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AUD/USD

  • #17,941
  • Mar 1, 2010 7:40pm Mar 1, 2010 7:40pm
Quoting Saxon
Actually, raising interest rates is a contractionary move, not expansionary. Interest rate hikes being good for the economy is not exactly a correct statement. Which means not so good for Australians, good for speculative currency investors (long currency investors that is).
Look! 5,000 pose nude in Australia, protest interest rates!
http://www.examiner.com/x-38158-Cult...o-in-Australia
  • #17,942
  • Mar 1, 2010 7:40pm Mar 1, 2010 7:40pm
Then why do they lower interest rates during times of recession (to stimulate lending for businesses) and raise interest rates during times of prosperity ( to keep inflation in check ???)

Im not an expert but I know thats generally how things work

Quoting Saxon
Actually, raising interest rates is a contractionary move, not expansionary. Interest rate hikes being good for the economy is not exactly a correct statement. Which means not so good for Australians, good for speculative currency investors (long currency investors that is).
Annoying Precision
  • #17,943
  • Mar 1, 2010 7:52pm Mar 1, 2010 7:52pm
last time the didn't raise interest rates was 30 days ago? when price was at .925 and then it drop to .86
  • #17,944
  • Mar 1, 2010 7:57pm Mar 1, 2010 7:57pm
Quoting erikte279
Then why do they lower interest rates during times of recession (to stimulate lending for businesses) and raise interest rates during times of prosperity ( to keep inflation in check ???)

Im not an expert but I know thats generally how things work
Lowering interest rates during a recession will stimulate lending and spending, and help the economy expand (expansionary policy). Raising interest rates will cause investors to not take out loans and/or spend, and save at the IR instead thereby contracting the over-expanded economy (contractionary policy). So if you raise interest rates, the economy will contract; spending will go down and loans/debt will decrease (bad for the economy). That is how things generally work.
  • #17,945
  • Mar 1, 2010 7:59pm Mar 1, 2010 7:59pm
Gotcha

Long aud

Quoting Saxon
Lowering interest rates during a recession will stimulate lending and spending, and help the economy expand (expansionary policy). Raising interest rates will cause investors to not take out loans and/or spend, and save at the IR instead thereby contracting the over-expanded economy (contractionary policy). So if you raise interest rates, the economy will contract; spending will go down and loans/debt will decrease (bad for the economy). That is how things generally work.
Annoying Precision
  • #17,946
  • Mar 1, 2010 8:02pm Mar 1, 2010 8:02pm
I'm confused why any country would have an 'inflation' target, or why Japan is 'fighting' deflation. I love deflation. What's wrong with deflation?! I want things cheaper. Tired of the baby boomers that buy houses for 30k now living in house worth Millions. I want that same house for 30k.
  • #17,947
  • Mar 1, 2010 8:03pm Mar 1, 2010 8:03pm
This is my plan:

If rates higher, it'll probably go up 30 pips (?) immediately then continue up higher in coming days. Go long with a stop around 9000.

If rates are even, it'll drop about 50 pips (at least), wait for retrace if it occurs and go short with wide stops.

If rates go down SELL at any price!
  • #17,948
  • Mar 1, 2010 8:04pm Mar 1, 2010 8:04pm
Quoting Saxon
Lowering interest rates during a recession will stimulate lending and spending, and help the economy expand (expansionary policy). Raising interest rates will cause investors to not take out loans and/or spend, and save at the IR instead thereby contracting the over-expanded economy (contractionary policy). So if you raise interest rates, the economy will contract; spending will go down and loans/debt will decrease (bad for the economy). That is how things generally work.
Sort of, but not really. Certainly not since 2008.

I doubt you will be able to show any case where loans/debt decreased over the last 10 years in Australia as interest rates went to decade highs. But I can definitely show you loans/debt decreasing (increased saving) as the Aus interbank rate fell from 5 to 3 in less than 2 months during 2008.

Please provide some evidence for your claims.

