Thread: Discuss the AUD/USD, NZD/USD , USD/CAD and more

I got bullish thoughts on the Aussie especially after an immense Gold and Silver rally this week.
But I can't justify a long technically - could you share your thoughts?

Originally Posted by deha

I got bullish thoughts on the Aussie especially after an immense Gold and Silver rally this week.
But I can't justify a long technically - could you share your thoughts?

Im sorry but no technicals to share....In 1 word as i did say the A,B,C correction is out an the setup is bullish.Now if im wrong and this is not the keypoint then the stop loss is in place.Loosing a couple of pip's for 300-350 pips is ok for me.

Good Luck

Jamie S. has similar thoughts with EW counts. Most folks are bearish the Aussie though.
Personally I am fine holding a AUD long for the carry even if it goes -200 pips before it comes back.

From personal analysis, the only positive thing for Aussie that I see are Gold prices.

Originally Posted by deha

Jamie S. has similar thoughts with EW counts. Most folks are bearish the Aussie though.
Personally I am fine holding a AUD long for the carry even if it goes -200 pips before it comes back.

From personal analysis, the only positive thing for Aussie that I see are Gold prices.

When did you start trading and what is your background??? You need time and experience too see what other's dont see....

About a year with Live, and some 4-5 with demo. Considerable currency work before that as well
Did technical analysis 'till recently, now putting in fundamentals mostly. Not yet into EW. Maths background.

Originally Posted by deha

About a year with Live, and some 4-5 with demo. Considerable currency work before that as well
Did technical analysis 'till recently, now putting in fundamentals mostly. Not yet into EW. Maths background.

Moved stop loos too 1,0,675

Nice ......i'm more off a technical trader i do belive that fundamentals already have a price on the market befor release

Originally Posted by Mary R

In my opinion the end of the aggressive quantitative easing by the Fed will have a bullish impact on the US dollar and a bearish impact on riskier assets including the stock market and commodity based currencies as well as the euro. Even if they continue to reinvest the principal payments, this is a big reduction in the amount of liquidity they were adding to the markets on a daily basis. I think the USDCAD may have a good 100 to 200 pip move up from here, I bought some at .965. It doesn't mean that this is the beginning of a long term upward trend, but it you might see a move up to .98 or even parity. it was grossly oversold in the recent move down, and the markets are starting to become more aware of the true risks to growth in the global economy.

Well you can probably at least range-trade this pair for awhile. For a bullish position I would maintain tight stops because this pair has a recent history of slow grinds higher with fast, bigger drops lower. I will need to see USDCAD recapture the 330 pips it dumped last week and close at/above .992 to cast any doubt on my long-term bearishness of the primary trend. I hope it does but I am skeptical.

The risks to global growth are fully advertised but there is also risk to the upside in markets. I think chinese stocks could be popping. Sure doesn't look like QE2 ended last week based on the large moves up in oil, silver, copper, stocks and bond yields. Will the S&P break out over 1350 or respect the 1250-1350 range? I think this is an important consideration in view of the correlation between USDCAD and S&P500. l lean towards the US raising the debt ceiling, a break above 1350 for S&P500 and break below 0.95 for USDCAD.

More than ever the major risk to USD and markets is the surging derivatives and interest rate swaps now up to $321-trillion, an astounding figure especially compared to these banks' market caps, which are less than 0.5% of their derivatives exposure. Can anyone say "too big to fail"? It makes the shaky Chinese regional banks and EU sovereign debts look rock solid in comparison. What happens next time these banks' meager capital base is wiped out by derivatives-gone-bad and the US must bail out their "too big to fail" US banks? Answer: they take down with them the USD, the US government and much of the world.

US Comptroller of the Currency: Quarterly Report on Bank Trading and Derivatives Activities

What happens to USDCAD if the US debt ceiling is raised, or is not raised?
What happens to it if they begin to truly slash spending? (fiscal drag)

Originally Posted by SkiBunny

What happens to USDCAD if the US debt ceiling is raised, or is not raised?
What happens to it if they begin to truly slash spending? (fiscal drag)

The issue of the debt ceiling is an interesting one - Despite the hyper sensationalism in the media the fact is it may be a non issue. I'm not a lawyer but I have lawyers in my family who have been practicing in the federal courts for decades, and I had several discussions about my debt ceiling concerns.
The fact is, this is all unprecedented but even if Congress does not raise the debt ceiling, the Treasury, under the direction of Obama could still continue to sell securities. Obama could direct Mr. Geithner to defy Congress and continue to issue securities, and basically say to Congress "Try to stop us and see how far you get"
This is an unprecedented situation so no one knows how the courts would react but simply put: The only way the Congress could get the Treasury to stop selling securities would be to go to the Supreme Court and get a federal injunction ordering the Treasury to cease and desist, then they would have to enforce the injunction by sending federal marshalls into the US Treasury and putting Tim Geithner in jail. They would also probably have to try to impeach Obama, and would have no support for this.
The question is, would the federal courts issue and enforce such an injunction? Theoretically its possible but it is highly unlikely. There is a clause in the US constitution called the political questions doctrine which says that it is not within the jurisdiction of the federal courts to intervene in disputes between the executive and legislative offices. So I don't think the US will default even if Congress does not raise the debt ceiling.

