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Aussie Pairs

  • #2,421
  • Jul 15, 2008 2:33am Jul 15, 2008 2:33am
This is unreal... AU will probably reach parity within 48 hours. It seems like a safer bet than letting FDIC insure your money in the bank.
  • #2,422
  • Jul 15, 2008 8:49pm Jul 15, 2008 8:49pm
Quoting Subdude
This is unreal... AU will probably reach parity within 48 hours. It seems like a safer bet than letting FDIC insure your money in the bank.

Be careful. The Aussie fundamentals are'nt that great - yes play the rise but be prepared to break fast. The higher it goes the harder the break will be.
  • #2,423
  • Jul 15, 2008 9:30pm Jul 15, 2008 9:30pm
Quoting mchael
Be careful. The Aussie fundamentals are'nt that great - yes play the rise but be prepared to break fast. The higher it goes the harder the break will be.
I can definitely vouch for that

Our ASX is down almost 20% from its peak and is posting losses 4 out of 5 days in the week. Even though the Asian boom has shielded us from the brunt of the credit crunch for now, Asia seems to be running out of steam. Once that becomes apparent then it will be painful. I think even those big resource stocks, BHP RIO and some of the mid-cap ones OXR LGL are starting to price in this fact (index for materials is -23%).

Housing while still ok is starting to show signs of deterioration. Its a major turning point now that houses prices are no longer increasing for the last 2 years especially after the previous 10-12 years where houses tripled and some cases quadrupled or more in value. I think Sydney is recording an average decline of 1% in housing for the year. Very dangerous to have stalling prices at 16 year high rates, especially as every one of the 5 major banks have lifted their variable interest rates independent of the RBA once again.
  • #2,424
  • Jul 15, 2008 10:34pm Jul 15, 2008 10:34pm
Will someone please smash the AU on the head. I miss the good old days of bringing 1 greenie back home for 2 Aussies.

No, it does not make things cheaper here. Scum bag retailers have brought on high inflation by not passing the higher dollar value back onto consumers.

Yes, it will come back to bite their backsides
  • #2,425
  • Edited 3:21am Jul 17, 2008 1:08am | Edited 3:21am
There is very little room to profit on the AUD*. It's almost at a point where the chance of making a profit is far too small to bother. Most of it is being held up by retail investors - mom and pop's and japanese houswives who most likely are'nt looking to closely at the fundamentals but basing their decisions on a 7.25% interest rate and hearing commodities are still booming. They're aren't picking up the devil in the details.

The RBA knows they have raised interests rates to their max this cycle.

You're going to see more bad data out of Australia in coming months with more pressure on the RBA to reduce rates otherwise they risk tipping the country into recession.

You're also going to see the US come out with higher inflation data and the US really needs to start raising rates soon.

- The US share market is almost at a bargaining buying point
- Foreigners are likely to start buying equity in the US
- The Fed starts to raise rates and give strength to the USD, this is an opportune time for the US to start increasing rates as they'll pick up on the value of money flowing back into the US
- higher US interest rates will attract money back into the US money markets which will bring liquidity back into the US financial system.
- A rising dollar will put pressure on commodity prices putting pressure on inflation which the FED is going to have to take action on.

Australia will come out with worsening data.

- Australian banks are having to pay more to source money which is putting the price of credit up which will stop the flow of money in Australia - this is outside the RBA rates. The banks have almost had the effect of two RBA interest rate rises which the FX markets were expecting - they definitley wont come now.
- The RBA will come under pressure to reduce the costs on banks and credit or they risk causing a major drop in property prices which will spiral the economy out of control which will be much harder to stimulate, especially in such tight global money markets. IF they're are not careful we could be back to a 90's style sluggish growth again.
- Employment is stable only because many full time positions have been shifted to part time positions and if consumer spending does not start to increase of it's low's that part time employment will turn to unemployment.
- The Australian Govt is brining in Carbon Credits - effectively a tax on energy use which will have an effect like the GST which caused a drop in growth and greater pressure on household spending. This will put greater pressure on the economy and we could see a rerun of 2001/2002 - this is when the AUD hit it's lowest point in the last cycle.

