AUD/USD

China data is green..

The only stick in the spokes is the perceived (false) strength in the USD and all this taper talk.

If USD really does scale back QE then US equities are in real trouble.

it is a definite balancing act....that is for sure.

The thing I don't understand is Euro... NEGATIVE GDP in Spain. Unemployment is over 12%. No hope of turning it around either.

Germany is the one lone country holding EU afloat, portugal, greece, italy...all down the tubes.


Sure China is holding back AUD, but how is China not holding back US also? If China isn't producing then how can America buy it?

Its a strange animal to say the least..

are you still holding or sold the open

Small lot.. SL 0.87... added long order 0.8765

Not everything in made in China is purchased in the U.S.

China is the place for production, sure. So is Indonesia, Mexico, Korea, India, Haiti, Africa and the list goes on. Trust me, us Americans will purchase it regardless of where it's produced.

I agree here Edinkzeko. I lost quite a bit of money in thinking that the USD would reflect the Fed's reluctance to taper prematurely and in turn, reflect at least a retracement in AUD/USD. But when the USD continued to rally throughout the week and the AUD/USD continued to plummet from that standpoint it seemed the expectation of a Sept taper is very much still "On". I still have a Moody's / S&P / Fitch institutional account and saw the sovereign credit rating analysis for AUD. As of late June 30 a report was released that affirmed the Aaa rating (Moody's rating). Not a single mention of China in the report. I really think its only a matter of time as the below would demonstrate that quite a few negativity has been priced in for some time now. The bearish trade of the AUD is highly crowded.

As per Moody's:


Rating Rationale

Australia's Aaa rating is based on the country's very high economic resiliency, very high government financial
strength, and very low susceptibility to event risk. Economic resiliency is demonstrated by the country's very high
per capita income, large size, and economic diversity. As one of the world's most advanced economies, the
country has not only a significant natural resource sector--including minerals, hydrocarbons, and agriculture--but
also well developed manufacturing and service sectors. It also demonstrates strong governance indicators. In
particular, the framework for fiscal policy is transparent and has, until now, consistently kept government debt at
low levels.
The government's debt rating of Aaa takes into account the aim of maintaining a balanced budget, on average,
over the business cycle. It is supported by the very low level of public debt and the country's strong financial
system. In comparison to most other Aaa-rated countries, Australia's government financial strength is very high,
with very low gross debt that is easily affordable and provides a high degree of fiscal flexibility.
Although Australia's demographics and policy framework leave it well positioned to deal with population aging
relative to other industrial countries, the government's own analysis indicates that health and aged care spending
will lead to the emergence of a funding gap over the next 40 years. The potential fiscal burden is well into the
future, but measures to address the issue may be considered in the coming few years.
The diversity of the economy and the strength of the financial system lead to a very low level of event risk.
However, the banks are more dependent on foreign funding than in some other advanced economies. The large
size of the negative net international investment position is a vulnerability in times of global financial market stress.

Rating Outlook

The stable outlook is premised on the expectations that the government will maintain its low debt levels and
macroeconomic conditions will continue to support fiscal consolidation. The Commonwealth government was a net
creditor prior to the global crisis, but will show small net debt for the coming few years.

What Could Change the Rating - Down

Any trend or event that caused a long-term shift in budget balances to significant deficits and an increasing public
debt burden might put downward pressure on the rating. Such trends could include, for example, fiscal costs
associated with an aging population. However, since the government has been proactive in addressing this issue
through its superannuation policies and proposed reforms to healthcare schemes, Moody's does not anticipate
sustained fiscal deterioration over the rating horizon.


Recent Developments

GDP in the first quarter rose 0.6% from the previous quarter and 2.5% from a year earlier. Household consumption
growth equaled the 0.6% rise in real GDP during the quarter but was only 2.0% higher than in the year earlier
period. Australian households have remained relatively cautious, with the household saving rate remaining above
10% compared with less than 2% prior to the global financial crisis. Investment in engineering construction
dropped 5.7% during the quarter, perhaps reflecting the beginning of the expected slowdown in mining and LNG
projects. Export growth was strong, with real exports up 8.1% from a year earlier and net exports being the largest
contributor to growth during the quarter. Part of the downturn in the level of new investment in the mining sector will
be offset by increased export volume as these projects move into the production phase. Nonetheless, the
economy has grown somewhat below potential for the past three quarters. Nominal growth, an important
determinant of government revenues, picked up during the quarter, but nominal GDP was still only 3% above its
year earlier level.

Slow nominal GDP growth because of declining terms of trade was the main driver of the Commonwealth
government's missing its original target of returning the budget to surplus in the 2012-13 fiscal year, which ends on
June 30. Instead, a deficit equivalent to 1.3% of GDP is now estimated, with small deficits in the coming two years
before a surplus projected in the 2015-16 fiscal year. These projections indicate that the budget will have been in
deficit for seven consecutive years by 2014-15. The initial deficits were the result of an explicit stimulus plan
designed to offset the effects of the global financial crisis. This was successful, in that Australia was one of the
few countries to avoid a recession at that time. The continuation of these deficits beyond the government's original
plan, however, reflects reliance on tax revenues linked to the resource sector and, in part, to commodity prices.
Ultimately, as the investment phase of new resource projects winds down and export revenues pick up, the
government's revenues from this source should rise. However, if there is a change in government following
elections in September, there could be changes in tax policy.


