AUD/USD

Hi all,

Im new here and would appreciate your input. please see attached

Thanks

Since writing this short peice last week on the narrowing percentage yeild between EUR/AUD and AUD/USD

http://www.forexfactory.com/showthre...92#post5974692


AUD/USD was then at 1.03% noW since today we are at -0.02% and EUR/AUD has increased to -2.58% up from -3.41%. Finding correlations is another great tool in a traders box because it lets you know what others are trading.


I
I Know of ALGO's who trade solely based off this model of converging/diverging yields and percentages so if they are doing this than the everyday trader should know about this as well and how to exploit it
The day you find two markets that move almost in lockstep dollar for dollar or % wise is the day you have found a macro trade to exploit for weeks and months. This is still one of them until the correlation breaks down.

Current account number a little bit better than expected, no real movement right off the news but a little bounce since then.

I've closed 20% of my position around 1.0230 before the RBA tonight. If we don't get any bearish words from the release it might be a good idea to hold fire until the GDP number tomorrow night, barring any big movement or news of course.

I'm long from 1.02339. I'll be looking to add to the position if it breaks 1.0251.

Nice breakout of downward channel. Looks to me like demand is lurking around 10175.

Since we officially hit the middle of the flag, the last chart I posted here with the targets may come into play. Price may go down to 1.02, but there could be a retrace before. However, if price does go down to 1.02, I would be surprised if the level broke, and wouldn't be surprised to see a move up to 1.05.

If price does break the 1.02 levels, I'll post some interesting areas to watch for.

Perhaps a nice little run indeed if Stevens and co. are interpreted as bullish in about 40 minutes.

Edit: oops, make that about an hour and ten minutes

Hi CDM,

what expectations of news? any friend have guess? I am long at 1.02400,
dont know what happened next,

thanks

Hey Ahmad,

Just speculation of course, but my call would be a pretty bearish sounding release. The RBA has had time enough to digest the slowdown story and it's in their interests now to move towards some softer policy.

I don't believe they'll be cutting rates tonight, and that's the general perception out there. If they do then it's down we go.

Even if there is some bearish sentiment in there however, if it's not bearish enough the market may interpret it as a disappointment and we'll get a little bounce off the release.

Again though I believe it'll be bearish and probably bearish enough.

I'm holding the rest of my short position and won't reduce until tomorrow night in any case when GDP numbers are released.

Best of luck!

Its been on a downtrend lately, and this 0.5 level would be right to wait to see if the downtrend continues or stags or reverses. Till then milk the cow.

Current price: 1.0239*
Time: 3.36 GMT

If we see a retrace towards the upside I will look to add a few more short positions at the 55 Day MA @ about 1.034.

I also have a complex indicator which uses several moving averages, RSI, and speed of price change. This indicator gave me a sell signal (yesterday) on the weekly chart.

Also, Williams % (leading indicator) has already crossed over and the weekly MACD indicator (lagging indicator) is just about to cross over as well.

We are clearly in a downtrend now and I will look to sell on any retraces we get. Remember folks, the trend is your friend, don't try and go against it.

Like that number, I may do the same news allowing. If the RBA doesn't move us in that direction then the ISM number tomorrow could do it barring price floating up over night.

Bullish

Care to post any charts or explain why?

Aussie Bets Send Warning Signal For Currency
By James Glynn

The strains and stresses on the Australian dollar are growing rapidly and its key supports are under attack.

Already at six-week lows against the U.S. dollar, everything from falling prices of Australia’s key exports of coal and iron ore, rising expectations that interest rates will be cut again, and a slowdown in China, argue for a fall in the Aussie.


Bloomberg News
The latest negative for the currency can be seen in wildly skewed market positioning.

Last week, long Australian dollar positions held by speculative investors trading the Chicago-based International Monetary Market, or IMM, touched a record high last set in December 2006. Market watchers say it means that once the profit-takers come off the sidelines, the snap back in the Australian dollar could be truly spectacular.

The number of long Australian-dollar contracts on the IMM last week totaled a net 114,000, up from 62,000 four weeks earlier.

“Over extended positioning is just the latest issue the Australian dollar has to contend with,” said Gareth Berry, currency strategist at UBS UBSN.VX +0.47%. “Clearly, the risk of a positioning snapback is significant and supports our bearish forecast which sees the Australian dollar falling back to parity against the U.S. dollar over before the end of the year,” said Mr. Berry.

