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Sean Hyman - DailyFX Forum Moderator - shyman@dailyfx.com

The following I've pasted from Jamie Saettele - which was posted on DailyFX's website on Friday - (new York time) 23rd Oct, 2009.


"After failing just shy of 1.6700, the GBPUSD reversed sharply and trades over 350 pips from its daily high. Failures at channel resistance and a short term head and shoulders pattern warn that the AUDUSD may be the next pair to take a plunge."

The reason the pound back-tracked is because its GDP also back-tracked. Thus pound nose-dived against all currencies. Had the GDP reading been favourbale the pound would have continued to appreciate against the US$.

Moving on - Jamie goes onto say that the AUD/US pair may be the next pair to take a plunge. I doubt it - in 10 days the RBA will announce the interest rate. And while the rate may be left unchanged - that would be contradictory to the rhetoric that has been spilling forth from their gobs since the last rate hike.

N.B. - House prices are higher now than during the boom - and this is ANOTHER reason to hike interest rates - otherwise with cheap finance, the property market will continue to rise and .......pop goes the weasel.

The world markets have just celebrated with a renewed optimism from both traders and governments....and higher prices.

I doubt, the AUD will go below 90cents - and on Cup day it will probably rally to 94.5 cents. If it does hit 90 cents - I'll be buying more AUD.

On the GBP/AUD cross - aussie puts rates up in november - sterling rates get cut and QE , well lets just say - it ain't easing - double whammy, the pound is going down to the $1.69 - very soon.

What is the market doing? - its my fave question.

Cyers

the phoenix

I understand your points, but each long journey begins with the first step, so I will continue to read through EW theory and rules, when I get around to applying them is another story, thanks, Sean, CB.

In "The Age" newspaper today. (Melbourne, Australia)

Melbounre had 818 auctions yesterday - which was a super high amount of auctions, and the selling rate was 82%. Auctioneers, say its busier now than during the boom. This is largely due to Australia's rapid population growth thanks to migration - with 1200 people moving to melbourne every week.

Houses are still fetching silly prices....ie, in Northcote a guy paid 1.375,000 for a house......the reserve was 900,000. (before the boom, Northcotes mean price was around $150,000.)

You can read it here.

Rate rise tipped after 'hot' auctions


Also, Australia's CPI figures are released this Wednesday , so keep an eye on the trimmed mean and the weighted mean - this is what the RBA uses to determine inflation. (The economic calendar on Daily FX lists the yearly CPI as high......and the yearly weightedmean/trimmed mean as medium - yet it is these two measures that the RBA determines interest rates on.......The targer rate is betwnn 2-3%........the CPI is at 1.5% and the trimmed mean/weighted mean are both over 3%) Trimmed and weighted means are more important than the yearly CPI figure in this respect.

You can read it here.

Interest rates | Inflation data likely to shape RBA's Cup Day move


The RBA determines the interest rate the following Tuesday.

the phoenix

the phoenix, good info here. Keep it up. You really put a lot into this post and that is what is going to make it the "post of the day".

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Come join me at the FXCM Las Vegas Expo along with the FXCM course instructors and DailyFX analysts May 3-4th: http://www.fxcmexpo.com/

The DailyFX Forums have over 75,000 members, and many discussions going on at once. If you aren’t sure where to get started, watch this video as your how-to guide to the DailyFX Forums: http://forexforums.dailyfx.com/daily...ion-video.html

Email me with your questions and I’ll introduce you to the community and point you in the right direction. I look forward to hearing from you.

Sean Hyman - DailyFX Forum Moderator - shyman@dailyfx.com

Hi guys,

Yes, I am looking at Australia's CPI data and at the Reserve Bank of New Zealand Interest Rate Decision. If RBNZ hold rates and Australia's CPI is lower than expected, that combination may allow current market for a correction. In other words, if market interpret that RBA won't increase rates so fast, and RBNZ holds... maybe carry trades will take profits in coming weeks...

what do you think?

best,

A.

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Patience, Discipline, Consistency, Confidence...

While New Zealand has higher inflation...it doesn't have a positive GDP growth rate yet and its unemployment is still heading higher.

So it's more likely that Aussie continues to hike (maybe not every meeting...or even the next one) and that New Zealand holds off on hikes for just a bit longer.

That would be my take. Now we'll see how it all unfolds.

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Come join me at the FXCM Las Vegas Expo along with the FXCM course instructors and DailyFX analysts May 3-4th: http://www.fxcmexpo.com/

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Email me with your questions and I’ll introduce you to the community and point you in the right direction. I look forward to hearing from you.

Sean Hyman - DailyFX Forum Moderator - shyman@dailyfx.com

Hi Sean(aka Dr. Phil) and members of this forum

Need help with this... Why is it that EUR/USD drops and AUD/USD barely moves, but when EUR/USD rises slightly, AUD/USD rallies sharply? It would appears the correlation is one sided and that make no sense to me.

