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| Posted By: Michael Posted On: Oct 8, 2007 Views: 3271 | 10 cents or more is due to Carry trades 10 cents or more in the value of the Australian dollar is due to carry trades. I wouldnt get too excited about Parity with the USD and if/when it does reach it, the carry traders should get very nervous. With every cent rise now in the AUD/USD the carry traders would have their finger sweating over the sell button. Carry trades work when the currency is on the rise but wait for when it hits the top and starts to wobble - becuase if there is the slightest fall - all carry traders must rush to reverse becuase if they get out too far down, their losses can be massive and not only wipe out gains but put them in the red. Carry trades are high risk investments. Watch for any sign of bad news in the US or global economy, more defaults on loans or bad earnings and the whole thing could go into free fall - traders will need money back in their funds and in a safe place and well away from risking investments. Or if the Fed holds rates, or BOJ start upping them. Inflation is a key issue coming up for the key G8 economies over the next year - maybe not for Japan but they are playing a dangerous game with a rubbish value on their currency. The last fed cut could actually influence inflation to increase whilst at the same time more and more households suffer debt stress. There are more subprime loans expected to default in the US- check out the numbers and what you;ve seen over the last few months is just a taster of whats to come. Mroe and more households in Australia are under debt stress and that figure is tipped to rise. Few can take on more debt in the US as their assests are loaded and declining in value. Dont get tricked into thinking the rise in AUD is all becuase of a booming AU economy. Also Australia is now paying a premium to fund it's economic growth 6%+ more than the rest of the world. The majority of the economic growth is credit based. Over a trillion dollars has been borrowed in the last 10 years. (up from around 400/500B). The US and UK are heavily debt based but they have the population and global reach to be able to leverage it. Australia just has rocks in the ground to pay its debts and is physically a long way from the rest of the world - if commodity prices get too much China will look towards Africa and Russia as they are now doing. We should be investing more in R&D and technology but we dont. Booms dont last and ones based on credit are dangerous. Look back in history and just when everyone is dancing and cracking the champagne bottles and patting themselves on the back about how great things are and how they willlast - for the slightest reason out of left field it all comes to a stop. |
| Posted By: Michael Posted On: Aug 20, 2007 Views: 3952 | Bouncing There are mixed feelings on the carry trade and it is the carry trade that has been keeping the AUD up in the last 8-9 months or more. I still believe Australia's dollar value is around 65-75>79 the later in good times and the lower when things arent so good. I still strongly believe an AUD over 80 is overpriced. Anyone playing with it over 80 is just being greedy and trying to push it up. I'm not sure if people understand that Australia's net foreign debt is around 60% of GDP or thereabouts. Much of the economic boom is similar to the US where it is credit based. consumers refinancing their primary asset on property valuation increases and then spending on renovating, holidays, cars, Electronics. The difference between the US and Australia is that the US can call on a huge amount of liquidity if there is a problem. In Australia we have to ride out any problems over time and cut back spending - similar to the early nineties. Australia is also lacking in infrastructure due to little investment in this area over the last 12 years or so. The bouncing of the last few days has been the RBA (Reserve Bank Australia) and RBNZ propping the AUD up to stop it from sliding so fast. I have no idea why they want to do this. the market seems to be working quite nicely in the last few weeks bringing sense back to the valuations. Previous to July 26th it was nuts and I think it would be very dangerous to head back to those levels as the next crunch (and it will come) will be devastating to investors. |
| Posted By: Rick Posted On: Aug 17, 2007 Views: 3952 | "The harder and faster it will fall ..." Well ... never a truer word was spoken! From 88.6 down to 76.9 in a few short weeks! So where to from here? It all depends on the return of risk appetite and resumption of the carry trade. Even then, I doubt we will see a return to the recent highs, any time soon. I suspect there will be more than a few traders out there with severe indigestion following this rout. |
