The following a direct quote from Glenn Robert Stevens – an Australian economist and the current Governor of the Reserve Bank of Australia.
“The foreign exchange market is perhaps another area in which investors should take care.
While the direction of the exchange rate’s response to some recent events might be understandable, that was from levels that were already unusually high.
These levels of the exchange rate are not supported by Australia’s relative levels of costs and productivity. Moreover, the terms of trade are likely to fall, not rise, from here. So it seems quite likely that at some point in the future the Australian dollar will be materially lower than it is today. “
Boom!
You’ve got to love it when a central banker:
- Tells the absolute truth.
- Tells the absolute truth.
- Tells the absolute truth.
Short AUD has been ” and will continue to be” an absolutely fantastic trade moving forward, as perhaps “finally” we get the correlation to “global appetite for risk” back in vouge.
Absolutely right Kong – short from 0.9725 and again at 0.9629. The AUD has responded to the comments down 35 pips and sits on top of the daily 20ema and the 23.6 fib of the move 0.8848/0.9757. If it breaks there is still plenty of support on the way down, but for me target 1 is the 38.2 fib at 0.9410. I suggest to go much further than that it will need a new risk aversion trigger.
Looks like a reversal on the AUDNZD as well.
Nice work Deano – as always.
I’m looking at things ” a touch longer term” in that…..AUD vs USD has “swung high” on a weekly chart so……..
My longer term view would have it that trades entered “around here” / or perhaps on any push higher…might just stick for ” a real turn” taking out lows around 89.00
I know……everyone is convinced the Fed will save the day etc…..I’m not on that train.
Food for thought mate.
No agree entirely Kong. The ring high is good for a few hundred pips and my system is also giving me a turnover signal so its only going one way. I’m just cautious that progress may be slow and choppy given the lack of a true risk off driver, so intend to take profits as it goes. We just need one good blowup to clean up! Perhaps the Chinese and Japanese can take a few pot shots at each other – nothing too serious but enough to bump up the volatility 🙂
Reading my mind Deano as I too ponder what may come of the “potencial conflict” over those islands.
I’m very cautious here too, but do really like the way things are “finally” coming together???
Looks like the China is weary of the massive influx of hot money into their economy, unlike the rest of the world still thinking that QE gonna save the world.