Also, if carry trade stop chasing assets (per Dr. Doom), wouldn't those USD be pulled from higher yielding currencies, like AUD?

Really a newb with AUD and simply don't understand why the disparity between them.

Any feedback would be appreciated.

Mr. Pippin.

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Mr. Pippin.

If you don't mind me answering. Look at the currencies during the crisis. The JPY, CHF, and USD were the safehavens and did appreciate. During the recession people stopped chasing assets as you put it. Now the Aussie's have raised interest rates already and we know that they have already began recovering from this recession. Also, the RBA have been very hawkish with their terminology. We don't know anyone else who is recovering as far as currencies that FXCM allow you to trade. When the EUR/USD falls, it shows strength in the dollar and since the Aussie is so strong, a strong dollar will not be able to push it down as much. Plus Germany had some bad numbers come out recently, bad for the Euro. Hope that makes sense.

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Thanks for the input. It does help.

I just see Australian homes selling at big numbers compared to say, the US and the world and wonder if the Australian economy is not so much stronger as behind the global recession and has yet to see their bubble pop. Was it that the Australian economy was so strong that they raised rates, or was because they needed to cool the housing market?

Agreed on the safe heaven on currencies... and true the AUD could climb higher, and even beyond, before the recession but I pause to think that the USD compared to purchasing power is still greater now than it was then and this is the part I don't see, unless a correction is in the winds.

Thanks again,

Mr. Pippin

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Mr. Pippin.

Hey Rodriguez,

I don't think it is prudent that you determine what the AUD might do in releation to the NZD and the NZ interest rates. Sure both currencies might be considered high right now to the USD - but they are stand alone curencies. (AUD/NZD)

The NZD interst rate is likely to NOT go up as quick as Australias.

I'm also watching the CPI for OZ, for me its the last nail in the coffin for a .50% rise. Me thinks a .25% rise on Nov 3rd is a given. The CPI will determine if its more.

If there is no rate rise at all, then yupp, I'd expect the AUD to drop a few cents.......even if that scenario pans out, I still see the AUD appreciating against the USD. ......so just a good opportunity to buy more AUD at a cheaper rate.

In Australia, anything to do with the AUD being reported in financial circles is its going to parity, but is it going beyond parity - ie, $1.10.

All of this becomes null and void if the stock markets crash.

Good, I am glad that helped. I don't have too much experience in the Forex market, but I come from many years of equities and futures trading. The correction that we have seen in the Aussie pair I attribute to a pullback and possibly some profit takers as well as some dollar strength, which you referred to with the EUR/USD.
So far the AUD/USD is holding my key levels of .91533 and .91126. This is bullish to me and I have bought towards the low. I am also thinking that people are viewing risk; the kiwi is thought to keep interest rates the same as well as Aussie CPI is expected to be lower. This is also keeping the currency low. After the CPI number we will know more, and the strength in the AUD/NZD pair show the risk being put into the kiwi, because of interest rate speculation.
ThePhoenix posted a good link about housing prices and I feel that they will try to raise rates to cool the housing market, but most of all they want to curb inflation and that is why the CPI number is so big tomorrow. The kiwi bank is talking of cutting stimulus to curb inflation, but the Aussie economy is too strong for that so they have to raise rates I think.
I am short usd/jpy and as a whole number it is down more than aud/jpy and nzd/jpy as a percentage it isn't down as much, but it is a higher number so you cannot judge that. This tells of a weaker dollar today. Also, all the other majors are holding levels against the dollar.
Also, to your point that the U.S. has better purchasing power. The U.S. will still continue to print money into next year. The Aussie's don't need to print any money. Also, they are adding jobs while the U.S. unemployment is going higher, even with a higher number of discouraged workers.

These are my thoughts, but hopefully they help a bit

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Hey Rodriguez,

I don't think it is prudent that you determine what the AUD might do in releation to the NZD and the NZ interest rates. Sure both currencies might be considered high right now to the USD - but they are stand alone curencies. (AUD/NZD)

The NZD interst rate is likely to NOT go up as quick as Australias.

I'm also watching the CPI for OZ, for me its the last nail in the coffin for a .50% rise. Me thinks a .25% rise on Nov 3rd is a given. The CPI will determine if its more.

If there is no rate rise at all, then yupp, I'd expect the AUD to drop a few cents.......even if that scenario pans out, I still see the AUD appreciating against the USD. ......so just a good opportunity to buy more AUD at a cheaper rate.

In Australia, anything to do with the AUD being reported in financial circles is its going to parity, but is it going beyond parity - ie, $1.10.

All of this becomes null and void if the stock markets crash.

the phoenix

G'day Mr. Pippin


EUR/US down.......aud/us.....stable.

EUR/US.....up..........AUD/US....up.

To me, it appears that out of the three currencies they are appreciating in this order. AUD/EUR/US


the phoenix

So far this week the USD is very strong, this will of course change. Here is the strength as I see it and the calculator sees it.

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