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  • #32,301
  • Jun 17, 2013 8:02pm Jun 17, 2013 8:02pm
Quoting k3nshinz3139
{quote} The troops are going to that area now
DIVE DIVE DIVE............
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The More You Learn, The More You Earn.....
  • #32,302
  • Jun 18, 2013 12:37am Jun 18, 2013 12:37am
Quoting namitak007
Thanks mate! Well 2nd TP hit now last @.949


yeah!! three cheers to me!!! http://www.sherv.net/cm/emoticons/dr...nking-beer.gif Out now! Now long @.95 with tp .96 maybe I will close it before!
  • #32,303
  • Jun 18, 2013 2:48am Jun 18, 2013 2:48am
Quoting namitak007
{quote} Well then why AUD kept falling after Rate Cut? I was too expecting it to get some damage and then bounce back but it did not happened. Currently they are lowest in history with 2.75 and still can't find ground to their fall. So I expect if China rate cut occurs it will damage AU more! {quote} Thanks mate! Well 2nd TP hit now last @.949 {quote} SOLID brain I guess!
I was talking about China rate cut which has not happened yet. What are you talking about?
daddybearforex. com
  • #32,304
  • Jun 18, 2013 2:52am Jun 18, 2013 2:52am
Quoting namitak007
{quote} yeah!! three cheers to me!!! {image} Out now! Now long @.95 with tp .96 maybe I will close it before!
You did not look at my chart of Sun-Tzu's FCC posted 8 hours ago and entered too soon.
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daddybearforex. com
  • #32,305
  • Jun 18, 2013 3:36am Jun 18, 2013 3:36am
Quoting DaddyBear
{quote} I was talking about China rate cut which has not happened yet. What are you talking about?

Well as far as I know rate cut mostly weakens the currency. So if China decides to cut rate sooner while AUD is suffering against USD, don't you think it will suffer more?

Quoting DaddyBear
{quote} You did not look at my chart of Sun-Tzu's FCC posted 8 hours ago and entered too soon. {image}
Yup! Maybe too early but it's according to my plan. Let's see if I can come out green & I am fine to close in red too as it's very small position!
  • #32,306
  • Jun 18, 2013 3:49am Jun 18, 2013 3:49am
Quoting namitak007
{quote} Well as far as I know rate cut mostly weakens the currency. So if China decides to cut rate sooner while AUD is suffering against USD, don't you think it will suffer more? {quote} Yup! Maybe too early but it's according to my plan. Let's see if I can come out green & I am fine to close in red too as it's very small position!

A Chinese rate cut could boost the AUD rather then push it down.
  • #32,307
  • Jun 18, 2013 4:00am Jun 18, 2013 4:00am
Quoting Sixfour
{quote} A Chinese rate cut could boost the AUD rather then push it down.
Exactly!
daddybearforex. com
  • #32,308
  • Jun 18, 2013 4:06am Jun 18, 2013 4:06am
maybe then I am having some total misunderstanding! Thanks both of you though. I will check for more information on it. What I have in my mind as AUD directly proportional to China. So rate cut to China will act negative to AUD even though new investors gets attracted the 1st impact imo is always bearish! Anyways I will check for more information.
  • #32,309
  • Jun 18, 2013 4:45am Jun 18, 2013 4:45am
Quoting Sixfour
{quote} A Chinese rate cut could boost the AUD rather then push it down.
I'm new to FX and monetary policy. Can you explain the logic behind this?
  • #32,310
  • Jun 18, 2013 6:01am Jun 18, 2013 6:01am
Quoting edindzeko
{quote} I'm new to FX and monetary policy. Can you explain the logic behind this?
Hi Ed
the thinking is that when IR's go down, return on any investmests in that denomination also go down.
So drop in one currency's IR's, makes currencies with relatively higher IR's more attractive.
So....as AUD sitll currently has one of the highest IR's in world additional invertment in Aust - requiring the purchase of AUD - becomes more attractive.
Thus investors and more importantly real businesses take their money out of China and look for the best returns they can get. To invest in Aust they will need to by AUD - thus AUD goes up.

