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theflasherman

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IN REPLY TO A POST BY moneyman888, Wed 25/02/04 08:09am   [READ POST]


Yes. Greenspan does have an influence based on what he says, but at the end of the day it is not just the interest rate differential driving the uS$ down.

The economy in the US is not as strong as certain analysts and media would like you to believe, if it was there all of the indicators GDP, Unemployment numbers, consumer confidence, etc would be going off.

The AUD will get to .85 by mid year (I do expect that there will be intervention at this point), the Gold price will continue to strengthen after this period of consolidation.

Consumers in the US are tapped out, they have re-financed morgatges and spent the money, there is none left, jobs are now needed to drive the economy so consumers have money to spend.

Tax cuts are not the answer, Free trae aggreements will help, especially if the US keeps screwing contries over like AUS, wasting money on Space programs will not help, nor will spending billions of dollars fighting a war no-one (but a select few) wanted.

Until the US govt changes leadership, to someone who actually understands basic business and not a failed business man (twice over) the US economy is destined for more trouble ahead.

I am not disputing the $A 85c figure, I would just like to know how you calculated it.

I have a projection figure of high 82's for the USD index and 448 for Gold.

 

Having a look at the gold chart, weakness is shown by the two daily drops in the last month of $10 or more, but it may only be symptomatic of the strong greenback. This could normally be taken as a sign of imminent problems.

 

However, I think the moving averages hold a clue.

The USD index has been hitting the 100day MA on it's progress down. This looks likely to happen again within a month.

Also, Gold has bounced off the 200 day MA in it's way up, and that is showing at 380 atm.

 

The 395 for gold is a long term retracement level of 61.8% off the highs from the 70's run, and there are no major retracement points between 395 and 380. Perhaps it will go up next month. I hope so.

 

 

 

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AUD down significantly agains USD overnight and again today. It looks like the US economy is finally adding jobs which is a sign that the recovery in the US is fully underway. The key factor in any longer term trend is interest rates and the Feds position on these may halt the fall of the USD.

 

It looks like most base metals were sold down to offset USD gains, but oil still remains strong.

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Calculations can always be wrong, and resistance and support get broken, but I'm predicting the USD index has topped for now on this retrace, and with it, Gold has bottomed (or will do so in the next 2 days) and the good old A$ also has/will bottom in the next two days.

We should know by the weekend.

 

Only thing that could break it are the employment figures on friday, but my feeling is that if good, they are already factored in.

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US$ crumbling. Down 2c to 124 to Euro.

A$ to reach new highs against the greenback.

GOLD running. Up to 402 on weak employment employment figures from US.

How far will it go ? I believe this is the start of the next run. Past the last high, perhaps 448 to 470.

Don't be left short in Gold stocks. They will run next week. For those taking note, moves had started late this week.

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  • 2 months later...

The ole A$ is unloved at the moment. Down to 0.6875 against the US$. That US trade deficit didn't seem to be a problem. I think the threat of a near term rise in interest rates in the US is affecting it. A little odd given the talk that A$ interest rates may also be heading up given strong employment figures.

 

Possibly it is related to a fall in demand for commodities and related equities, therefore the demand for the A$ has reduced. Perhaps it is an early warning that China is buying less commodities??

 

Interestingly oil producers are nearly making A$60 a barrel at the moment....

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  • 6 months later...

In reply to: theflasherman on Thursday 13/05/04 10:32pm

AUD/USD to 0.9000 .....

 

Sounds ridiculous but looks that way.

 

Standing back and looking at the long term moves of the USD one can only wonder.

 

Since George W . Bush came into power the dollar has really only gone one way.

Overnight we yet again say and all time high for the Euro against the dollar at 1.3048. Looking back to 2001 it hit a low of 0.8230 back on the 27/10/2000. The rally to date represents an increase of the strength of the Euro and decline of the dollar of 58.5%.

 

Looking at the GBP/USD we see a similar story with the low on the 30/6/2001 of 1.3688 and the high early 2004 of 1.9138 representing a rise of 39.81 %. Now for myself the all time high back in September 1992 for the GBP of 2.0100 against the USD looks like a target for 2005.

 

If we try and look at the USD/JPY forget it .... Too many problems of their own with their floundering economy over the last few years as well as massive government bailouts and spending has left the economy with a set of all its own problems.

 

Now in this light we go to the Ozzie. Since its low back on the 6/4/2001 of 0.4778 we saw a massive rise to 0.8007 back in February 2004. This was a rise of 63% off its lows.

