl
Yeah I was looking at it long, and it popped 20 pips before I could click buy, so I am staying on the sidelines until these "railroad tracks" on the daily make up their mind.

I am thinking more long AUDUSD and AUDJPY for 2008 once the market stabilizes.

Look for oil hitting at least $95 and 10yr treasury bond yielding above 3.8%, before fixing yourseld to a long position with the AUD. If these conditions are met, then happy days may be back .

The rise in commodity currencies today can only be considered, if anything, as being irrational... careful folks.
  • #74
  • Jan 31, 2008 12:44pm Jan 31, 2008 12:44pm
Just witnessed a bearish pennant in the EUR/USD and a continuation triangle in the DOW breakout in a correlated fashion.

Since most subscribers to this thread are carry trade currency traders, here is a link to a free, real-time DOW chart:

http://freeserv.dukascopy.com/chart/...7f33687e3a846d


Enjoy!

________
scexglobal
  • #75
  • Jan 31, 2008 3:37pm Jan 31, 2008 3:37pm
With the snoozer of a session today, I found some time to talk to a friend about "the global financial scene". First off, we found out there is so much stuff to factor in it makes your head hurt after a while.

Second, and most importantly, we reasoned that other economies (Eurozone, China, Canada, Australia and New Zealand especially) have yet to fully feel the effects of a global slowdown. The United States is leading the way (as usual).

Let me explain......

The US has shown definitive evidence of a slowdown. Flattening spending, choppy but declining manufacturing and numerous layoff and writedowns. But has the US really FELT the effects of this yet? NO

Wait until the severance packages and stock gains stop infusing peoples wallets. There will be no equity to tap into. What happens then? Spending halts....quickly. Foreclosures are skyrocketing, but the wealthy still have disposable income to spend. When the wealthy feel the pinch, watch out. Service jobs will dry up. Consumer spending will go on the decline and then it will start to get nasty.

NOW

I believe that everything, economically speaking, filters from the US to the rest of the world. The reason commodities are still in demand is basically emerging markets are still doing well. This will not last without consumption from the US. Say what you will about decoupling but until I see it I don't believe in it (kinda like Santa Claus).

The rate differential between the US and others is huge and getting huger.
But how long ago was the Fed "focusing" on inflation? 4-5 months!
That's how long it took to go from inflation being the #1 concern to emergency 75 bp meetings. I am forecasting other economies to get some shockingly low performance numbers in the next 1-3 months simply from a bit of a lag.

With this said, I NEVER make trading decisions soley on FUNNYmentals.
"Timing Is Everything. Really I Swear It Is"
  • #76
  • Jan 31, 2008 7:34pm Jan 31, 2008 7:34pm
Quoting scexglobal
Look for oil hitting at least $95 and 10yr treasury bond yielding above 3.8%, before fixing yourseld to a long position with the AUD. If these conditions are met, then happy days may be back .

The rise in commodity currencies today can only be considered, if anything, as being irrational... careful folks.
I like that! Yeah, I am not jumping in yet
  • #77
  • Jan 31, 2008 8:21pm Jan 31, 2008 8:21pm
Quoting TexasforEX

I believe that everything, economically speaking, filters from the US to the rest of the world. The reason commodities are still in demand is basically emerging markets are still doing well. This will not last without consumption from the US. Say what you will about decoupling but until I see it I don't believe in it (kinda like Santa Claus).

The rate differential between the US and others is huge and getting huger.
But how long ago was the Fed "focusing" on inflation? 4-5 months!
That's how long it took to go from inflation being the #1 concern to emergency 75 bp meetings. I am forecasting other economies to get some shockingly low performance numbers in the next 1-3 months simply from a bit of a lag.
Yes, yes and yes! Indeed, one of the short-term USD rallies was caused by a high CPI reading toward the end of last year, causing investors to believe that the Feds would not have much room to cut rates. Now, growth seems to be a number one concern. However, if the interest rate differential get any larger between the USD and *place your favorite currency here* and we enter into a global recession, I doubt that the USD index will drop below 75 points.

TexasforEx, don't forget about the boomer's retirement mutual funds (although you did touch on equities in general) and credit card debt investments... hang on for a wild ride in 08.

_________
scexglobal
  • #78
  • Feb 1, 2008 7:58am Feb 1, 2008 7:58am
I've come up with a new nickname for the Yen..."The Truth".

As long as the yen is strong, it will continue to weigh heavily on the commod's.

FWIW I'm short the kiwi from 7910 targeting 7840 today.
"Timing Is Everything. Really I Swear It Is"
  • #79
  • Feb 1, 2008 8:10am Feb 1, 2008 8:10am
Time to start sinking teeth into AUDJPY carry? I am in at 95.54, will add on dips, and on the climb. Looking for AUDUSD to continue upward strength and a recovery in USDJPY to fuel the fire.
  • #80
  • Feb 1, 2008 8:29am Feb 1, 2008 8:29am
Quoting TIckerShuffl
Time to start sinking teeth into AUDJPY carry? I am in at 95.54, will add on dips, and on the climb. Looking for AUDUSD to continue upward strength and a recovery in USDJPY to fuel the fire.
You're buying high. I'm seeing this as the start of the next leg down to retest lows. We'll be lucky to see AUDJPY stay around 95-96 through the first quarter of the year IMO.

If you're buying in at 95, you must think we're out of the bear market.

Also, technically 96.30 was my projection for the end of the AUDJPY rally since it's the 61.8 Fib from the last huge move down.
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