- #38,125
- Dec 27, 2011 10:52am Dec 27, 2011 10:52am
You can always play on the mirrored effect of the AUD/USD and the EUR/AUD:
http://i741.photobucket.com/albums/x...RAUDmirror.gif
At a slow pace such as this past week and coming week, it's doable. When the action picks up, you gotta be nimble.
http://i741.photobucket.com/albums/x...RAUDmirror.gif
At a slow pace such as this past week and coming week, it's doable. When the action picks up, you gotta be nimble.
It's the simple things in life that have the most powerful meaning.
- #38,126
- Dec 27, 2011 11:28am Dec 27, 2011 11:28am
In the mid/late 90s, East+SouthEast Asian countries were enjoying double digit growth. It was widely rumored (by asians) that Europe+USA were envious of the success so much so Madeline Albright + George Soros orchestrated the great 1997 Asian Financial Crisis to negate the progress.
Currently, we are back in the same situation with Europe+USA in economic slowdown with BRICS+Asia in top gear.
Will we see something like the 97s Asian Crisis to happen to Asia again?
Well, I'm not one to say that that particular scenario will not happen again, but the likelihood of it happening is definitely much lesser than before mostly due to the fact that most banks in the region have learned from that crisis and have built in measures to ensure their structure remains intact even in the face of global uncertainty.
BRICs + Asia are much more influential now in the flow of global economy, and if they enter a crisis so will the rest of the world.
Look at Europe for example. In my opinion, one of the main reasons they came up with the EFSF is to allow BRICs+Asia an avenue to bail them out. As soon as they announced the EFSF plan, one of the first things they did was send Klaus Regling, the CEO of the EFSF, to China to bankroll their debt.
Look at the recent headlines of the past few years. And see how the tone has softened from the US and Europe regarding China's questionable human rights records or its questionable currency policy.
Here are two articles in regards to Europe and China:-
http://www.rfa.org/english/east-asia...011033711.html
http://money.cnn.com/2011/10/27/news...buzz/index.htm
Of course, the best scenario would have been China saying, "Of course. How much do you need?"
But once that blank cheque that they were hoping for went up in smoke, it was back to the drawing board. Except that there isn't any Plan B.
I've been saying it for awhile, and I'll say it again. The only way for Europe to get out of its current mess is for the ECB to start up the printing press. And they better get to it, instead of having countless meetings after meetings trying to solve a problem that is getting bigger by the way.
Anyway, that will be a a different article for another time. I've already run off course with the original discussion. Once I get started, I won't be able to stop! To be honest, I am fascinated with the whole saga.
We live in interesting times. And my head tells me that the current global economic power shift will soon tide itself from the West to the East.
It has already begun.
Of course, all of the above is entirely my personal opinion. I could be completely wrong, and all of the BRICs+Asia will collapse and go bankrupt in a year's time.
- #38,127
- Dec 27, 2011 11:45am Dec 27, 2011 11:45am
AUD is a commodity currency and is linked more to China than anything. Not risk aversion. When NY companies go up AUD will go up because most NY companies outsource to china. When the Chinese data comes out bad, its bad for AUD but not necessarily by risk aversion.
Likewise when AUD is rising doesn't make it risk on, since EUR can be falling because of italy bonds topping 8 percent for example. S&P will rise more than anything else, which bodes well for this currency for n ow, until China is decoupled from the states which may take a few years,...
I don't think I quite agree with the bit where "NY companies go up, AUD will go up because most NY companies outsource to China".
Personally, I will say currencies such as the Euro and the AUD are "risk-on" currencies, and currencies such as the USD and the Yen as risk-averse currencies.
From my understanding, the main reason the USD dollar weakens when the equity markets rise, is because of the change in the sentiment of risk.
As the outlook becomes brighter, individual or institutions will use their USD to purchase higher yielding assets such as stocks, Euro and AUD, which will see better return for their cash. Thus why, more often than not, the S&P rising coincides with the USD weakening. Not due to NY companies outsourcing to China.