Now note the bottom we saw in the ozzie was very near the low in the GBP/USD in terms of time and was lagging the Euro move by about six months. Now a lot of things caused our move to be exaggerated ... Mainly we were hit harder on the way down, but the well know short position of the NAB idiot option boys helped the AUD a bit higher. Since its high we saw a correction back to 0.6775 as most currencies corrected off their highs from such a hard run. Our correction was the order of a 38% pullback. It is interesting to note the pullback in the Eur/USD was almost exactly a 25% pullback. Stating the obvious, AUD/USD has always been more volatile and being a much smaller market than the Euro we whip around more.

 

So where from here ? Well in the past we seem to be lagging the Euro by several months hence it is obvious the previous high of 0.8007 back in February 2004 is not far away. More frightening is the all time high we saw back in February 1989 of 0.8990 looks likely to me unless some things change. Of course this all time high is a post float of the AUD/USD high. Before then we saw the currency higher.

 

This is just looking from a technical perspective alone.

 

Now what really is driving this fall in the USD ?

Well being flippant George W Bush would be the answer. However on a serious note it is fairly obvious. Changes in the US taxation system along with massive increases in government spending coupled with the economy being sluggish for most of the past four years. Also widening trade deficits.

 

Now what is going to change ? The tax cuts and the changes in mix to the US taxation system have taken the government from a very strong projected surplus to a widening deficit position.

On top of this massive increases in government spending have pushed the US government deficit into record blowout positions. Is this going to change ? No is the simple answer and with the Bush landslide he will be increasing the spending if anything. The size of the current federal deficut in the US beggars belief.

 

Now the US economy has been sluggish for some time and the US Federal reserve has been keeping rates at extremely low rates in an attempt to stimulate growth. Recent months have seen them move those rates back to a more neutral stance as the economy slowly grinds back. With the fall in the dollar the effects on the economy should be positive making their exports more attractive and hopefully pushing it along especially if the slide continues. On the negative side of this since the trade position is awful the imports will become more expensive and I suppose they are hoping the increased cost will deaden demand to some extent and the better trade position with the lower dollar will increase exports and hopefully correct some of the trade imbalance.

So from the trade side they are not to worried about the weakness in the dollar.

 

Still on the economy the massive government spending also should eventually come through and have some positive effect on the economy.

 

Both the lower dollar and the spending should eventually kick in, offset by the fed raising rates.

On the trade side the exports should be helped by the lower dollar and import prices hit on the other side.

 

Also taking the social security burden off the government and making the next generation responsible for there own superannuation should provide some boost along the way.

 

One negative as time goes on is the US demand for energy imports and the fact is by 2015 the US will have massively increased the proportion of its energy import needs let alone any growth in demand. For the US its own energy reserves by that time will have dwindled and reliance on oil imports will go from 50% to somewhere around 80%. That's a big jump in anyone's language but at USD $40- a barrel it will put a hole of around 100 billion USD in the deficit by 2015 unless thing change.

 

Now where do the positives kick in and the US slide stop ? Government spending and deficit will not change. At some time some real strength will come in the US economy, for myself I see it being hosed down partially by the Fed creeping rates up but more importantly for me the higher cost of energy slowly seeping through. If that hits the inflation numbers it may even spur the fed to greater lengths in raising rates. Short term a plus for the dollar but at the risk of tipping the US economy back over the edge into recession.

 

Personally ... I think US spending is out of control. Some fiscal restraint is needed, but with a mandate handed to the new president that is not going to happen. Fed faced with ballooning federal deficit and awful trade numbers with a fragile recovery ...... Well my feeling is we see AUD to 90 cents late 2005.

 

What's that mean for us ? Will slow our booming export industry down for the resource market.

Inflation with yet again a massive appreciation will be muted as imports especially for capital items become cheaper. Our stock market eventually will slow from its march toward 4000 and correct as the reality of lower returns in AUD terms for our larger exporters hits. Of course this may take a while, looking at the coal industry they are talking about 30% plus increases in USD over last year an even with the Ozzie up by 10% still a 20% increase in real terms for returns. Others including agriculture and gold will be hit by the much higher Ozzie and not enjoy the increases in prices in US terms.

 

Sorry for the ramble. Just my long term thoughts. Personally can't see anything stopping a further fall in the USD and hence a rise in our lovely currency. Time to book a trip to the States late 2005. Both from a technical perspective and a fundamental stance it all looks one direction. Then again it also did before we saw the correction back in February, but the bottom line for me is the fundamentals and they are not good for the USD.

 

Cheers

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