The last several years of growth and money flow have been on the back of over a Trillion in debt, commodities have boosted the economy but not as much as some thinking - it's been the debt and that debt is now incredibly expensive by world standards and it's hurting households.

All it takes is some larger funds to pull their funds out of Australia and it will tip the AUD fast. Last year in August a fund pulled only a few billion out in a day and the AUD price dropped dramatically. It does'nt take much to move the AUD dramatically down coupled with the current situation would leave many smaller investors carrying big losses.

I suggest trade the AUD with extreme caution.

*... RE: http://www.forexfactory.com/showthre...=1#post2114143
Quote:
Originally Posted by razldazl http://www.forexfactory.com/images/buttons/viewpost.gif
You meant very little room to long surely? Maybe you could edit that so its not confusing...thanks for your input...Raz

yeah I actually realised that after I posted it and wondered if someone would pull me up on it. What I actually meant was there was little room to sell on the ups and buy on the down expecting more ups as has been with the volatile upward nature of the AUD.

The point is there is not much room for profiting and large scope for big losses.

here's more news to support the events that will pressure the AUD: http://www.news.com.au/business/stor...-31037,00.html
  • #2,426
  • Jul 17, 2008 7:14am Jul 17, 2008 7:14am
Great post mchael...thanks

I have come to much the same conclusion, I'm just waiting for the technical signs before I start loading up on some shorts..

Where are you from?
  • #2,427
  • Jul 17, 2008 10:26pm Jul 17, 2008 10:26pm
I'm from Australia
  • #2,428
  • Jul 18, 2008 8:31am Jul 18, 2008 8:31am
OK, so AUD fundamentals are not good. While not disputing that, let me ask you which currencies have good fundamentals then?

USD is doomed.

CAD is too close to USA;

GBP combines exaustion of revenue/ resources with feelings of grandeur;

EUR does not have resources to speak of;

JPY does not have resources and has a huge aging populace;

NZD has a tiny economy and can be crushed by any serious organisation;

What do we have left? CHF? CNY? NOK?

Australia, even considering 0.6 trillion debt and housing issues, is still a stable country with a small population and enormous natural resources. It does not need to maintain a $500 billion a year military or 1 mln prisoners or hoards of ethnically diversive people who chose welfare as a career. It does not have to spend $250-300 billion to take care of its elderly ( knee replacement surgeries for non-walking elders with dementia and so on and on )
Once US will allow Australia to build an atomic reactor and all that uranium will stay within I will bet my farm on AUD.
  • #2,429
  • Jul 18, 2008 8:51am Jul 18, 2008 8:51am
I am amazed with you analysis.........as you argue Australia is a beautiful country ............I agree with you.......... But Australia can't expand why........you have very little water....... and to maintain service sector also difficult as the population is limited .........I see Canada ,Russia and China,India,Brazil,USA,JAPAN,Germany,UK going to be economic giants....long time to come ..........I know USA will bounce back........only USA experiencing economic downturn.......USA has lot of potential........I know USA will bounce back .......why you need uranium........ we need water .......future energy from water..... there are cars already using water ........

Quoting Vlad
OK, so AUD fundamentals are not good. While not disputing that, let me ask you which currencies have good fundamentals then?

USD is doomed.

CAD is too close to USA;

GBP combines exaustion of revenue/ resources with feelings of grandeur;

EUR does not have resources to speak of;

JPY does not have resources and has a huge aging populace;

NZD has a tiny economy and can be crushed by any serious organisation;

What do we have left? CHF? CNY? NOK?

Australia, even considering 0.6 trillion debt and housing issues, is still a stable country with a small population and enormous natural resources. It does not need to maintain a $500 billion a year military or 1 mln prisoners or hoards of ethnically diversive people who chose welfare as a career. It does not have to spend $250-300 billion to take care of its elderly ( knee replacement surgeries for non-walking elders with dementia and so on and on )
Once US will allow Australia to build an atomic reactor and all that uranium will stay within I will bet my farm on AUD.
BANDA333
  • #2,430
  • Jul 18, 2008 2:03pm Jul 18, 2008 2:03pm
Quoting BANDA
I am amazed with you analysis.........as you argue Australia is a beautiful country ............I agree with you.......... But Australia can't expand why........you have very little water....... and to maintain service sector also difficult as the population is limited .........I see Canada ,Russia and China,India,Brazil,USA,JAPAN,Germany,UK going to be economic giants....long time to come ..........I know USA will bounce back........only USA experiencing economic downturn.......USA has lot of potential........I know USA will bounce back .......why you need uranium........ we need water .......future energy from water..... there are cars already using water ........

