WTF RBA rate cut

[Naked shorts]

So we had a rate cut today, down 100BP, more then the expected 75-50BP cut.
http://www.abc.net.au/news/stories/2008/12/02/2435606.htm?section=justin

It is common knowledge that when interest rates go down, so does the value of the currency. I decided to trade this news....

Instead of AUD tanking (like it should when interest rates are cut more then expected), it shot up. See attached pic


I wanted to know why it acted like this? I'm obviously missing something

 

[Nick Radge]

NS,
The media and mainstream economists were expecting 75bp. The IR futures markets had priced in 125bp, so the 100bp is actually less than what the market thought, hence the rally in the AUD.

 

[Naked shorts]

NS,
The media and mainstream economists were expecting 75bp. The IR futures markets had priced in 125bp, so the 100bp is actually less than what the market thought, hence the rally in the AUD.

Where can i find out everything related to IR futures?

 

[cuttlefish]

is actually less than what the market thought, hence the rally in the AUD.

And the post announcement fall in XFJ

 

[Nick Radge]

http://www.sfe.com.au/content/prices/rtp15sfIB.html

 

[Naked shorts]

http://www.sfe.com.au/content/prices/rtp15sfIB.html

How do you get a 125BP cut from that table?

 

[white_goodman]

hmm looks like the aud was a big earner for me today, cant wait till i get home. Maby thats why they say dont trade the news, its so rapid and soemtimes you can get burnt

 

[Trembling Hand]

If you are going to trade the news why would you trade what is expected. Where's ya edge in THAT!!!!!!!!

 

[Naked shorts]

If you are going to trade the news why would you trade what is expected. Where's ya edge in THAT!!!!!!!!

It was expected on all my sources (bloomberg, ABC, SFE, RBA) that the rate cut would be 75-50BP. It was my personal opinion that it would be more then that. So i waited for the news to come and I was right.

Of course you don't make money if the release is what is expected.

 

[nomore4s]

It was expected on all my sources (bloomberg, ABC, SFE, RBA) that the rate cut would be 75-50BP. It was my personal opinion that it would be more then that. So i waited for the news to come and I was right.

Of course you don't make money if the release is what is expected.

lol, you obviously weren't the only one who was expecting a bigger cut.

 

[RodH]

It was expected on all my sources (bloomberg, ABC, SFE, RBA) that the rate cut would be 75-50BP. It was my personal opinion that it would be more then that. So i waited for the news to come and I was right.

Of course you don't make money if the release is what is expected.

most of my rss feeds said 100, though forex factory said expected was 75.. I thought there might be a chance of a dip, but given the amount of times 100 came up I figured it was too risky of a trade.

just bad luck really, brush yourself off and look for the next trade

 

[Naked shorts]

most of my rss feeds said 100, though forex factory said expected was 75.. I thought there might be a chance of a dip, but given the amount of times 100 came up I figured it was too risky of a trade.

just bad luck really, brush yourself off and look for the next trade

Yeah forex factory was another one of my sources.
Even senior interest rate strategist at JP Morgan Aus thought the cut might be only 50BP.

http://www.bloomberg.com/avp/avp.ht...//media2.bloomberg.com/cache/v5Q3KAa7uHBc.asf

Its no wonder they get news like this
http://online.wsj.com/article/SB122818726575871543.html?mod=rss_markets_main


Can I ask you who you are getting your RSS feed from?

 

[julius]

The carry trade type play you are referring to has gone to sh*t in the past 12 months.

I really wouldn't be reading much into anything fundamental these days.

 

[MRC & Co]

Yeh, Reuters and a lot of news sources were expecting 75 I believe, but consensus seemed to be around 100.

My plan personally (on the SPI) was to sell 75 or below, buy 125 and above and buy 100 followed by a quick cut and reverse, which is exactly what I did, and exactly what happened. Still lost, such is the game of trading.

 

[RodH]

Yeah forex factory was another one of my sources.
Even senior interest rate strategist at JP Morgan Aus thought the cut might be only 50BP.

http://www.bloomberg.com/avp/avp.ht...//media2.bloomberg.com/cache/v5Q3KAa7uHBc.asf

Its no wonder they get news like this
http://online.wsj.com/article/SB122818726575871543.html?mod=rss_markets_main


Can I ask you who you are getting your RSS feed from?

I'm fairly new to the game so not sure if these are the best sources but in my reader the main ones are:
http://www.smartcompany.com.au
http://www.sharecafe.com.au/
http://www.compareshares.com.au/

 

[Macquack]

So we had a rate cut today, down 100BP, more then the expected 75-50BP cut.
http://www.abc.net.au/news/stories/2008/12/02/2435606.htm?section=justin

It is common knowledge that when interest rates go down, so does the value of the currency. I decided to trade this news....

Instead of AUD tanking (like it should when interest rates are cut more then expected), it shot up. See attached pic


I wanted to know why it acted like this? I'm obviously missing something

Did the Reserve Bank intervene by buying Australian dollars to cushion the drop?

 

[skyQuake]

IR futs had it fully factored in. Comments from glen stevens didnt hurt either.

 

[Naked shorts]

Did the Reserve Bank intervene by buying Australian dollars to cushion the drop?

It didnt drop, thats the thing. otherwise i would have a few fast woman sitting on my lap right now.

It only droped about half an hour after i covered my short. see below

And to the best of my knowledge, RBA didnt intervene. I think they did it a couple of month back and they got nothing but flack

 

[drsmith]

http://www.sfe.com.au/content/prices/rtp15sfIB.html

It will be interesting to see if the RBA reaches 3% (or beyond) by March/April 2009 as implied by the settlement prices.

 

[Aussiejeff]

It will be interesting to see if the RBA reaches 3% (or beyond) by March/April 2009 as implied by the settlement prices.

It will be interesting to see what the RBA says/does when the interest rate hits 1% by mid next year and the economy is still $hite.