Aud/usd

[Chood]

I almost never agree with predictions by the time they've made the financial news. The "news" is normally long priced in by the time you read about it. But I do believe this from Bloomberg's today, based on the primacy of yield, and expectations that follow from that (and ignoring for now gold's role in the currency's price action):

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"The Australian dollar may gain this week on speculation the higher yields offered by the nation's government bonds will attract investors to the currency.

The difference in yield between Australian and U.S. 10-year government bonds is near the highest in 17 months. Australia's overnight cash rate target of 6.25 percent is 1 percentage point higher than the Federal Reserve's key borrowing cost. The Australian dollar has gained 6.7 percent this year as the central bank has raised interest rates three times.

'The Australian dollar should be well supported,' said Stephen Koukoulas, chief Asian-Pacific strategist at TD Securities Ltd. in Sydney. 'The yield differential is starting to get attractive.'"
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I believe this long Aussie prediction will hold up even if, as I also expect, gold drops to around 600 in the next two months.

Yield is particularly good when other assets are not appreciating.

 

[nravo]

Quote from Chood:

I almost never agree with predictions by the time they've made the financial news. The "news" is normally long priced in by the time you read about it. But I do believe this from Bloomberg's today, based on the primacy of yield, and expectations that follow from that (and ignoring for now gold's role in the currency's price action):

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"The Australian dollar may gain this week on speculation the higher yields offered by the nation's government bonds will attract investors to the currency.

The difference in yield between Australian and U.S. 10-year government bonds is near the highest in 17 months. Australia's overnight cash rate target of 6.25 percent is 1 percentage point higher than the Federal Reserve's key borrowing cost. The Australian dollar has gained 6.7 percent this year as the central bank has raised interest rates three times.

'The Australian dollar should be well supported,' said Stephen Koukoulas, chief Asian-Pacific strategist at TD Securities Ltd. in Sydney. 'The yield differential is starting to get attractive.'"
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I believe this long Aussie prediction will hold up even if, as I also expect, gold drops to around 600 in the next two months.

Yield is particularly good when other assets are not appreciating.

Sounds logical, but too much so, it's the prevailing wisdom, etc. Might take a short-term flier. Thanks.

 

[Chood]

Quote from nravo:

Sounds logical, but too much so, it's the prevailing wisdom, etc. Might take a short-term flier. Thanks.

I got a couple of other changed expectations up my sleeve, which should resolve long Aussie. BOJ won't raise and won't signal raise next month (or won't raise in January regardless of the signal it gives this week). Deflation is more treacherous for Japan than inflation is for USA. Also, I now believe that expectation for Fed will tilt for a rate cut, correctly so, and will stay there until vindicated.

 

[arco]

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Still heading north IMO (as per previous posts/charts).

regards -arco


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[nravo]

Quote from arco:

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Still heading north IMO (as per previous posts/charts).

regards -arco


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Aussie and Forex experts: Is backwardization the norm for AUD/US. Just looking at the March futures ... .

 

[Chood]

I would not be short Aussie going into BOJ annoucement. Price action, even if whipsawing as speculators decode and read the tea leaves, should resolve long Aussie, if I am correct.

Quote from Chood:

I got a couple of other changed expectations up my sleeve, which should resolve long Aussie. BOJ won't raise and won't signal raise next month (or won't raise in January regardless of the signal it gives this week).

 

[DrEvil]

bullish flag looks very tasty too. I'll have me a bit of that action.

 

[illiquid]

Quote from nravo:

Aussie and Forex experts: Is backwardization the norm for AUD/US. Just looking at the March futures ... .

As long as aussie pays higher rate than usd, yes.

 

[nravo]

And why is that?

Quote from illiquid:

As long as aussie pays higher rate than usd, yes.

 

[Chood]

Aussie can pierce .8100 by March, creating an excellent reward to risk of 5 to one using a reasonable stop 55 to 70 ticks from entry.

Quote from Chood:

I would not be short Aussie going into BOJ annoucement. Price action, even if whipsawing as speculators decode and read the tea leaves, should resolve long Aussie, if I am correct.