AUD/USD

Finally, we are at 1.0660, not only 1.0600. Nice Aussie.

HI, there is a very good 1.0576 broken level on 4 hour chart, which is a support now, and it is good to see if the price comes back in this level , i think it that must wait to form a buy pattern

Lol

got stopped out @ 6840

Excellent post. You hit on my two fears with respect to the AUD; China's economy and Australia's housing market. I watch both very closely. Don't forget the Australian floods and Japan's decreased demand for raw materials.

There are no 'good' fiat currencies at the moment. I used to be a USD fan, as it is the world's reserve currency and where (traditionally) money flows when there is a flight to safety. We didn't see a flight to safety this spring in spite of Japan's earthquake/tsunami and the Middle East revolutions. That is telling me that the USD is losing its reserve currency status. I took my time to find a new 'safe haven' currency for my money and found only the AUD. To paraphrase Max Keiser, the AUD is the leper with the most fingers.

Interesting comments on QE. However, the Fed is buying Ts and MBSs. They're doing this with digital dollars that they've created out of thin air, so I would define that as printing.
It's an ill-conceived attempt to fill the decline in the money supply that has resulted from contracting credit (as you pointed out with fractional banking). The Fed's been fortunate to date that the velocity of money is at all-time lows but once that accelerates, the value of the USD will decline rapidly unless the Fed can soak up all that additional money supply. And in order to soak up the additional money, the Fed will blow up their balance sheet by selling Ts and MBSs at a lower price than they paid for them. Ben has dug himself a very nasty hole and he needs to stop digging.

Short Aussie, for a long term trade. See you under 0.9700 level.

.98-.95 is my target...then load up for 1.10+ imho

Dang, im pissed. Put in a long entry order around midnight for 1.0577. Missed this nice run by .0001.

lol, Great Keiser quote.


In relation to the USD reserve status, I have heard a lot about this lately. However, upon some examination these are the same arguments made back in the first half of 2008. If you look at google trends and type in "USD Collapse" and see the surge in people typing the search term "USD collapse" back in 2008, as the USD began its surge. While I agree it will lose its status longer term, it will take time. People see news stories like Yuan trading set up in Singapore and think the end is nigh, but in reality it could take many years. The GBP took a few decades relinquish its reserve status, it didnt happen over night. As long as the majority of the debt in the world is USD denominated, there will be brutal USD rallies as the unwind takes place with credit destruction. However, when the USD starts to get used less and less and diversified then the possibility for a real USD collapse will start. One must also forget Japan. There is a fair chance there will be crisis(bond and currency crisis) in Japan first. These things usually happen when where "people are not looking", and come from unexpected areas.

Take a look at the following chart. People have been calling for a USD ending of reserve status because it failed to rally in March during the Japanese tragedy, and the CHF instead strengthened. The following chart is one I have developed that looks at the relationship of the USD Index with other assets. In this case the SPX. It works around correlation, with below the red line deeply negatively correlated, and above the blue, positively correlated. I use a rolling summation indicator to smooth the data.

You can see that the SPX is showing a positive bias in correlation to the USD at the moment. If you look back to 2007-2008, the USD was struggling to find a bid even though the market was off its highs by 20%. The choppy action in the indicator is showing a very similar pattern to the market top and USD bottom in 2008.

The second chart shows the SPX and the USDCHF. The market was off 20% before the USD bottomed against the CHF. The same arguments were made back then, that a USD collapse was imminent. In the initial stages of risk aversion back in 2008 the CHF took the lead role, however, the USD take that role of the CHF once it had bottomed.

My view is that the USD will start its rise in earnest when it bottoms against the CHF, possibly soon.
Its a major contrarian trade for the second half of the year. Its despised, unwanted, and the COT positioning shows every one is on one side of the trade. The nature of the unwind in 2008 shows that many people were caught offside as everyone dashed to liquidate all at once.

Margin Debt and Leverage on the NYSE is at its highest level since 2007 also. I m positioning for a large rally in the USD, and even a chance that we could get back up to the 90.00 level on the index.

