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AUD, Australian Dollar Discussion
Lizard
post Posted: Jul 16 2005, 06:14 PM
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In reply to: neutron on Saturday 16/07/05 01:20am

QUOTE
The debt bubble theory is an interesting one, my own view is not as cynical as most - maybe I will go into detail sometime.


Yes, please do neutron.

 
neutron
post Posted: Jul 15 2005, 11:20 PM
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QUOTE (mangrove @ Wednesday 06/07/05 10:34pm)

Good analysis Mangrove - agree with most of that.

I have attached a chart to show how the Instos and Fundies are probably identifying the target prices mentioned here.

Don't worry about the elipses - just my recent entry and projected exit levels.

The debt bubble theory is an interesting one, my own view is not as cynical as most - maybe I will go into detail sometime.

Sorry about the size of chart, probably need to expand it for clarity.

just noticed the 61.8 and 38.2 fib levels are almost invisible, shame as the 61.8 level has been the key support level during the topping process of the last 6 months.
Attached image(s)
Attached Image

 


 
mangrove
post Posted: Jul 6 2005, 10:34 PM
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In reply to: Techno on Wednesday 06/07/05 10:18pm

China is calling the shots. They finance the American debt and hold squillions of US bonds. They are concerned that the value of their bonds is falling.

Greenspan must offer them a better interest rate and must protect the value of the US $.

The Aust $ can not compete without an interest rate increase and our Government is holding back this eventuality as long as possible.

The falling $Aust, will mean higher interest rates and higher fuel costs. With consumers already overburdened by debt, things don't look good.

The indicators are confusing atm but it will happen. Westpac are spot on.

We have overspent and now have to pay.

Cheers, m

 
Techno
post Posted: Jul 6 2005, 10:18 PM
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Westpac Bank predicted the local dollar would plunge back below US70 as commodity prices come off highs and foreign investment into Australia slows.

Westpac has forecast the local dollar will fall to US72 cents by December 2005 and to US64 cents by December 2006.

"The Australian dollar looks set for a fall in the second half of this year," said Westpac in a research report.

"The fundamentals do not improve in 2006 either. In fact, the unfavourable trend accelerates."



 
Techno
post Posted: Jul 6 2005, 10:06 PM
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May 21 (Bloomberg) -- The Australian dollar had its third weekly decline on concern falling commodity prices will weigh on the currency and the country's interest rate and yield advantage over the U.S. will narrow.

The prices of metals such as copper and gold that Australia exports dropped over the week, raising speculation the country's revenue from overseas sales will decline. The Reuters-Commodity Research Index of 17 commodities futures has fallen 9 percent from its March 16 all-time high. Over the same period the Australian dollar has depreciated 4.7 percent.

``Commodity prices and the direction of the U.S. dollar will drive the Australian dollar lower,'' said London-based Monica Fan, global head of foreign exchange at RBC Capital Markets from the firm's Sydney office. She recommended selling the currency next week.

Australia's dollar fell to 75.60 U.S. cents in late New York trading yesterday from 76.14 cents at the close a week ago. The currency slid to a four-month low of 75.32 cents on May 18.

Australia's dollar may slide to 70 U.S. cents by year-end, said Stephen Koukoulas, chief strategist at TD Securities Ltd. in Sydney. The currency is influenced by metals prices because almost 60 percent of the country's exports, which make up a fifth of the economy, are raw materials.

``There has been a clear softening of commodity prices,'' said Koukoulas. ``This component of currency support for the Australian dollar is very quickly unwinding.''

Copper futures for July delivery rose 1.2 cents, or 0.9 percent, to $1.375 a pound on the Comex division of the New York Mercantile Exchange yesterday. Prices were up 29 percent from a year earlier, while the Australian dollar has gained 8.6 percent over the same period. A futures contract is an obligation to buy or sell a commodity at a set price by a specific date.

Australia is the world's third-biggest producer of the metal, which had a correlation of 0.81 with the Australian dollar in the past year. A reading of 1 would suggest the two move in lock step.

Rate Gap

The currency is also being sold because some traders are betting that rising U.S. interest rates will lure investors away from Australian financial assets such as government bonds.

Australia's target interest rate for lending to banks overnight is 5.5 percent compared with the Fed's comparable rate of 3 percent. The Reserve Bank of Australia has raised rates just once in the past 17 months. The Federal Reserve has lifted rates by a quarter percentage point eight times since June to 3 percent.

Thirteen of 22 economists surveyed by Bloomberg News on May 6 forecast Australia's interest rate will remain unchanged for the rest of the year. U.S. borrowing costs will rise to 4 percent by year-end, according to the median estimate of 63 economists surveyed by Bloomberg from April 29 to May 6.

``One of the core reasons behind our expectations that the Australian dollar will underperform through 2005 and 2006 is that higher rates and yields in the U.S. will see spreads narrow versus Australia,'' Westpac Banking Corp. currency strategists, headed by Robert Rennie in Sydney, wrote in a note to clients.

The currency will decline to the low 70 cent area by year- end, the bank predicts.

The gap in yield, or spread, between Australian two-year government bonds and comparable U.S. Treasury notes has narrowed to 1.60 percentage points from 2.92 percentage points a year ago. The gap has averaged 2.23 percentage points in the past year.

`Risk Environment'

Australia's dollar also weakened on concern hedge funds, which helped drive the currency higher last year, may sell after incurring losses, said Simon Stevenson, a currency strategist at Merrill Lynch Investment Management in Sydney.

The funds, loosely regulated investment pools that oversee more than $1 trillion for investors, declined by an average 1.75 percent in April, their worst monthly performance since September 2002, according to Hennessee Group LLC, a New York-based consulting firm.

``The risk environment isn't positive for the Australian dollar,'' said Stevenson, who helps manage about $8 billion of investments. ``I'd be a seller of Australian dollars.''



 
balance
post Posted: Jul 6 2005, 08:37 AM
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In reply to: crowman28 on Sunday 12/06/05 02:00am

oz $ certainly being given some stick of late.i read 72-73 should be it though.

with US economy doing ok and rates still in upward bias it likely puts the crashing dollar / gold thru the roof theorists out of the loop for now.



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crowman28
post Posted: Jun 12 2005, 01:00 AM
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In reply to: neutron on Saturday 11/06/05 11:10am

Anyone willing to take a guess how much the AUD will fall against the USD??

My take is 72 cents will be the lowest perhaps. Can't it this level being broken this year.

 
neutron
post Posted: Jun 11 2005, 11:10 AM
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QUOTE (neutron @ Thursday 12/05/05 02:30pm)

If the majors do fall hard under the weight of the USD over the next few days (very likely now) it means GOLD must decouple from the USD, otherwise we could see GOLD also break its LT uptrend (USD).

and decouple it has...



 
LSM
post Posted: May 12 2005, 03:29 PM
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At least we will know either way very soon. All this indecision is sending me insane, too many mixed signals. The frustration is unbearable; maybe I should take a holiday and come back in a few weeks. weirdsmiley.gif

Rgds
LSM


 
neutron
post Posted: May 12 2005, 03:21 PM
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Thanks Lizard.

Agree LSM.

It will be very interesting seeing where the AUD, Gold and other majors are trading come Monday morning.

Though short-term speculators are of little consequence to the forex market, the same can't be said for larger, long term players.

Many of these must now decide whether its time to take profits and cover USD shorts or ride out the strength in the USD on the assumption USD weakness will re-assert.

Expect volatility and some nasty spikes, there would have been a lot of small trades entered on the USD long-side last night after the breakout. These may need to be punished first before the true direction is revealed.



 
 


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