And as risk averse conditions set in, investors will flee to "safe haven" platform by liquidating their riskier and higher yielding assets such as stock back to the USD, Euro and AUD back to the "safety net" of the USD, Yen, and until more recently before the SNB stepped in, the much loved Swiss Francs.
Of course, from time to time, the correlation decouples as happens with most things in this world. But I can't recall the day where risk averse conditions set in, the Euro falling due to bond yields skyrocketing, and the AUD still managing to push higher against the USD.
And again, I could be wrong about all of the above. I'm not an economist by trade, just from my very basic understanding.
- #38,128
- Dec 27, 2011 11:53am Dec 27, 2011 11:53am
Back on topic of the AUD/USD.
For those bearish on the AUD (I am bullish, but we can't all be bullish.), this is as good a time as any to short for a first target of the blue line as seen on the chart attached, keeping a core position for a break, retest and close below the blue line.
The reason I'm saying this because your stop can be placed very comfortably on a close above the 100 day moving average and the blue line above which should negate any short term bearish views. And we have bounced off this level quite a number of times backdating from around November 2010.
Just thought I'd point it out for those who missed it and are interested.
For those bearish on the AUD (I am bullish, but we can't all be bullish.
), this is as good a time as any to short for a first target of the blue line as seen on the chart attached, keeping a core position for a break, retest and close below the blue line. The reason I'm saying this because your stop can be placed very comfortably on a close above the 100 day moving average and the blue line above which should negate any short term bearish views. And we have bounced off this level quite a number of times backdating from around November 2010.
Just thought I'd point it out for those who missed it and are interested.
- #38,129
- Dec 27, 2011 12:16pm Dec 27, 2011 12:16pm
I hope you don't mind if I enter this discussion.
And again, I could be wrong about all of the above. I'm not an economist by trade, just from my very basic understanding.
There's not one main course in any economics college program that has taught about the inverse relationship between USD and its Stock Market, the S&P and DOW. The dollar selling off on good news, especially US good news baffled me at first, because it defies conventional economic theory of when a country is performing well, investors should flock to its currency and buy. Until recently, this relationship didn't even exist.
It's all the twisted, demented policies, starting with the fact our interest rates are way way out of sync and super low. That alone screws up the rest of that portion of macroeconomic theory. And the other theory or keynesian principal of increasing the money supply to stimulate growth is also be tested right now.....We could see some major re-writing out of this time period, no scratch that, we will.
- #38,131
- Dec 27, 2011 5:51pm Dec 27, 2011 5:51pm
- Joined Jun 2009 | Status: Carry Trader that not want interest | 2,016 Posts
I hope you don't mind if I enter this discussion.
I don't think I quite agree with the bit where "NY companies go up, AUD will go up because most NY companies outsource to China".
Personally, I will say currencies such as the Euro and the AUD are "risk-on" currencies, and currencies such as the USD and the Yen as risk-averse currencies.
From my understanding, the main reason the USD dollar weakens when the equity markets rise, is because of the change in the sentiment of risk.
As the outlook becomes brighter, individual or institutions...
ur mind same like me.....hahha.....like...like...haha
Bismillah
- #38,132
- Dec 27, 2011 5:56pm Dec 27, 2011 5:56pm
- Joined Jun 2009 | Status: Carry Trader that not want interest | 2,016 Posts
Bismillah
- #38,133
- Dec 27, 2011 6:37pm Dec 27, 2011 6:37pm
- | Joined Dec 2011 | Status: Trader | 1,581 Posts
Any prices quoted are futures
- #38,138
- Dec 28, 2011 7:41am Dec 28, 2011 7:41am
Currently im still holding my short ON AUDUSD start from 1.0050.. and my position stil in floating around 100pips.. But i have a strong feeling That AUDUSD will drop down very soon.
and when will you bail out? at 1.0400?
im not saying its going up.. just wanting to know if you have exit plan
Currently im still holding my short ON AUDUSD start from 1.0050.. and my position stil in floating around 100pips.. But i have a strong feeling That AUDUSD will drop down very soon.
P.S.: Just hope will not get u far, gotta have a plan.