You can see more info on this in a post I wrote a month or so ago....http://triggerpointeconomics.com/201...-usd-buy-sign/

Agreed...check this out http://supercycleelliottwave.blogspo...4th-waves.html

VedantaTrade, I understand where you're coming from and understand your rationale for a USD rally. However, I'm seeing more and more chatter of central banks decreasing their USD holdings on both an absolute basis and percentage of foreign reserves.
My second concern is the debt ceiling. It will eventually get raised but not before a very public display of how dysfunctional our political system is.
I am also very concerned about the meager cuts made to the federal budget in the last continuing resolution. Not nearly enough. We need to cut the federal budget by 20% per year for the next three years to get anywhere close to balancing the budget.
I could also go into what rising interest rates do to servicing our debt along with the gargantuan annual roll on our debt. For FY2010, we're looking at $3 trillion in maturing debt and another $1.5 trillion in new debt. With that much debt coming to the market, I don't see how QE can ever end. And QE is debasing the USD.

The British Pound didn't lose its reserve status overnight and I don't expect the USD to lose its reserve status overnight either. At this point, I'm just looking for the safest haven for my money and at the moment, I think that the AUD is it. As Keynes once said, I change my mind when the facts change. I am always looking for good reasons to close any position I have; the two worst things you can do is fall in love with a position and not have the humility to admit that you're wrong. Hubris has destoyed many a trader's bank account.

There are a ton of moving parts and I'm watching many of the things you've discussed. Another nice post by you, even if we have opposite views.

hi everyone, i have been reading this forum for a while now. thought i might as well join. i can see most of you are long at this pair. i am no technical expert on forex market. i place my bet set a target and wait for profit to come along.
I am from australia and i have seen aud as low as 0.48 . i dont feel confident longing this pair. currently going short average at 1.0475. and have 2 other order pending 1.0734 and one at 1.0864.
i think aud is way too over valued. my target average at 1.0675-1.0700. and take profit @ 0.98. it might not happen over night but i am prepare to hold the position for extended period. ***** if it takes stairs to go up it must take elevator to come down ****

I've noticed a slight difference this time around on this USD low it might be worth looking into further but in 2008 USD short positions were running at 97% at their peak. When I look at the USD pairs now on the majors USDJPY,USDCAD,USDCHF most traders appear to be net long this time around. Maybe somebody could confirm this as it would imply that the USD is going a lot lower from here.

Hey, we would have no market without disagreement

I m quite bullish on the AUD on a secular basis, but not for the next 6-18 months.

All your points are very valid, and I agree with them all regarding the USD debt situation. This is a concept I have been struggling with, the age old debate about deflation and inflation. IT is impossible for the USD to pay back its debt, thats for sure, and I see continuing QE also. I m just going to play the swings between deflationary fears and inflationary fears until I see a clear winner.

My position might be different also. I have core silver and gold positions, so my musings on the USD are a hedge also. I would not own the USD outright thats for sure.

Good luck, I m sure we ll discuss it further as things unfold.

Thanks, I ll check it out later. Looks good.

LOL! Absolutely; there is always someone on the opposite side of your trade.

I don't even want to open up the inflation/deflation can of worms; I could be writing posts for days. Both points of view have many valid points.

Nice call on gold and silver. I have no precious metal positions; kicking myself as I think they'll go higher. Are you holding physical or paper? I'd recommend holding physical as I've been reading that a lot of the paper (ETFs, etc) don't exist in reality. Just make sure that no one knows you have it or keep it secure in a bank safety deposit box. Here's an interesting article for you: http://www.zerohedge.com/article/gol...-physical-gold

As a short term trader I have cut my longs and I will revise my earlier next long entry and hope that the bid retraces to 1.06280 between now and tomorrow... Maybe that is the next long entry...

That's the level I'm looking at atm...

However the USD news coming up in an hour "Existing Home Sales" has the potential to change things... So I am not placing any pending buy limits there just yet...

daily candle looks like a reversal....man this is gonna be sweet when it tanks!

the price is way too high by technical standards it should drop; however, this pair doesnt stop. after losing 12% in the last two weeks. i have given up and just going to buy on the dips until something changes

This last hourly candle is crazy, .. what a breakout