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AUD/USD

  • #23,301
  • Sep 20, 2010 6:57pm Sep 20, 2010 6:57pm
Quoting kandarv
It's the same case as with BoJ and SNB. Overvalued currency is not healthy for their mainly export economy. Bloomberg is already stating the aussie is 27% overvalued in PPP. Signals here, signals there...
May I ask what PPP is ?
  • #23,302
  • Sep 20, 2010 6:58pm Sep 20, 2010 6:58pm
Quoting jamesvdm
I read that a big position is being protected at .9475 so I'm short when it nears that level.

(first post )
Dear James, can you plz kindly provide us the website links where you see such stop loss position? Thanks
  • #23,303
  • Sep 20, 2010 6:59pm Sep 20, 2010 6:59pm
If the press reports that the Aud is overvalued, maybe be a clear sign of upcoming parity, I would begin to worry about the uptrend failing if reports state that AUD is sure to hit parity with USD.
  • #23,304
  • Sep 20, 2010 7:05pm Sep 20, 2010 7:05pm
Quoting lasty
RBA wont intervene to defend the currency level.Its never been their mandate.They may however sell to position themselves.
They bought when the currency was under pressure from a disorderly market down in the low 60's, so 30 odd big figs later they may look at it to take profit and boost reserves.
There are many ways to "intervene". I'm not saying RBA is going to directly intervene in the fx market as SNB and BoJ did, but they could do so with the yield, but again with high inflation they can't cut interest so they are in a dilemma soon to be address.

Quoting Sunsi
May I ask what PPP is ?
Purchasing power parity
  • #23,305
  • Sep 20, 2010 7:16pm Sep 20, 2010 7:16pm
Quoting kandarv
There are many ways to "intervene". I'm not saying RBA is going to directly intervene in the fx market as SNB and BoJ did, but they could do so with the yield, but again with high inflation they can't cut interest so they are in a dilemma soon to be address.


Purchasing power parity
Well a strong AUD is an inflation dampner.
The market has gone long on the expectations that int rates may rise.
If the CPI comes in lower the currency will be sold off.
You are right the RBA has many levers to pull.
  • #23,306
  • Sep 20, 2010 7:24pm Sep 20, 2010 7:24pm
Quoting kandarv
There are many ways to "intervene". I'm not saying RBA is going to directly intervene in the fx market as SNB and BoJ did, but they could do so with the yield, but again with high inflation they can't cut interest so they are in a dilemma soon to be address.


Purchasing power parity

please note that Purchasing power parity really has nothing to do with exchange rate values..just because exchange rate is high for example over 1 doesnt mean they cant maintain current cost for exported product... inventory pricing will just be adjusted... its all relative.. if they maintain pricing it becomes a problem as they will be charging more than the rest of the world..

for example.. waygu beef... aussies know what im talking about
australia exports waygu beef the exchange rate is 1:1 price of waygu in australia is i dunno 9$ a pound.. interest rates are increased and the commodity is internationally raised .1% and the exchange rate is now 1.1 what is the price of waygu beef?

in relation waygu beef rises .1% or whatever that commodity rises.. thats the price change.. in aussy the value on the exchange is higher so the by .1% and then is dropped by the price change of the exchange rate.. all things being equal price of waygu increases .1% not the profit margin or revenues on the beef.. its relative..
  • #23,307
  • Sep 20, 2010 7:27pm Sep 20, 2010 7:27pm
if rba raises rates to cool the economy and circulates more money into the market.. they can keep the exchange rate low but the prices relatively do not change. but they create an inefficiency in the market only the price and rates of interest rate fixed products.
  • #23,308
  • Sep 20, 2010 7:29pm Sep 20, 2010 7:29pm
Quoting domino
please note that Purchasing power parity really has nothing to do with exchange rate values..just because exchange rate is high for example over 1 doesnt mean they cant maintain current cost for exported product... inventory pricing will just be adjusted... its all relative.. if they maintain pricing it becomes a problem as they will be charging more than the rest of the world..

for example.. waygu beef... aussies know what im talking about
australia exports waygu beef the exchange rate is 1:1...
Agree on that PPP alone is not a good indicator, I'm quoting what bloomberg says and that to me is just a signal that the market is uncomfortable.
  • #23,309
  • Sep 20, 2010 7:29pm Sep 20, 2010 7:29pm
In reality the AUD is overvalued. Many speculators have moved into the USD/AUD pair to replace the USD/JPY as they consider the overt intervention by the BOJ producing an unworkable trade enviroment for speculators. Of course this was the aim in the first place so no surprises there.

