Australian Bear Raid

Australia is a credit bubble built on a commodity market built on an even bigger Chinese credit bubble

Last week, Deutsche Bank's Adam Boyton and Phil Odonaghoe warned of the end of the investment boom and a 2013 recession in Australia. "It does seem to us that there is some complacency surrounding the prospect of a sizeable decline in the terms of trade – and some over-confidence that the investment pipeline is ‘locked in’. While there may be reasons as to why this time is different ...history would counsel some caution on the investment outlook. an average response to a circa 15% decline in the terms of trade would see business investment falling in year over year terms by early 2013."

China: HSBC Manufacturing PMI — 49.5, up from 47.9 in September
Taiwan: HSBC Manufacturing PMI — 47.8, up from 45.6 in September
Vietnam: HSBC Manufacturing PMI — 48.7, down from 49.2 in September

Indonesia: HSBC Manufacturing PMI — 51.9, up from 50.5 in September

PnL going into Friday and into RBA next week. Now this swing has been something of an experience for me and really at times while riding my bike at night I think constantly as if I am sitting at the table with stevens and the others deciding what factors matter most to Australia and why a rate cut still makes sense and if we get it next week I will post this paper I have been working on for for 2weeeks.

Now as for the swings I am sure some of you have seen I was up 70+K in the very beginning down 30K as we retraces, then i SOLD more at 1.04-1.0410 and up over 145K now I am currently here on my pnl





So to say the least waiting from one 'key news event' to the next has been something of patience that I have grown accustom to just like EUR/USD 1.30 when I was waiting for that dam to break for a few months. The position game is something that you have to be exactly right about on a macro standpoint or else you face the loss of opportunity cost, and a more painful loss after months of building.

I am relaxed knowing that the walls of fib confluence are still holding up, RSI is approaching Overbought and that 1.0435 is the real last line of defense for bears before 1.06 will be achieved again. Knowing all this and the RBA is around the corner I can feel more relaxed if we are at this level with just days to go rather than be at this level at the middle of the month where PA can push even higher.

if tonight data unemployment rate is above 8%,
i might start closing some of my shorts..

PPI and Retail Sales will signal why RBA needs to cut rates. Still waiting for the RBA as the main event news though

1.04-1.0435 should hold given the resistance wall

FINALLY!! I have a hedgie in my corner on China/Australia. David Einhorn is shorting Iron Ore expecting targets of 100-80 early next year.

http://www.gibidallas.com/speakers

It seems to me that one of the factors that is at the forefront of the RBA is housing sales. Generally speaking if a reserve bank decreases their prime interest rate that change may be passed on to home buyers through lower loans. So lower interest rates beget more home buyers. Now these people have a commitment to pay a mortgage over a number of years. What if businesses take a downturn - and we all know the probability of that. And what if that recession or lack of growth takes place within the next month wouldn't it be better to sit on interest rates for the next month? Then these people have a commitment that they may not be able to hold up to and given the experience in the United States no bank in their right mind wants to go through what has happened there.

I say all this knowing the other side of the fence which is the tug of war here. Australia is still one of the only countries that is not running a deficit so the loss of tax revenue from declining miners and other businesses may only be short term (meaning less than a year).

Since one of the factors involved in world growth is the rescuing of parts of Europe, this no doubt has an effect on China, then likewise, Australia. This seems to be like another episode of General Hospital (although I have never watched it) the point being that it never ends. Certainly the situation in Europe is not a one time event. Secondly, it seems that the correlation between the price of gold and the Euro has to change or else the tug of war continues. I talked to a number of miners and their break even is way below the current price. There is still a dampening effect from lower prices.

Regardless of the technical levels I would like to see the Australian dollar as high as possible going into the RBA decision because I figure the economists have figured out a point of intervention. Certainly in my way of thinking an AUDUSD at 1.04 anything is worthy of a rate decline, but then I am a scalper as well so there is always a reaction.