The Australian dollar has been the darling of the currency world in 2012. It rose midyear to with striking distance of its 30-years highs as central banks and global investment funds poured money into the country, seeking the relative safety of Australia’s triple-A rated sovereign bonds.

Demand from central banks and sovereign wealth funds has led to a repositioning of the Australian dollar as a safe-haven asset, having thrown off its previous reputation as a boom, or bust, currency closely linked commodity price swings and interest rate speculation.

If the current bets being placed in the currency futures market reverse then the Aussie could fall hard and fast as it has in the past. In 2008, the currency lost 40% of its value against the greenback in a matter of weeks.

On Monday in Asia, it was trading around US$ 1.0250, down from a high in early August of US$1.0612.

The Reserve Bank of Australia, or RBA, has questioned the strength on the Aussie dollar in the face of falling commodity prices and has highlighted the anomaly in recent policy statements.

For manufacturers, tourism companies, and other industries not tied directly to mining, a fall in the Australian dollar below parity won’t be a bad thing. But for foreign investors and bond traders it could be a disaster.

thrill seekers did not cut Interest rate today

Alright, it look like the RBA Rate Statement will be the catalyst to give us our retrace upwards.

I will be looking to short AUD/USD, AUD/JPY and will be looking to add more long positions for EUR/AUD & GBP/AUD once the dust settles.

Rates unchanged, rather bullish statement in my opinion. Talk about inflation being at target, Aussie bank's having no trouble borrowing, acknowledging the China slowdown but downplaying it while noting that expectations for addressing Europe's issues are high.

I have to assume that, at least in some small part, this will reduce the absolutely certainty for cuts in the very near future.

Here it is:

http://www.rba.gov.au/media-releases/2012/mr-12-25.html

At its meeting today, the Board decided to leave the cash rate unchanged at 3.50 per cent.
Having picked up in the early months of 2012, growth in the world economy has since softened. Current assessments are that global GDP will grow at no more than average pace in 2012, with risks to the outlook still on the downside. Economic activity in Europe is contracting, while growth in the United States is only modest. Growth in China remained reasonably robust in the first half of this year, albeit well below the exceptional pace seen in recent years. Some recent indicators have been weaker, which has added to uncertainty about near-term growth. Around Asia generally, growth is being dampened by the more moderate Chinese expansion and the weakness in Europe.
Markets for key natural resources are adjusting accordingly. Some commodity prices of importance to Australia have fallen sharply in recent weeks. The terms of trade peaked a year ago and have declined significantly since then, though they remain historically high.
Financial markets have responded positively over the past couple of months to signs of progress in addressing Europe's financial problems, but expectations for further progress are high. Low appetite for risk has seen long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Nonetheless, capital markets remain open to corporations and well-rated banks, and Australian banks have had no difficulty accessing funding, including on an unsecured basis. Share markets have generally risen over the past couple of months, on very light volumes.
In Australia, most indicators available for this meeting suggest growth has been running close to trend, led by very large increases in capital spending in the resources sector. Consumption growth was also quite firm in the first half of the year, though some of that strength was temporary. Labour market data have shown moderate employment growth, even with job shedding in some industries, and the rate of unemployment has thus far remained low.
Inflation remains low, with underlying measures near 2 per cent over the year to June, and headline CPI inflation lower than that. The introduction of the carbon price is starting to affect consumer prices in the current quarter, and this will continue over the next couple of quarters. The Bank's assessment is that inflation will be consistent with the target over the next one to two years. Maintaining low inflation will, however, require growth in domestic costs to remain contained as the effects of the earlier exchange rate appreciation wane.
As a result of the sequence of earlier decisions, interest rates for borrowers are a little below their medium-term averages. The impact of those changes is still working its way through the economy, but dwelling prices have firmed a little and business credit has picked up this year. The exchange rate has declined over the past month or two, though it has remained higher than might have been expected, given the observed decline in export prices and the weaker global outlook.
At today's meeting, the Board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate.

Indeed, statement might be good enough for 10340 on it's own over night.

First target down.

http://www.forexfactory.com/showthre...52#post5980652