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

Originally Posted by Mary R

I don't think we have seen the real panic-driven demand for US dollars peak yet . Plus we are entering a new phase of financial crisis, one in which the authorities have limited ability to solve. For the last several years, the Fed has been saying that conditions are gradually improving . Market participants had some type of reassurance that the Fed would provide a security blanket and cushion of liquidity . The last statement basically said that there are significant downside risks and there really isn't much they can do about it.

Could become manic-depressive... a panic-in followed eventually by a panic-out.

With the 3 FOMC dissenters and broad criticism of the Fed, it choose to do little. Many of us have been expecting the Fed will wait for pain and then do QE. And that might happen, but now I wonder whether we might have to wait MUCH longer than I thought based on these observations by David Rosenberg (you may dislike his his criticism of Bernanke but his points about why there will be no QE and the implications of Fed policy on the banks etc is worthwhile)

Rosenberg Presents The Three Ways Bernanke Disappointed The Market, And Why It Is Dumping 09/22/2011

I had been thinking the Fed would have to buy US t-bonds to fund the annual US budget deficit, which could soar over $2-trillion just for this coming budget year, on account of a slowdown/recession. However, on second thought the Fed will not have to buy bonds while capital flows into USD. But IMO this phase shall pass and the flows will eventually reverse with a vengeance and all the ugly implications that will bring. Now is the time to start preparing for that eventuality and profit from dollar strength while it lasts... in the big picture of the world for the long-run, overall the supply of dollars far exceeds the demand and the markets will sort it out mercilessly after this EU-induced distortion fades.

Anyway, I am hedged and positioned to win on a dollar advance or slide... expecting both to happen, in that order, kinda like 3 years ago but a bit differently

Originally Posted by SkiBunny

Could become manic-depressive... a panic-in followed eventually by a panic-out.

With the 3 FOMC dissenters and broad criticism of the Fed, it choose to do little. Many of us have been expecting the Fed will wait for pain and then do QE. And that might happen, but now I wonder whether we might have to wait MUCH longer than I thought based on these observations by David Rosenberg (you may dislike his his criticism of Bernanke but his points about why there will be no QE and the implications of Fed policy on the banks etc is worthwhile)

Rosenberg Presents The Three Ways Bernanke Disappointed The Market, And Why It Is Dumping 09/22/2011

I had been thinking the Fed would have to buy US t-bonds to fund the annual US budget deficit, which could soar over $2-trillion just for this coming budget year, on account of a slowdown/recession. However, on second thought the Fed will not have to buy bonds while capital flows into USD. But IMO this phase shall pass and the flows will eventually reverse with a vengeance and all the ugly implications that will bring. Now is the time to start preparing for that eventuality and profit from dollar strength while it lasts... in the big picture of the world for the long-run, overall the supply of dollars far exceeds the demand and the markets will sort it out mercilessly after this EU-induced distortion fades.

Anyway, I am hedged and positioned to win on a dollar advance or slide... expecting both to happen, in that order, kinda like 3 years ago but a bit differently

It depends on many factors, including the results of the next election

Originally Posted by Mary R

It depends on many factors, including the results of the next election

I think it is like a natural cycle (like a sine wave & stuff) and it does not matter which politicians get rented anywhere... USDCAD will continue up from its lows of a few months ago and fall again inversely with the ongoing commodity rout redux. You knew it at the start of the year but were early, which of course is better than being too late.
Just like before, lead-up to the recession/crisis sees USD weakness, early part of recession/crisis has USD strength and the later part & aftermath has USD weakness. With gold and silver moving inversely to these USD moves. Yawn.

Do you still believe as Rosie does (like in his opinion I posted above) that there will still be no QE3?

Originally Posted by SkiBunny

I think it is like a natural cycle (like a sine wave & stuff) and it does not matter which politicians get rented anywhere... USDCAD will continue up from its lows of a few months ago and fall again inversely with the ongoing commodity rout redux. You knew it at the start of the year but were early, which of course is better than being too late.
Just like before, lead-up to the recession/crisis sees USD weakness, early part of recession/crisis has USD strength and the later part & aftermath has USD weakness. With gold and silver moving inversely to these USD moves. Yawn.

Do you still believe as Rosie does (like in his opinion I posted above) that there will still be no QE3?

