AUD/USD

[explod]

A firming up of the US$ in the last day or so has also played its part.

Will be short lived in my view. The aussie $ fall that is.

 

[MRC & Co]

Well it prooved that the RBA was a small fish in the sea in comparison with the BoJ, keeping the liquidity rally full blown! Then Evans in the US basically saying US QE2 is going to be coming and looks like it will dwarf the Japanese attempt! All great for the carry to blow full steam ahead.

Trade wars are the next thing heating up and look what could potentially derail all of this, but that shouldn't be an issue before G20.

All good for your gold stash Explod!

 

[Boggo]

Short term hit and run trading seems to be the best method on these currencies, is that the general method that most apply ?

This is the opposite of what I do on daily stock trading.

(click to expand)

 

[tech/a]

Thats what I tend to do.
Double top on AUD shorted with a stop above the previous high.

 

[Boggo]

Thats what I tend to do.
Double top on AUD shorted with a stop above the previous high.

Yep, seems to work doesn't it, last time I tried this I felt I had to be in a trade most of the time, now I just wait until the setups I like come to me and its working so far.

 

[prawn_86]

Yep, seems to work doesn't it, last time I tried this I felt I had to be in a trade most of the time, now I just wait until the setups I like come to me and its working so far.

I'm the same with my personal trading. Probably dont take as many trades as i should, but when i have time and a nice set-up comes along i will put one on. Only a couple a month

 

[Frank D]

AUD/USD

Yearly highs reached @ .9786 (personally I think it will go slightly higher
this month.

Thursday's trend guide defined by .9777

Random support as shown (right chart)

Levels in the daily range are only valid for the each 12 hour block.

 

[Boggo]

AUD/USD

Yearly highs reached @ .9786 (personally I think it will go slightly higher
this month.

It did that Frank, now, can it do it again, waiting, waiting.

Hourly chart.
(click to expand)

 

[Boggo]

or is it going to do this ?

(click to expand)

 

[Frank D]

AUD/USD

I still think it is going slightly higher (october highs), with a potential reversal down in the 3rd or 4th week of this month.

If AUD was going to continue down on Tuesday it would have remained
below Tuesday's 50% level and headed lower.

But once it kicked back above during the US session the trend bias was
to follow the overall trend.

Wednesday's levels as shown for the next 12 hours, at this stage I
would focus on 41 to 85 pip ranges.

 

[MRC & Co]

Well it prooved that the RBA was a small fish in the sea in comparison with the BoJ, keeping the liquidity rally full blown! Then Evans in the US basically saying US QE2 is going to be coming and looks like it will dwarf the Japanese attempt! All great for the carry to blow full steam ahead.

Trade wars are the next thing heating up and look what could potentially derail all of this, but that shouldn't be an issue before G20.

All good for your gold stash Explod!

It's still all about the carry and personally I think parity is about to be decimated! Both on AUDUSD and USDCAD!

Can't see this reversing until early next month.

 

[professor_frink]

It's still all about the carry and personally I think parity is about to be decimated! Both on AUDUSD and USDCAD!

Can't see this reversing until early next month.

Whilst I can certainly see the reasoning there MRC, do you think that any effects of the upcoming QE have already been factored in? It's basically been THE talking point for the whole equity rally/USD selloff.

Just wondering if we'll see some short covering in the USD before the next fed meeting as there would be quite a few late comers to this party that a ripe for a massive squeeze

 

[tech/a]

It's still all about the carry and personally I think parity is about to be decimated! Both on AUDUSD and USDCAD!

Can't see this reversing until early next month.

I think he's right.
If it powers into parity then its off.

 

[doctorj]

Whilst I can certainly see the reasoning there MRC, do you think that any effects of the upcoming QE have already been factored in? It's basically been THE talking point for the whole equity rally/USD selloff.

Just wondering if we'll see some short covering in the USD before the next fed meeting as there would be quite a few late comers to this party that a ripe for a massive squeeze

Aus has the highest yield in the G20 last I looked (and it's only likely to increase with strong underlying inflation). Throw in strong commodity prices driven by QE and shortages in softs, the macro picture is well supported too. I posted some research a couple of weeks back that suggested AUD was a one way trade and whilst it won't be a one way street all the time, for the moment, it still looks like a one way trade.

 

[Nimbin]

I trade "from time to time" on news and fundamentals.
Taking a punt now on AUD, NZD, CAD to power upwards for a bit.
Good question as to how completely QE II has been priced in already.