| Posted By: michael Posted On: Jul 16, 2007 Views: 4481 | how far will risk appetite go? and then hit the skids- it's all credit based and wildly over inflated. Australia is is not the US that it can sustain such high credit usage. Buying AUD now means there is not much profit to make from it - and the higher it goes the more FX losses one will make. The higher it goes the hard and faster it will fall. |
| Posted By: Paul Posted On: Jul 14, 2007 Views: 4197 | AUD AUD will go further.... hold on |
| Posted By: peter Posted On: Apr 15, 2007 Views: 5543 | sell AUD if hit above 85, The current level of 83 mid is at a crucial point. At 84.50 to 85 I'd tp and run like hell. I'd look to take a short AUD on a the first day that drops 75bps. The differential in RBA versus Fed was achieved already at 79. So that becomes the TP target. Anybody who says 87 has never traded a full cycle and is just another chart loving dill either seeking to lose money or pretending. It's all about human nature. If Labor wins a November election, the market will dump it more. |
| Posted By: Zoe Posted On: Apr 10, 2007 Views: 5109 | Buy (travel) in USD now or wait till July? Hi Wondering if anyone can tell me if it's best to purchase (travel-hotel) in USD now, while the AUD is high, or wait till July? -July because that's when the travel agent needs the cash by. They only accept USD. So I'm wondering if I'm best to purchase my trip now while the AUD is high?, or risk a weakening (???) AUD in July? Any predictions of where the AUD will be in July? and what is best? Thanks, Zoe. |
| Posted By: Michael Guilfoyle Posted On: Feb 12, 2007 Views: 5963 | Depedant on one Economy - Chine - risky There are more factors to an economy than just commodity prices. The Gains on the Aussie economy are purely on gains made in commodities and consumers are flush with cash from consumer debt and inflated property prices. Australia does not have enough industry or exports other than commodities to carry. Lets just hope the mining companies dont send there money out from Australia or hold it. |
| Posted By: mick georgeff Posted On: Jan 26, 2007 Views: 6128 | australian economy I cant see the aussie economy slowing until everyone in China owns a car and a colour tv. |
| Posted By: Michael Posted On: Jan 18, 2007 Views: 6254 | heavily overvalued Just a personal opinion.... Govt has transferred it's debt to consumers in last 7 years thorugh selling of assets for private investors uptake mostly done with debt or leveraging against other assests. Most major states are struggling whilst only commodity producer states are doing any good which has pushed up property prices in those areas which are expected to tumble. Nearly all states heavily in a drought and everyone is worried about water supplies with no infrastructure planned to handle the extra demand and diminishing rainfalls. there is also a lot more to this story that many foreign speculators just dont take into consideration. The only thing holding this up is specualators playing with the currency on commodity prices. One straw comes out and the whole lot will tumble... |
| Posted By: wozoo Posted On: Oct 13, 2006 Views: 7645 | Break Big breakdown back through 2.50 to 2.47. Weekly trendline still intact, touching at 2.47. |
| Posted By: wozoo Posted On: Sep 25, 2006 Views: 7896 | 2.50 break Break above 2.50/2.51. Looking for next resistance around 2.60. Short term reaction pullback to 2.50 expected. |
| Posted By: wozoo Posted On: Aug 2, 2006 Views: 8342 | GBPAUD Monthlu GBPAUD, monthly chart possible observations. Could be a large multiyear 2B forming on chart. Divergence on MACD as well. Higher low on the second B on the monthly. |
| Posted By: telf Posted On: Jun 8, 2006 Views: 9165 | uk market in reverse how or where do you know that the UK housing market is going to reverse. or for what reasons do you think this? |
| Posted By: muse Posted On: Jun 6, 2006 Views: 9041 | GBPAUD Weekly and monthly both showing a long term GBPAUD downtrend has been broken (back to '01). There is a longer term downtrend though still to be taken out but it wont reach the top of this resistance at around 2.65 until oct or so. Interestingly this may also be interpreted as a long term swing pattern and that means if the downtrend is broken its going to break to the upside rather sharpish past this resistance. Short term 2.50 is going to offer serious support now if it holds above here for a several weeks. On a sidenote the UK housing market is on the edge of going into a serious reverse, so something else to consider if you are buying. 2c. |
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