Quote:
Originally Posted by DollarBull
The long term equilibrium point for AUDNZD is about 1.11. Presently it is at 1.08; Further, AUD economy is fundamentally much stronger than NZD. RBA has declared that its rate cut does NOT form a pattern. RBNZ has declared that more rate cuts are forthcoming. Therefore AUDNZD MUST rally upwards significantly and perhaps beyond 1.25 again. The present fall of AUD seems correlated to commodity prices (other than Gold). Its weakness is very similar to CAD (both commodity currencies). This correlation won't continue for ever. Commodities like Silver has seen a spectacular fall ($19 to $10) in a few weeks. Aluminum and Copper also have fallen big time. They will stabilize soon. When Gold recovers and starts going towards $1000, it will pull up other commodities. Therefore, I wouldn't worry much about further commodity price fall affecting AUD.
The recovery of JPY above 100 has shown that risk aversion is nearing an end. Once carry trade begins, AUDJPY will rally and with it AUD will go up. Thus, so many different arguments point to AUD recovery and rally.
|
I would avoid saying a market 'must' do anything. What if the market isn't comforted by the global effort to help markets and the overnight lending market seizes again? The world is still sitting on enormous levels of leverage and banks will deleverage going forward regardless of market conditions.
In my opinion, conditions and the currency market are far to volatility to attribute any sort of long-term balance point.
That being said, looks like this overly active market hit your objective relatively quickly.