Anyway:

For the money market traders - the 30 day interbank rate March fut. Spread between March/Apr forwards is roughly 6 points to the downside for Apr.
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  • #17,949
  • Mar 1, 2010 8:06pm Mar 1, 2010 8:06pm
Quoting Clouds
I'm confused why any country would have an 'inflation' target, or why Japan is 'fighting' deflation. I love deflation. What's wrong with deflation?! I want things cheaper. Tired of the baby boomers that buy houses for 30k now living in house worth Millions. I want that same house for 30k.
Deflation is a credit based economies worst nightmare.

It means paying off your debt at the full price.

If you can inflate, the debt will be paid with inflated fiat.

Japan has been trying to fight deflation for 20 years to no effect. If the US thinks they can build more highways to nowhere and zombify more banks than the Japanese, then expect a 20 year secular bear in the SP500 to come.

Australia has an inflation target, and it is legitimate, because we are a commodity export country. Inflation target keeps monetary policy tight and under control.
  • #17,950
  • Mar 1, 2010 8:06pm Mar 1, 2010 8:06pm
Quoting Clouds
I'm confused why any country would have an 'inflation' target, or why Japan is 'fighting' deflation. I love deflation. What's wrong with deflation?! I want things cheaper. Tired of the baby boomers that buy houses for 30k now living in house worth Millions. I want that same house for 30k.
You took the words right out of my mouth. We will eventually have a countercycle as bad, or worse than, our overseas Anglo brethren. Anyway how can asset prices stay at current levels when BBs start to shuffle off? Doesn't take a demographer to predict how that story ends.

Be patient Clouds.. shorting is risky business but we will have our day in the sun soon enough.
  • #17,951
  • Mar 1, 2010 8:09pm Mar 1, 2010 8:09pm
Quoting erikte279
Gotcha

Long aud
I'm out of AUD until news. I am playing USD/CHF right now and doing pretty good. AUD/USD busted out of it's M15 and M30 Bol Squeeze and is past K Channels. H1 AUD is at 0.00 (20)CCI, so it is Literally on the fence. If CCI dips below 0.0o0 then up, my long will enter; I have no short setups right now. Also, AUD is smack in the middle of my GANN/FIB box and between an H1 0.00 and 23.6 FIBO, giving me no direction. Good luck on the trades though erikte, if I was any position right now, it would be micro long.
  • #17,952
  • Mar 1, 2010 8:10pm Mar 1, 2010 8:10pm
Quoting Clouds
I'm confused why any country would have an 'inflation' target, or why Japan is 'fighting' deflation. I love deflation.

Deflation is great once its over but its pure hell going through it
  • #17,953
  • Mar 1, 2010 8:11pm Mar 1, 2010 8:11pm
I will say it again:

Australias inflation target is completely legitimate and the result of a sound monetary policy.

This is not the US or UK or Japan.

We have a manufacturing base (which is unfortunately shrinking), and strong commodity export base.

My main issue with inflation targetting is the use of the CPI measure as the means to benchmark inflation.

CPI is a terrible benchmark. We need a new one, based in reality. Unfortunately, that would mean politicians can't cook the numbers to look good anymore - so we probably won't get it.
  • #17,954
  • Mar 1, 2010 8:13pm Mar 1, 2010 8:13pm
Quoting sinner-
Sort of, but not really. Certainly not since 2008.

I doubt you will be able to show any case where loans/debt decreased over the last 10 years in Australia as interest rates went to decade highs. But I can definitely show you loans/debt decreasing (increased saving) as the Aus interbank rate fell from 5 to 3 in less than 2 months during 2008.

Please provide some evidence for your claims.