I live in Canada and the Canadian government lowered the value of the Canadian dollar by running deficits, and by stating they may change the bank rates based on the debt levels of individuals. It seems to me that that debt amount is going up in Australia as well. At least the number of home sales went up, and that is at current rates.

Taiwan: HSBC Manufacturing PMI — 47.8, up from 45.6 in September
Vietnam: HSBC Manufacturing PMI — 48.7, down from 49.2 in September
Indonesia: HSBC Manufacturing PMI — 51.9, up from 50.5 in September
India: HSBC Manufacturing PMI — 52.9, up from 52.8 in September
Russia: HSBC Manufacturing PMI — 52.9, up from 52.4 in September
Ireland: NCB Manufacturing PMI — 52.1, up from 51.8 in September
Turkey: HSBC Manufacturing PMI — 52.5, up from 52.2 in September
Greece: Markit Manufacturing PMI — 41.0, down from 42.2 in September
UK: Markit / CIPS Manufacturing PMI — 47.5, down from 48.4 in September
Brazil: HSBC Manufacturing PMI — 50.2, up from 49.8 in September
US: Markit Manufacturing PMI — 51.0, down from 51.1 in September
Canada: RBC Manufacturing PMI — 51.4, down from 52.4 in September
Mexico: HSBC Manufacturing PMI — 55.5, up from 54.4 in September

Syncopat,

again you give me something to think about thank you for your continued inputs and I agree if the RBA shifts tone and hold next week it would be for the reason you described

One of BHP Billiton Ltd's most senior executives has forecast a drop in iron ore prices over the long term, as well the mining giant becoming a bigger producer of middle-income commodities such as shale gas and potash, The Australian Financial Review reports.
According to the newspaper, BHP’s chief executive for aluminium, nickel and corporate development, Alberto Calderon, said as China continued to develop, iron ore demand would fall.
“The physical iron ore demand of China will go down," he said, according to the AFR.
"That high end of the cost curve will disappear.

“Still a significantly, very significantly less amount of revenue for BHP of exports for Australia.”

per the commodity release

No dowstream price pressures, just consumers paying more

Final demand (excl. exports)

0.6
1.1

Domestic

0.9
1.1

Imports

-2.3
0.4

Intermediate demand

0.1
1.5

Domestic

0.6
1.6

Imports

-3.6
0.3

Preliminary demand

-0.2
1.2

Domestic

0.2
1.2

Imports

-4.0
0.6

You want your reason why RBA should cut next week look to ppi and retail sales. International economies is secondary in their mind right now. They are focusing on domestic pressures

Hi jplazard, interesting thread you have here. I'm also short on audusd, because I think australian economy is getting worse , also I see a monthly triangle , so I expect a major change in trend. My targets are below 0.90. Do you have a target?

1.0050 then a retrace but the ABC for that is not possible to draw yet. Then a full fill back to 0.95 but we will see

closed all Dollar short positions with a loss of 6,288 it broke out of its range and that means im out. I am overall happy with this because this means we could see some dollar appreciation and commodity risk off including AUD NZD all we need now is RBA to say the word

As for right now and as I stated last week and a bit before I don't expect a major bid spike or sell spike before RBA meeting and any news that comes out with the Spikes will be filled in short order. If anything we could be trading at the Hourly bar right at the Oct cut 1.03655

Wrote the above two nights ago on Australian Bear raid. This could be the level we trade at come the main event night.

This is necessary this downward movement first you have the dollar breakout above YTD 618%

Then you need ES to form a rounding bottom which looks like its almost complete. A few more days and another test of 1405 would make it complete

and PS.. the fib confluence walls always prevails that is until they market bust right through them and then the next 'set' of fib walls comes into play. This month the fib wall at 1.04-1.0435 held before the RBA




And like I mentioned and most here have said also the market participants are not going to bid up the market of AUD or sell it off too much pre announcement because it really is coming down to a coin flip