AUD - RBA Forex intervention

Recently the Reserve Bank of Australia has decided to intervene in the currency markets. From my research the intervention has consistently been set at $0.60 USD level. This is offcourse due to the RBA having an objective to stabilise the domestic currency.

For a longer-term investment I’m planning on getting into a long position in the AUD/USD around the low 60 mark. I see this as a potentially low risk investment due to the RBA creating a short squeeze on speculators. The only risk factor is if the RBA does not have enough foreign currency reserves.

I'm sharing with you my simple idea and interested to see what you guys think…

Greetings Kent,

This below from one of my posts in the AUD/USD thread, sourced from one of the regular Reuters news bulletins uploaded on FF. Please note that the RBA minutes indicated they will NOT intervene again and some believe the AUD may travel much lower than .60c. You can read comment from myself and other traders about the RBA's intervention at .60c and .6350 in the thread also. It polluted the TA considerably, making the currency's future quite unreliable because it gave a false inverse head and shoulders pattern. I think "Trout" aka Jay Norris, (Senior Market Strategist for BrewerFX in Chicago) or maybe it was Imarket's John Jagerson (also excellent), posted an analysts item on the inverse H n S set up too. This is the AUD/USD thread link....

http://www.forexfactory.com/showthread.php?t=95260

Reuters item -

'The conclusion is clearly that further easing of policy can be expected over coming months to take policy to accommodative settings,' said ANZ senior currency strategist Tony Morriss.

The market is pricing in a cut of at least 75 basis points at the RBA's December policy meeting and a further easing to around 3.5 percent by March.

Morriss noted that with so much easing already priced in, an actual cut in December might not be so negative for the Aussie, especially if it was seen supporting economic growth.

However, the weakness of the global economy, and lately China, meant commodity prices could fall yet further, with grim repercussions for a resource exporter like Australia.

'We now see the Aussie staying weaker for longer in light of the global slowdown,' said Morriss. He predicted a drop below 60 cents in 2009 and even a move toward 54 by year-end.

The November minutes also suggested the RBA would not try and stand in the way of further falls. The central bank made the point that its intervention of recent weeks was not intended to defend any particular level of the Aussie but rather to provide liquidity in disorderly markets.

Interventions normally do not work. Normally the best intention is to slow down a meltdown.

BoJ did it, back a few years ago. Can you spot where???? It took several months of buying into USD/JPY to make it finally work. So the question is are you willing to hang onto a position for months on end, going back and forth?

I do not suggest this, as it is trying to guess what a group of old Aussies are going to do, none of whom you know.

Just my thoughts.

Very true. Reminds me of GBP in the early 90s.

Btw, broadening triangle is forming on Aussie:


http://i38.tinypic.com/2hcp0ts.jpg