I think the concept of a carry trade can also illistrate why IR moves can impact the demand of one currency over another. When a currency has higher IR's relative to anonther - demand increaces for that currency - value of that currency goes up. IR moves thus become a catalyst for changes in these demands.

Google the "carry trade". Over recent years has been acknowledged to be a significant factor impacting the JPNAUD pair.

Hope this helps
  • #32,311
  • Jun 18, 2013 6:11am Jun 18, 2013 6:11am
Quoting GeoTrade
{quote} Hi Ed the thinking is that when IR's go down, return on any investmests in that denomination also go down. So drop in one currency's IR's, makes currencies with relatively higher IR's more attractive. So....as AUD sitll currently has one of the highest IR's in world additional invertment in Aust - requiring the purchase of AUD - becomes more attractive. Thus investors and more importantly real businesses take their money out of China and look for the best returns they can get. To invest in Aust they will need to by AUD - thus AUD goes up....
It will be great if you can explain with recent AUD rate cut and the might AUD/USD fall.
  • #32,312
  • Jun 18, 2013 6:25am Jun 18, 2013 6:25am
Quoting namitak007
{quote} It will be great if you can explain with recent AUD rate cut and the might AUD/USD fall.
Hi again
even though there have been some recent cuts in IR in Aust, relative to rest of the world Aust still has high IR's. Thus attractive - relativly speaking. As other currencies arround a high yielding currency reduce rate this makes the high yielding currencies even more attractive.
  • #32,313
  • Jun 18, 2013 6:55am Jun 18, 2013 6:55am
Quoting GeoTrade
{quote} Hi Ed the thinking is that when IR's go down, return on any investmests in that denomination also go down. So drop in one currency's IR's, makes currencies with relatively higher IR's more attractive. So....as AUD sitll currently has one of the highest IR's in world additional invertment in Aust - requiring the purchase of AUD - becomes more attractive. Thus investors and more importantly real businesses take their money out of China and look for the best returns they can get. To invest in Aust they will need to by AUD - thus AUD goes up....
That does help, thank you for the explanation.

Which is why I don't understand why AUD is taking such a beating I guess.
  • #32,314
  • Jun 18, 2013 7:03am Jun 18, 2013 7:03am
Quoting Sixfour
{quote} A Chinese rate cut could boost the AUD rather then push it down.

http://blogs.wsj.com/chinarealtime/2013/06/18/tough-love-from-chinas-central-bank/