Did you take your medication today?
  • #2,431
  • Jul 18, 2008 6:24pm Jul 18, 2008 6:24pm
We have as much water as we need, it's in the ocean for us to harvest when ever we decide to. We also have as much energey as we want which we can use to make unlimited amounts of water to turn our semi arid areas to farmland. Should the Australian people ever decide that stinky nuclear power plants are the way to go then no one would stop us building them for two reasons. One, we would let people inspect them as much as they wanted to. Two, we could stop selling uranium until people changed their minds
Hopefully oil will hit $300 a barrell soon and we can kick our petrolium habbits. Australians generally want a renewable / low carbon energy future so let's bring it and aud/usd to $2!!!
  • #2,432
  • Jul 18, 2008 10:04pm Jul 18, 2008 10:04pm
Quoting Marrethiel
We have as much water as we need, it's in the ocean for us to harvest when ever we decide to. We also have as much energey as we want which we can use to make unlimited amounts of water to turn our semi arid areas to farmland. Should the Australian people ever decide that stinky nuclear power plants are the way to go then no one would stop us building them for two reasons. One, we would let people inspect them as much as they wanted to. Two, we could stop selling uranium until people changed their minds
Hopefully oil will hit $300 a barrell soon and we can kick our petrolium habbits. Australians generally want a renewable / low carbon energy future so let's bring it and aud/usd to $2!!!
I am in Melbourne this week and this is my 3rd time visiting Australia in 3 years. Love this place. It's beautiful and clean and people are nice. I have not ventured out of the Melbourne city area yet, and I expect the suburbs to be even nicer. Having lived in the US for 16 years and several other countries, I can tell you that Australia is one of the best places in the world.
Expected the unexpected
  • #2,433
  • Jul 19, 2008 11:14pm Jul 19, 2008 11:14pm
Quoting Marrethiel
I keep buying dips on the A/J taking half the trade for pip profits and holding the rest as carry... long long long
Same here! I love that pair. The Aussie news on Monday should be interesting.
  • #2,434
  • Edited 9:29pm Jul 20, 2008 9:10pm | Edited 9:29pm
Quoting usdivers
Same here! I love that pair.
So do thousands of Japanese housewives, whose entire accounts got wiped out last August when the pair dropped to 86. More of the same to come soon - you've been warned.
  • #2,435
  • Jul 20, 2008 9:42pm Jul 20, 2008 9:42pm
Quoting Vlad
OK, so AUD fundamentals are not good. While not disputing that, let me ask you which currencies have good fundamentals then?

USD is doomed.

CAD is too close to USA;

GBP combines exaustion of revenue/ resources with feelings of grandeur;

EUR does not have resources to speak of;

JPY does not have resources and has a huge aging populace;

NZD has a tiny economy and can be crushed by any serious organisation;

What do we have left? CHF? CNY? NOK?

Australia, even considering 0.6 trillion debt and housing issues, is still a stable country with a small population and enormous natural resources. It does not need to maintain a $500 billion a year military or 1 mln prisoners or hoards of ethnically diversive people who chose welfare as a career. It does not have to spend $250-300 billion to take care of its elderly ( knee replacement surgeries for non-walking elders with dementia and so on and on )
Once US will allow Australia to build an atomic reactor and all that uranium will stay within I will bet my farm on AUD.
Vlad, you've got to take into consideration things like total GDP, Population, Aging population, Manufacturing sector, R&D, Education sector, Proximity to busy markets and and many others

Check the fundamentals of the US a little closer and you'll see the issue is primarily just within the banking sector, the economy is not hitting the wall. the 70's, 80's and even earlier 90's were worse. China's Boom and Australia's subsequent boom were all brought on by an unsustainable property boom led by the US and then carried over in Australia, UK, Europe - this allowed people to borrow more (hence Australia sitting on some of the highest debt per capita levels in the western world) which allowed people to spend more. That gravy train stopped last year and now the markets are going through a process of coming back to normal and anyone who go carried away with it all - a touch of greed - is paying the price.