I don't know who Rosie is but I think the Fed has made it clear that there will be no QE3. But I said that almost a year ago and no one believed it then either.
If you look at a 50 year chart of the dollar it is very clear that the political leaders have a very big role. Just look what happened from 1980 to 1992 then from 1992 to 2000 then from 2000 to 2008

Originally Posted by Mary R

I don't know who Rosie is but I think the Fed has made it clear that there will be no QE3. But I said that almost a year ago and no one believed it then either.
If you look at a 50 year chart of the dollar it is very clear that the political leaders have a very big role. Just look what happened from 1980 to 1992 then from 1992 to 2000 then from 2000 to 2008

Rosie is one of the infamous "3 bears": Rosenberg, Roubini and Sprott... I posted a link to his Fed/QE3 opus and more 4 posts up.

I understand your point and give it some merit but I believe more in the power of cycles and interconnected dynamism. I think political leadership (and practically everything else) is a byproduct or subordinate to that. I think in terms of circles, or sine waves which of course is a mathematical relationship of a circle. In contrast Western economic thinking tends to be linear instead of circular, and seeks to control events rather than adapt to cycles... thus for example you have Keynesian practices in the West attempting to thwart the natural business cycle, actions which I think have contributed to the credit bubble and debt mess that most western nations (and japan) are in. It is like fighting nature which in the end will overwhelm.

Also, I think there might not be enough time in this cycle until events overwhelm. Americans seem to say, we will have our election next Nov and then straighten things out after 2013. Politicians fail to understand that as soon as capital smells the problem, it will panic on a contagion basis. This means that the future will be accelerated (as we see has happened in Greece and is now starting in places like Italy and even France). So where one country might not reach the same point of insolvency as Greece for another 5 or more years, capital will react sooner assuming that the crisis will hit everywhere. So there is a real chance that the US debt crisis arrives sometime in 2012 and a currency event might too. Perhaps before the 2012 US election, which could happen n during a meltdown again not unlike the 2008 election. Just saying, though I could be wrong.

AUD/USD did a ABCD harmonic pattern on .786 retracement of 1.1070-0.9963 (point C) and 1.27 extension of 0.9933 and 1.0760 around 0.9710 (point D). Pair found a resistance on 0.9690-0.9700 region. If a further trend reversal sign appears, my anticipation is that AUD/USD may do a bull movement.

Originally Posted by SkiBunny

Rosie is one of the infamous "3 bears": Rosenberg, Roubini and Sprott... I posted a link to his Fed/QE3 opus and more 4 posts up.

I understand your point and give it some merit but I believe more in the power of cycles and interconnected dynamism. I think political leadership (and practically everything else) is a byproduct or subordinate to that. I think in terms of circles, or sine waves which of course is a mathematical relationship of a circle. In contrast Western economic thinking tends to be linear instead of circular, and seeks to control events rather than adapt to cycles... thus for example you have Keynesian practices in the West attempting to thwart the natural business cycle, actions which I think have contributed to the credit bubble and debt mess that most western nations (and japan) are in. It is like fighting nature which in the end will overwhelm.

Also, I think there might not be enough time in this cycle until events overwhelm. Americans seem to say, we will have our election next Nov and then straighten things out after 2013. Politicians fail to understand that as soon as capital smells the problem, it will panic on a contagion basis. This means that the future will be accelerated (as we see has happened in Greece and is now starting in places like Italy and even France). So where one country might not reach the same point of insolvency as Greece for another 5 or more years, capital will react sooner assuming that the crisis will hit everywhere. So there is a real chance that the US debt crisis arrives sometime in 2012 and a currency event might too. Perhaps before the 2012 US election, which could happen n during a meltdown again not unlike the 2008 election. Just saying, though I could be wrong.

Keynesian economics did not contribute to the credit bubble in the US, in fact the opposite occurred. The anti-Keynesian movement in the US gained popularity during the 1980's partly because Reagan was such a fan of limited government intervention in business. So the concept of de regulation of everything became fashionable, which led to excessive deregulation in banking and insurance, the repeal of the Glass Steagall act and the hands-off approach the Federal banking regulators took during the subprime mortgage lending bubble. The regulators could have prevented that tragedy from occurring. They chose to look the other way, in part because of the vilification of government intervention and regulation. Even old Adam Smith, the revered free market capitalist recognized that some markets, namely banking and insurance, need more regulation not less.
I seriously doubt that we will see a massive capital flight away from the US dollar this year, I know that you believe that the US and Greece are fundamentally the same but it's not that bad yet. Greece is a very poor country to which bankers lent an excessive amount of money to on the assumption that their European partners would come to the rescue when the bill came due. Even if Greece sold its entire country and the citizens sold their internal organs that country would not be able to come up with the cash to pay off its creditors. The US is a rich country which is currently partially paralyzed by political gridlock. If there were any indication of capital flight, the US treasury yields would be skyrocketing, and that is not what is happening.