  1. http://s.wsj.net/img/wsj_print.gif

  1. June 18, 2013, 1:03 AM HKT

Tough Love From China’s Central Bank

Banks have been scrambling for funds (http://online.wsj.com/article/SB10001424127887324188604578545184149408090.html) of late amid unusually tight liquidity. They could have reasonably assumed that the People’s Bank of China, which looks after this sort of thing, might give them a helping hand and inject funds into the market.
Instead, the central bank thumbed its nose at them on Monday, announcing it would sell a small amount — 2 billion yuan ( $323 million ) of central bank bills into the interbank market Tuesday, draining funds despite tight credit conditions.
http://s.wsj.net/public/resources/im...0114060524.jpg
Associated Press
The headquarters of the People’s Bank of China (PBOC) in Beijing.
It has people wondering if the central bank is saying problems created by the market should be sorted out by the market.
Looking at China’s interbank bond market, clearly something has been amiss. Around the dragon boat holiday overnight rates surged to around 15% in intraday trading – way more than levels in April or even late May. One bank was widely believed to have technically defaulted on an interbank borrowing transaction. Though this hasn’t been confirmed, there wasn’t much of an explanation from any of the usual suspects.
The liquidity squeeze was partly due to predictably heavy borrowing ahead of the long holiday. But it also was a result of a sharp reduction in foreign capital inflows (http://online.wsj.com/article/SB10001424127887323734304578545174278525766.html) in May – and that was partly from a crackdown on fake export invoices (http://online.wsj.com/article/SB10001424127887323844804578532401454450098.html). Those irregularities had inflated export data as some exporters tried to bring funds onshore, skirting controls oncapital movements, to take advantage of higher domestic interest rates and an appreciating currency.
Reduced inflows of capital from abroad in May helped tighten liquidity so much that the Ministry of Finance had the embarrassment of being able to sell less than two-thirds of the 15 billion yuan worth of debt it hoped to auction last week. This was the first time in nearly two years it failed to sell all of the bonds it offered. And adding injury to insult — it was forced to pay 3.76% on the debt, much more than the 3.14% yield on similar bonds already being traded on the market.
On Monday, there was more bad news as the Agricultural Development Bank of China had to respond to the lack of market appetite for debt, saying it would slash its planned offer of three- and five-year bonds to 18 billion yuan from 26 billion yuan.
If the nation’s banks could be granted one wish, it would be for a central bank cut in the reserve requirement ratio – the proportion of deposits that banks need to keep on reserve as a cushion against potential problem loans. That was last used in May last year and now doesn’t look like it will be employed again soon.
The central bank also refrained from using one of its newer policy tools – the SLO, or short-term liquidity operations — to sort out temporary problems in the banking system.
Left to its own devices the market saw a partial easing of liquidity at the shortest end Monday. The overnight rate slid to 4.81% from about 7 % on Friday, but there was no easing for slightly longer term funds. The interbank rate for one-week funds actually rose slightly from Friday to about 6.85%. Bond traders said market players were still cautious about offering funds for anything beyond very short term uses.
While the central bank had nothing officially to say, it seemed to be speaking volumes with its inaction. Its message was: “Don’t look to us.”
– William Kazer

The world you desire can be won. It exists.. it is real.. it is possible..
  • #32,315
  • Jun 18, 2013 7:04am Jun 18, 2013 7:04am
Quoting namitak007
{quote} It will be great if you can explain with recent AUD rate cut and the might AUD/USD fall.

Rate cut makes AUD less attractive. Chinese rate cut might make AUD more attractive as stimulus should provide demand for AUD exports.

Bur what is most important is expected future path of interest rates.
The world you desire can be won. It exists.. it is real.. it is possible..
  • #32,316
  • Jun 18, 2013 7:06am Jun 18, 2013 7:06am
Quoting Mr. Scott
{quote} Rate cut makes AUD less attractive. Chinese rate cut might make AUD more attractive as stimulus should provide demand for AUD exports. Bur what is most important is expected future path of interest rates.

Right. Expected future path of AUD interest rate is down, at least in the short-term. Correct?

So if China cuts rate AND Australia cuts rate, its a wash, no?
  • #32,317
  • Jun 18, 2013 7:12am Jun 18, 2013 7:12am
Quoting edindzeko
{quote} Right. Expected future path of AUD interest rate is down, at least in the short-term. Correct? So if China cuts rate AND Australia cuts rate, its a wash, no?

No rate of AUD is more important for fx as opposed to increased Chinese demand.
The world you desire can be won. It exists.. it is real.. it is possible..
  • #32,318
  • Jun 18, 2013 7:20am Jun 18, 2013 7:20am
Quoting Mr. Scott
{quote} No rate of AUD is more important for fx as opposed to increased Chinese demand.
Ok, so if both AUD and CNY cut rate, AUD should press lower. Correct?
  • #32,319
  • Jun 18, 2013 7:24am Jun 18, 2013 7:24am
Quoting edindzeko
{quote} Ok, so if both AUD and CNY cut rate, AUD should press lower. Correct?

What I would say is Chinese demand for Australian exports is less important than the market's expectation of the future path of AUD and US interest rates.

That being said, I just look at what the charts say as to future direction.
The world you desire can be won. It exists.. it is real.. it is possible..
  • #32,320
  • Jun 18, 2013 9:41am Jun 18, 2013 9:41am
What do you guys think about a hedge on AUDUSD ~10 min before FOMC announcement?

Everytime Benny opens his mouth the chart just seems to vibrate. Seems like a fairly safe play to look for ~25 pips in each direction before the market decides which way to continue.
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