As far as the derivatives are concerned, what are the underlying instruments? How are they hedged? Derivative alone means nothing. More information would be necessary to make a judgement on derivative contracts outstanding.

According to this report, the total notational value of derivatives outstanding is not the amount at risk

"Credit risk is a significant risk in bank derivatives trading activities. The notional amount of a derivative contract is a reference amount from which contractual payments will be derived, but it is generally not an amount at risk... However, in most derivatives transactions, such as swaps (which make up the bulk of bank derivatives contracts), the credit exposure is bilateral. Each party to the contract may (and, if the contract has a long enough tenor, probably will) have a current credit exposure to the other party at various points in time over the contract‟s life. "

It's starting to look like an A,B,C correction too me...Closed long position
If correction then1,0706 should not break higher and goo down too 1,0600.Swichd to short position 1,06939 stop loss above 1,0706

Good Luck

Oh yes A,B,C correction right on the spot....

Edit: the new's just rock'd the Aussie...goona take a couple of hours off...take a look if the spike pull's back and the trend goes his way or not....lol...did not think that the impact is goona be soo big...

Originally Posted by Mary R

According to this report, the total notational value of derivatives outstanding is not the amount at risk

"Credit risk is a significant risk in bank derivatives trading activities. The notional amount of a derivative contract is a reference amount from which contractual payments will be derived, but it is generally not an amount at risk... However, in most derivatives transactions, such as swaps (which make up the bulk of bank derivatives contracts), the credit exposure is bilateral. Each party to the contract may (and, if the contract has a long enough tenor, probably will) have a current credit exposure to the other party at various points in time over the contract‟s life. "

Depends on the derivative and what happens in the underlying markets. Swap derivatives are contingent liabilities like insurance – unlikely to be at risk for the total amount underwritten, but indeed “significant”, like AIG learned when it failed in 2008 with “just” $447B of CDS and CDO derivatives. Now you have, for example, JPM with $80,000B of derivatives and a market cap of ~$200B. According to my arithmetic, the derivatives/capital ratio for JPM now is over 400:1, way worse than the approx 10:1 for AIG in 2008. Similar for the other “too big to fails”. So I think it could take an event smaller than last time to crash everything next time. We will see.

Originally Posted by Mary R

The issue of the debt ceiling is an interesting one - Despite the hyper sensationalism in the media the fact is it may be a non issue. I'm not a lawyer but I have lawyers in my family who have been practicing in the federal courts for decades, and I had several discussions about my debt ceiling concerns.
The fact is, this is all unprecedented but even if Congress does not raise the debt ceiling, the Treasury, under the direction of Obama could still continue to sell securities. Obama could direct Mr. Geithner to defy Congress and continue to issue securities, and basically say to Congress "Try to stop us and see how far you get"
This is an unprecedented situation so no one knows how the courts would react but simply put: The only way the Congress could get the Treasury to stop selling securities would be to go to the Supreme Court and get a federal injunction ordering the Treasury to cease and desist, then they would have to enforce the injunction by sending federal marshalls into the US Treasury and putting Tim Geithner in jail. They would also probably have to try to impeach Obama, and would have no support for this.
The question is, would the federal courts issue and enforce such an injunction? Theoretically its possible but it is highly unlikely. There is a clause in the US constitution called the political questions doctrine which says that it is not within the jurisdiction of the federal courts to intervene in disputes between the executive and legislative offices. So I don't think the US will default even if Congress does not raise the debt ceiling.

As far as the derivatives are concerned, what are the underlying instruments? How are they hedged? Derivative alone means nothing. More information would be necessary to make a judgement on derivative contracts outstanding.

US bank reporting falls under purview of the OCC, which AFAIK does not provide more details on derivatives than what is in its Quarterly Report on Derivatives Activity (the link I posted above). The banks have moved derivatives to their holding companies, which are not under control of OCC. Gets murky but seems much of those are interest rate swaps with the US government as counter party which makes me nervous about USD.

If the debt ceiling is artificial then why hasn’t Treasury continued selling more bills instead of borrowing pension funds? Surely it would have been more prudent to test the legality of the debt ceiling in spring (when there existed the alternative of borrowing pension funds) than in August (when there will exist no alternative except to prioritize payments, which could turn ugly). Failure to raise the US debt ceiling is unprecedented for markets, which makes it difficult to assess probable market reaction. Everyone expects a deal; the unknown is what the deal will be… big spending cuts, tax increases, both or neither. And what will be the impact, if any, on USD?

Canadian bank BMO released its outlook today. The interesting thing here is that they are forecasting ~50 bp more BOC rate hikes by the end of 2011 and summer-2012 than what markets currently discount.

BOC: “We look for rate hikes to resume in October. After a
follow-up move in December, the concurrent appreciation in the
Canadian dollar will likely elicit another policy pause, one that will
probably persist until the Fed is much closer to hiking rates. This
will leave the Bank’s policy rate at 2% by next summer”

CAD/USD: “The resumption of rate hikes should send the loonie
soaring again. Against a background of consolidating commodity
price gains and continued global diversification flows (from U.S.
dollars, albeit not as much as before), we look for the loonie to hit
a high around 105 U.S. cents during the early part of next year on
a monthly average basis”

http://www.bmonesbittburns.com/econo...0706/rates.pdf