I understand your point about the natural cyclical order of the economic and business cycles, but Keynesian economists are not trying to thwart it. The fact is, there was an incredible boom and bust cycle in the US and the EU and we are now experiencing the bust. No one could prevent the natural cycle of things, but sometimes the worst outcomes can be moderated.

Originally Posted by Mary R

Keynesian economics did not contribute to the credit bubble in the US, in fact the opposite occurred. The anti-Keynesian movement in the US gained popularity during the 1980's partly because Reagan was such a fan of limited government intervention in business. So the concept of de regulation of everything became fashionable, which led to excessive deregulation in banking and insurance, the repeal of the Glass Steagall act and the hands-off approach the Federal banking regulators took during the subprime mortgage lending bubble. The regulators could have prevented that tragedy from occurring. They chose to look the other way, in part because of the vilification of government intervention and regulation. Even old Adam Smith, the revered free market capitalist recognized that some markets, namely banking and insurance, need more regulation not less.
I seriously doubt that we will see a massive capital flight away from the US dollar this year, I know that you believe that the US and Greece are fundamentally the same but it's not that bad yet. Greece is a very poor country to which bankers lent an excessive amount of money to on the assumption that their European partners would come to the rescue when the bill came due. Even if Greece sold its entire country and the citizens sold their internal organs that country would not be able to come up with the cash to pay off its creditors. The US is a rich country which is currently partially paralyzed by political gridlock. If there were any indication of capital flight, the US treasury yields would be skyrocketing, and that is not what is happening.

I understand your point about the natural cyclical order of the economic and business cycles, but Keynesian economists are not trying to thwart it. The fact is, there was an incredible boom and bust cycle in the US and the EU and we are now experiencing the bust. No one could prevent the natural cycle of things, but sometimes the worst outcomes can be moderated.

Oh I agree no capital flight out of USD this year, just the opposite and in fact I had already positioned us accordingly earlier as I think some should know. But the chatter from some in the US that they can postpone debt and deficit decisions for two years is dangerous, because history shows that contagion accelerates events. Yes US is not Greece and US is far away from any default. But if there is debt, currency and/or bank run in Europe this year or next, then a run on the US debt and currency before the newly/re-elected are in office in 2013 becomes conceivable because that is how contagion progresses - capital panics during contagion at even a "sniff" of any potential problem, and the US rises to that low threshold (as do most countries today).

No question about the truth you speak regarding the banks and regulation. I did not think that was germane to keynesian economics but I am not an economist. The thing about keynesian economic philosophy, as I understand it, with which I take issue is the government borrow-and-spend philosophy, whether that is true keynesian or a bastardization of it, I am unsure, but I am quite sure that this economic practice has brought most western and so-called developed economies to the brink with no painless way out. The attempt to "moderate" the natural economic cycle through government borrow-and-spend tactics postponed and accumulated necessary market adjustments - painful as they may have been - so eventually the sum of all pain occurs altogether. It is analogous to many other cyclical examples in nature - for instance when man suppresses natural forest fires, eventually there comes a mega-fire later.

Originally Posted by Mary R

Public debts aren't being forgiven, they're just not being paid. States are making big slashes in their medicaid budgets every day. The way our legal system is set up there's very little anyone can do about it. And as far as the Holy Roman Empire was concerned, it was neither holy nor Roman. It was actually the first German attempt to take over Europe. So you could say it took them 2000 years but they finally got what they wanted.

I had no idea about states reneging on medicare. Really?? Not just in some obscure little wacko fringe state full of beer-bellied, gun-toting, redneck hicks who applaud state executions and the notion of young uninsured men dying out front a hospital?

Originally Posted by SkiBunny

Oh I agree no capital flight out of USD this year, just the opposite and in fact I had already positioned us accordingly earlier as I think some should know. But the chatter from some in the US that they can postpone debt and deficit decisions for two years is dangerous, because history shows that contagion accelerates events. Yes US is not Greece and US is far away from any default. But if there is debt, currency and/or bank run in Europe this year or next, then a run on the US debt and currency before the newly/re-elected are in office in 2013 becomes conceivable because that is how contagion progresses - capital panics during contagion at even a "sniff" of any potential problem, and the US rises to that low threshold (as do most countries today).

No question about the truth you speak regarding the banks and regulation. I did not think that was germane to keynesian economics but I am not an economist. The thing about keynesian economic philosophy, as I understand it, with which I take issue is the government borrow-and-spend philosophy, whether that is true keynesian or a bastardization of it, I am unsure, but I am quite sure that this economic practice has brought most western and so-called developed economies to the brink with no painless way out. The attempt to "moderate" the natural economic cycle through government borrow-and-spend tactics postponed and accumulated necessary market adjustments - painful as they may have been - so eventually the sum of all pain occurs altogether. It is analogous to many other cyclical examples in nature - for instance when man suppresses natural forest fires, eventually there comes a mega-fire later.