The simple fact that everyone is rushing into the AUD believing in rivers of gold is an excellent time to get out. The AUD will, in my opinion, begin to reverse on the slightest hint of risk aversion and being at such lofty levels the correction could be substantial. Remember, Australia is more or less one big mine, there is little more in terms of economic drivers.

Good luck, and take care out there.
  • #23,310
  • Sep 20, 2010 7:31pm Sep 20, 2010 7:31pm
Quoting kandarv
Agree on that PPP alone is not a good indicator, I'm quoting what bloomberg says and that to me is just a signal that the market is uncomfortable.
I agree that the statement itself will create tension in investors.. and could cause selling since the market is emotion based and most of the time irrational emotions.
  • #23,311
  • Sep 20, 2010 7:37pm Sep 20, 2010 7:37pm
"if rba raises rates to cool the economy and circulates more money into the market."

Higher interest rates infact stiffles consumer spending.It will get to a tipping point that when interest rates become so expensive it cuts off business growth and that puts downward pressure on the economy.
Thats when we see AUD sellers emerge.
An extreme example is Zimbabwe.. High interest rates and weak currency.
  • #23,312
  • Sep 20, 2010 7:46pm Sep 20, 2010 7:46pm
Does the news event in 45min usualy have a huge impact on the pair?
Is it normal to see 50 pip moves in few minutes?
  • #23,313
  • Sep 20, 2010 7:47pm Sep 20, 2010 7:47pm
Quoting lasty
"if rba raises rates to cool the economy and circulates more money into the market."

Higher interest rates infact stiffles consumer spending.It will get to a tipping point that when interest rates become so expensive it cuts off business growth and that puts downward pressure on the economy.
Thats when we see AUD sellers emerge.
An extreme example is Zimbabwe.. High interest rates and weak currency.

they also use a different type of economic structure and will not react the same way.. but high interest rates will stiffle yes but not at 4% they will raise and will over time slowly grind their way down through many cycles.. we may never see aussy 7-8% rates after the next cycle we may never see 4-5% rates.. for example look at 100 year interest rate cycles for the usd... they have been decreasing in cycles and waves.. overtime.. the same will happen with aussies to deter the stiffle.. its all part of a common economic problem.. and the inability to continue to regulate our economies the way we do..

EDIT: this is how unsustainable economic debt structure effects an economy.. this is why debt needs to be paid down and savings need to be increased.. then you can move through cycles of increasing wealth and tighter interest rate changes and less economic structures .. more stable.. at the cost of reduced growth rates at first.. but later will increase faster than debt structure
  • #23,314
  • Sep 20, 2010 7:52pm Sep 20, 2010 7:52pm
Looks like the AUD is well into it's fifth Elliott wave on the daily. I think it will interesting to see if 95 cents is the turning point.
Pity the fool who thinks they'll make it overnight...
  • #23,315
  • Sep 20, 2010 8:03pm Sep 20, 2010 8:03pm
Does anyone have any ideas on where the GBP/CHF will go from here? It went to historical lows and took a good bounce but has retraced but not to the lows.

Thanks.

fap103
  • #23,316
  • Sep 20, 2010 8:14pm Sep 20, 2010 8:14pm
Quoting Sunsi
Does the news event in 45min usualy have a huge impact on the pair?
Is it normal to see 50 pip moves in few minutes?
Yes more so in a few seconds depending on how the market is placed and the validity of the news.
  • #23,317
  • Sep 20, 2010 8:23pm Sep 20, 2010 8:23pm
Seems we will go long as on 30mtf there is a bull flag......

Guys any suggestion........
Attached Image (click to enlarge)
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  • #23,318
  • Sep 20, 2010 8:37pm Sep 20, 2010 8:37pm
hmmm.......markets might take these minutes as negative. They did mention that inflation expectations had eased, while international economy had slowed. No hint of interest rate bump......

read the last paragraph

http://www.rba.gov.au/monetary-polic.../07092010.html
  • #23,319
  • Sep 20, 2010 8:44pm Sep 20, 2010 8:44pm
Quoting mfoste1
hmmm.......markets might take these minutes as negative. They did mention that inflation expectations had eased, while international economy had slowed. No hint of interest rate bump......

read the last paragraph

http://www.rba.gov.au/monetary-polic.../07092010.html
Could be, but I just bought some @0.9456
  • #23,320
  • Sep 20, 2010 8:51pm Sep 20, 2010 8:51pm
HEY GUYS..CHECK THIS OUT..

http://www.bloomberg.com/news/2010-0...vens-says.html

http://www.nber.org/cycles/sept2010.html
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