Look at the losses of some of the big banks that were involved in the boom, there losses just bring the previous record earnings reports back to a more normal trajectory.

Just like investing in Stocks you really need to understand the intricate details of each of these economies and look past the media drama written in one liners and not get carried away with the day to day market reaction. Unless of course you are a hardcore speculator where the risks are incredibly high and so are the potential for loss. Given the later over the last couple of years traders found it harder to lose - why I suspect so many people have jumped into FX trading. But now I am sure there are many not making as much as they did a year or so ago and many are probably licking their wounds at the moment.

The next phase in the markets sorting themselves out it is to clean up the FX markets and that will finally bring many fundamentals back to normal - namely oil and commodities coupled with demand settling. With everything back in place, we'll all be ready to do it all again over another decade. Gotta love humanity!
  • #2,436
  • Jul 20, 2008 9:44pm Jul 20, 2008 9:44pm
Quoting usdivers
Same here! I love that pair. The Aussie news on Monday should be interesting.
PPI Numbers came in much less than expected. Inflation is waning and interest need to be reduced soon otherwise we risk an inflation. Especially with the carbon credits coming - we could be in for a 2001 dip again in the next year or two.

http://www.bloomberg.com/apps/news?p...Ycs&refer=home
  • #2,437
  • Jul 20, 2008 10:51pm Jul 20, 2008 10:51pm
Quoting mchael
Inflation is waning and interest need to be reduced soon otherwise we risk an inflation.
Can you translate that into English? Are you one of those who suggest higher interest rates lead to higher inflation?
  • #2,438
  • Jul 20, 2008 11:17pm Jul 20, 2008 11:17pm
The Aussie continues to make higher highs and higher lows. Until that changes, I'll be trading the Aussie long only.

Trying to pick the top is a fools errand imho. If the amateur economists and funnymentalists who predict an AUD fall are eventually correct, good money management should ensure that any reversal doesn't do too much damage to your account - use an appropriate stop-loss and observe the 2% rule.

No-one knows what will happen next - keep the odds on your side by trading with the trend. Trying to trade counter-trend whilst using high levels of leverage will get you killed!
  • #2,439
  • Jul 20, 2008 11:45pm Jul 20, 2008 11:45pm
This week's CPI for the last quarter and then the RBA minutes of next month could put traders in a betting position for interest rate cuts. This will be the start of the downward trend:

http://www.news.com.au/business/stor...-31037,00.html

higher interest rates curb inflation and the way they do it is by curbing credit and it is credit that drives GDP. In the last few years Australia was borrowing as much as was selling in commodities and this was driving consumer spending. This has dropped to it's lowest in several years and is bringing the economy to a hard stop.

The RBA has hinted that they will reduce interest sooner than they see the CPI drop into their target band as they know they risk putting the economy into recession.

TraderZer0 you're right it is all about trends and the trend is showing a slowing economy and the market about to tip and bet interest rates will be cut. It's the central bank interest rates that set the tone of the trend for the rise of fall in the FX rate.
  • #2,440
  • Edited 1:40am Jul 21, 2008 1:18am | Edited 1:40am
Quoting mchael
TraderZer0 you're right it is all about trends and the trend is showing a slowing economy and the market about to tip and bet interest rates will be cut. It's the central bank interest rates that set the tone of the trend for the rise of fall in the FX rate.

The trading floors around the world are littered with the corpses of wannabe's who attemted to second guess central banks.

I think that the future is unknowable mchael, therefore the only enduring edge I'm likely to have as a trader is to deliberately and carefully manage my risk whilst only trading the very high probability setups - that means trading with the trend: the highest probability trade of all. It's not sexy, it doesn't give me bragging rights for picking market tops and bottoms, but it works!

You may be correct about a slowing Australian economy and that an AUD top might be somewhere hereabouts - so what though? How can you or I trade that information today - right now?

I don't mean to be disrespectful mchael - just re-read what i wrote above and felt I should let you know I'm not criticising you - just trying to put an alternative view.
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