I had no idea about states reneging on medicare. Really?? Not just in some obscure little wacko fringe state full of beer-bellied, gun-toting, redneck hicks who applaud state executions and the notion of young uninsured men dying out front a hospital?

In the state I live in Pennsylvania there were several public health clinics which had their medicaid reimbursements cut 15% in 2009 and they have not since increased the amount . In Arizona, medicaid will no longer cover organ transplants. In New York City, several public hospitals have closed due to lack of funding. In some other states amputees have had to return their artificial limbs so the states can sell them for cash. You don't always see it on a day to day basis unless you work in health care, but doctors are being trained how to cut costs everywhere - diabetics in hospitals and nursing homes are not getting their blood sugar tested as often, life saving medications are being denied by insurance companies. The ultimate result will be increased death rates among the poor, a trend which has been occurring for decades in the US but will accelerate unless current trends change. its very depressing, but the US has one of the worst health care systems in the developed world - far more of a long term threat to prosperity than anything else

Originally Posted by Gregory McLeod

USD/CAD May Move Lower on Profit Taking to 1.01492- USD/CAD uptrend is intact and could move back to 1.0600 or higher. With the weekend ahead, Long USD/CAD may take some off the table

I agree Gregory, looks like 1.04 could be a 3rd wave top before a 4th wave correction.

Originally Posted by Gregory McLeod

Hello Marjanian. This is a good question. Thank you for asking. Many investors are booking profits as the certainty of the past one way bet fades and dividend paying stocks are looking more attractive. The fear and uncertainty is still in the market as indicated by the yield on the 10 year treasury breaking below 2%. I believe this is only a short-term pull back that could provide a great place to get long gold in the 1534 to 1700 area for a push over 2500.

This is just my opinion and I could be "barking up the wrong tree."

Gold reached an intraday low of 1532.45 before rebounding higher. I was a $1.55 off with my price projection. It appears that a Japanese Candlestick hammer pattern is forming at the .786 Fibonacci retracement level taken from the move from the 1477.99 7/1/2011 low to the 1920.80 9/6 high. This could be what Gold bulls are looking for.

Originally Posted by gunesh

AUD/USD did a ABCD harmonic pattern on .786 retracement of 1.1070-0.9963 (point C) and 1.27 extension of 0.9933 and 1.0760 around 0.9710 (point D). Pair found a resistance on 0.9690-0.9700 region. If a further trend reversal sign appears, my anticipation is that AUD/USD may do a bull movement.

Hey Gunesh. I think you are right on. The Aussie may be setting up for a move higher to 0.9867 R1 Pivot Level if we get a bounce from the 50% Fibonacci level.

Originally Posted by D_Caron

I agree Gregory, looks like 1.04 could be a 3rd wave top before a 4th wave correction.

Hello D_Caron, USD/CAD had a very shallow correction that illustrated the strong Risk-Off/Flight-to-Safety sentiment in the market. USD/CAD needs to clear the 1.0400 for this rally to continue. Eurozone uncertainties including a vote on austerity measures by Greek Parliament today are holding markets hostage.

Hi Greg

If a higher move is set up for Aussie, could it trigger an up movement for gold as well. Because gold bounced from daily 200 SMA today.

Regards

Originally Posted by Gregory McLeod

Hello D_Caron, USD/CAD had a very shallow correction that illustrated the strong Risk-Off/Flight-to-Safety sentiment in the market. USD/CAD needs to clear the 1.0400 for this rally to continue. Eurozone uncertainties including a vote on austerity measures by Greek Parliament today are holding markets hostage.

Gregory this seems like a relief rally opposed to any real risk off trade, BOC hasn't been able to raise interest rates; although inflation has gone up over the past year. Due to the higher currency and its negative effects on the Canadian exporting economy. I am watching other carry trade currencies and they haven't even moved over the past two quarters. For me to believe this is a true flight to safety I would expect all the other carry trade currencies to move in the same direction as they did when Lehman brothers failed in 08. The USD/CAD is also reaching a 52 week high, from a 52 week low in less then two months. Basically as soon as the US debt ceiling debate was over Aug 2nd the USD started to rally.... So whats the trade I have finished unwinding all my long's (some I held from November 2010). Starting to look at adding Short's from 1.03, and up. if this pair closes above 1.085 for more then an hour, a true risk off environment will be in effect. The time frame for these comment to become invalid is Oct 28th.