 

[Frank D]

AUD/USD

Target on AUD will complete @ 9979, which aligns with Thursday's highs.

My view is a potential 3rd week reversal pattern (next week), but I need
to see lesser timeframe patterns to help verify the pattern.

I think AUD will continue to trend upwards and break parity later this
year and then into higher highs in 2011….

But the most robust trending pattern (after reaching .9979) is to see
the market reverse down and then continue higher from November's
50% level towards higher highs in the first Quarter for 2011

 

[prawn_86]

AUD/USD

Target on AUD will complete @ 9979, which aligns with Thursday's highs.

My view is a potential 3rd week reversal pattern (next week), but I need
to see lesser timeframe patterns to help verify the pattern.

I think AUD will continue to trend upwards and break parity later this
year and then into higher highs in 2011….

But the most robust trending pattern (after reaching .9979) is to see
the market reverse down and then continue higher from November's
50% level towards higher highs in the first Quarter for 2011

Its going to be a sorry day for FX brokers when we get less AUD for a USD trade

Not good for clients who locked in at 95 - 96 either....

 

[MRC & Co]

Whilst I can certainly see the reasoning there MRC, do you think that any effects of the upcoming QE have already been factored in? It's basically been THE talking point for the whole equity rally/USD selloff.

Just wondering if we'll see some short covering in the USD before the next fed meeting as there would be quite a few late comers to this party that a ripe for a massive squeeze

It's hard to know what QE will be, but an 'open ended' outcome may actually be a lot bigger impact than 1tril, given it could mean 1.5tril.

UST 10 year yields could still head towards and hit 2% I think, based on a 1tril QE (someone else did the math on that, not me), so there is def still room for USD to weaken.

The reason the carry is so strong also, is that now there is Japan doing their own QE (HUGE fundamental shift for Japan) and there will likely be further to come from them also given exporters are REALLY struggling now, intervention is being sold off, so they will simply undertake the IMF proposition and that is increasing Rinban buying (effectively QE), which will have a big Yen impact. BoE is another one also looking at QE of their own, even if the market is probably overplaying that possibility in the short-run, it is still altering sentiment.

This is all eerely remeniscent of the Plaza accord, without an actual agreement, but everybody pumping the liquidity in, you will get the high yielders rocketing and the carry currencies struggling.

The odd thing at the moment is the JPY strength, but think this may change later this month ahead of BoJ where they will likely do further easing and heading into Fed where USD may see a squeeze. This is where the carry could shift more towards the Yen as opposed to the USD. This is where we may see some quick position unwinds in IMM positioning as per the day the RBA last left rates unchanged when they were meant to rise back in May 2010.

But take a look at AUDUSD chart, if that is not a parabolic move in the making with the final leg beginning now, then I don't know what is.............

 

[professor_frink]

Doc, MRC,

thanks for the thoughts

Been struggling to get my head around the whole situation of late, so appreciate any comments.

Just on the prospect of other govts running their own QE programs MRC, was going through some of Bernanke's comments from earlier last decade and one of the few things he talked about that I haven't really seen done yet was this:

http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm

The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt, as well as domestic government debt. Potentially, this class of assets offers huge scope for Fed operations, as the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt.

Rather than the fed directly buying up OS govt debt, a quiet agreement between some of the bigger nations to pump liquidity into the system is basically doing the same thing without the perceived politics of intervening without some kind of accord, or trying to come to some kind of agreement without sparking fresh speculation about the China situation.

What scares me a little though is if this does take place en masse, it basically takes care of pretty well every option that he ever outlined as a tool to fight deflation from a monetary policy perspective(that I've read anyway). Hoping that it works

 

[MRC & Co]

Yeh, that is an interesting point Prof and your right, if that doesn't work, they are in Japanese style lost decades of deflation.

But China has basically been doing this in Europe, whilst at the same time, being able to get high yielding peripheral debt assets well in excess of what Australia, Canada, Norway or New Zealand can provide, whilst backed by the EU. Just one reason why the EUR has been so strong recently. At the same time, this has allowed them to see a fall in USDCNY, without actually altering the value against a trade weighted basket. Very very smart those Chinese are!

Word is, they are doing the same with JGBs to hold the JPY up against CNY (right near a big resistance zone now). Japan is firing up about it, along with Korean moves, which leads me to believe they are going to take some very very decisive action on October 30 I believe (BoJ). This way, they won't be seen as 'intervening' in currency, simply controlling their own yield curve, which has far more drastic implications on currencies.