Enjoy. As I dont think I will have access to these reports for too long.

http://images.smh.com.au/2013/03/21/...ings-60x60.gif
12:40pm: The federal government’s financing arm plans to raise an extra $10 billion from investors this financial year, due to to the deteriorating budget position.
The Australian Office of Financial Management said today it expected to issue $60 billion worth of Treasury bonds in 2013-14, up from $50 billion forecast at the time of the budget.
A note from UBS analysts Matthew Johnson and Andrew Lilley predicted the increase after the government’s economic statement last week.
‘‘This will be a record year: exceeding the 2011-12 record of $58.2 billion,’’ the analysts wrote.
Despite the rise, however, the analysts said the Commonwealth government’s AAA credit rating would remain intact.
The biggest risk to the rating is the current account deficit, they say. This is actually contracting as mining investment retreats from its peak, because there is less need to borrow from overseas to finance business spending.


Read more: http://www.smh.com.au/business/marke...#ixzz2b3nwoKfC

Hehe yeah. Well. Always good to get it from the Horse's mouth at least xD

Thanks for this post.

We can compare GDP of US to AU for example. US GDP is slowing down to a trickle since 2011. 2012 slower. now 2013 even slower. Part time jobs at an all time high to boot... Yet AU is steady and the mining problem is only temporary. Gold is needed in industry aside from investments and I know first hand that mines in South Africa are profitable even at $900/oz. AU can't be far behind.

If you don't mind me asking, how can you access the Moody's report? I would pay for that, seems pretty valuable. If you are secret I understand.

What are you referring to? Advanced GDP was 1.7% QoQ, Aussie is looking at 2.5% YoY. Australia also has an unemployment/underemployment issue.

I get that we try to rationalize it, but it is what the trend is. The US may tank again, and the Aussie shoot up. But fundamentally speaking, they both are in the same boat in terms of weak economy, but the USD is the largest in the globe (for now). I think that have weight. Aussie has more to lose in regards to interest rates IMO. Each cut may further weaken the currency. At .25%, that's not in the cards for USD

Furthermore, the moves in gold show you it is not somewhere you want to store wealth. It is a trading vehicle in my opinion. Nothing more, nothing less. And the largest physical demand is coming out of Asian, but with China clamping the easy credit, it is likely funds will lessen their load. Additionally, IMO gold will not be "true market value" until we get rid of "paper" gold.

Minors are done for right now. It cost anywhere from $900-1000 to mine an ounce of gold. Also, there has been a large divergence of miner performance and gold prices for a long, long time. And, the mining issue will continue to stagnant as long as demand is halted by slow global economics.

Compare actual (inflation adjusted) GDP AU vs US and US is 0%, really negative. USA has a far bigger problem with unemplyoment/undermployment.

Sure I agree, the Aussie has more to lose in terms of interest rates...because how the hell do you beat 0.10%??

In the short term USD will continue to win, but its a story of fiction with no backing. Manufacturing is cutting the most jobs, yet they print the highest "growth" according to ISM and other B.S. Food stamps is about the only permanent growth in USA.

Saw it from Chinese media that a new round of 4 trillion yuan stimulus is on the verge of coming. Can't find english version of this news yet. Looks like projects related to environment improvement is a big chunk of it, but there are also projects related to infrastructure constructionin the cities.

http://business.sohu.com/20130802/n383237910.shtml

This is how I look at it: We are traders. I find it hard to rationalize what may happen to what is happening. I cannot control the single mother in Harlem with 6 kids on EBT rockin' Jordan's, a gold grill, and a leased Escalade, but I can nab 50 pips on a faded AUDUSD rally.

It may sound funny, but I learned a long time ago that markets don't care about what I think. I have to trade what the market thinks. If that's S&P to 23,000 than hopefully I can profit enough to make my life and my family's a little easier. And currencies nowadays is not like investing in a company with 20% forward 5Y growth forecasts. It's about political, economical, and news risk. IMO.


Don't get me wrong. With the debt of this country, economic collapse I think is only a matter of time as long as these blowhards continue to run the country.

Also, today's job market is different. It is in a lot of places. Manufacturing is still producing, or at least profiting, regardless of the amount of jobs on the books. It may suck for the unskilled worker or laborer, but companies are learning to do more with less. That is just what it has morphed into.

And in the same token with inflation, Australia would have .5 to .6 taken off. Also, consumers are hurting in Oz land. There's little demand.

True, with Fed providing the number, US dollar rallied for a short term, i believe for another a couple of weeks. Then there might be turn in tides. In my opinion, AUD has more to drop, with tmr trade balance and rate cut(whether cut or no cut), it might fall to 0.88 or 0.86, as 0.86 is supporting level in 2010(i might be wrong, because i m writing from iphone). I see 0.86 is the critical level atm

Hedge funds lowered bullish gold bets for the first time in five weeks as signs of accelerating U.S. growth contributed to the longest retreat in prices in a month. - bloomberg

I can. Just tase'm

Lol, I live in North Atlanta. Heard a women today say she did not know the Uk was an "island."

Mmmhmm. I bet dat gurl got some cheelren thankin' da same damn thang.