Anyway:

For the money market traders - the 30 day interbank rate March fut. Spread between March/Apr forwards is roughly 6 points to the downside for Apr....
Basic economics man, just because your chart shows dif, doesn't mean that is isn't a truth. Also, do you think that you can show any chart from the last 2 years and make ANY economic sense of it? Are you trying to say that policy makers and CBs are totally off with their fiscal and monetary policy and that you know better? I'm not saying that your chart is wrong, I am just saying, "all else held equal" my analyisis is economically correct.
  • #17,955
  • Mar 1, 2010 8:14pm Mar 1, 2010 8:14pm
Quoting sinner-
CPI is a terrible benchmark. We need a new one, based in reality. Unfortunately, that would mean politicians can't cook the numbers to look good anymore - so we probably won't get it.
Agree with that. A good surrogate is wage growth, as it reflects a lot of the same variables. Might only be useful for long-term analysis though.
  • #17,956
  • Mar 1, 2010 8:19pm Mar 1, 2010 8:19pm
Leave it to me to stir up some intelligent conversation....lol

I have a small long position from the bounce off weekly support.
Annoying Precision
  • #17,957
  • Mar 1, 2010 8:21pm Mar 1, 2010 8:21pm
Read in an economic magazine that in the UK , the wealth distribution was 15% for those under 40. The older generation had 85% of the wealth. Does that seem fair? The argument on why , was because of inflation, and the older generation were able to buy homes that inflated, ect.. If deflation does occur in the US, or UK, it'll help a lot the younger generation a lot.. It'll cause a lot of banking problems, but screw them
  • #17,958
  • Mar 1, 2010 8:22pm Mar 1, 2010 8:22pm
The irony of course is that a lot of the inflation that the RBA is fighting, was caused by them. If it were not for rampant M1 growth then inflation would not have such big teeth. Saxon is technically right though, in that higher rates are used to curb borrowing, why else do it?
  • #17,959
  • Mar 1, 2010 8:23pm Mar 1, 2010 8:23pm
Quoting Saxon
Basic economics man, just because your chart shows dif, doesn't mean that is isn't a truth. Also, do you think that you can show any chart from the last 2 years and make ANY economic sense of it? Are you trying to say that policy makers and CBs are totally off with their fiscal and monetary policy and that you know better? I'm not saying that your chart is wrong, I am just saying, "all else held equal" my analyisis is economically correct.


That's the problem with "economically correct", it has no basis in reality. Otherwise you should be able to provide at least one reference or example for your claims.

Same reason my father (who is a professor in macroeconomics) and me argued all from 2007-2008 before Bear Sterns crash I was convinced the end was coming to him it wasn't "economically correct" to buy gold and USD. An inflation adjusted Dow:Gold chart or the Gold:Oil ratio means nothing to an economist.

In the end, he had to stand up in front of his class of postgraduate macro students, and when they asked him if he managed to predict the stock market crash he said "no, but my son did". They asked him what formula did your son use?



I can show you plenty of charts from the last 2 years that make perfect sense.

As for "policy makers and CB are totally off with their fiscal and monetary policy", I never claimed that "I knew better"...but if they are so spot on then please explain how the RBA completely missed the collapse last year, in fact they raised rates only a few days before Bear Sterns collapse, only to meet less than a week later (and ONLY 2 days before their scheduled meeting - i.e. they were shit scared) to drop rates.

ECB raised rates at EUR1.6. MCB refused to cut rates after Lehman Bros collapse which resulted in a 25% decline in the new peso. BoE had to resort to the ugliest QE program in decades not to mention the lowest rates in the 350 year history of the bank. BoJ couldn't even keep their economy out of deflation for 2 years in the biggest boom the global economy has ever had.

Does this sound like "policy makers and CB are totally on with their fiscal and monetary policy"?

My arse.
  • #17,960
  • Mar 1, 2010 8:23pm Mar 1, 2010 8:23pm
usd/chf looks like a no trade zone to me, what is your reasoning if you dont mind, breakout?

Quoting Saxon
I'm out of AUD until news. I am playing USD/CHF right now and doing pretty good. AUD/USD busted out of it's M15 and M30 Bol Squeeze and is past K Channels. H1 AUD is at 0.00 (20)CCI, so it is Literally on the fence. If CCI dips below 0.0o0 then up, my long will enter; I have no short setups right now. Also, AUD is smack in the middle of my GANN/FIB box and between an H1 0.00 and 23.6 FIBO, giving me no direction. Good luck on the trades though erikte, if I was any position right now, it would be micro long.
Annoying Precision
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