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July 13, 2010 – AUD potential for more leg’s near term.

Discussion in 'Giant #2' started by Giant #2, Jul 13, 2010.

  1. Giant #2

    Giant #2 Former Special Consultant to the FPA

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    We are forced to revise our AUD view as a result of very strong data and global sentiment for the region.

    We have taken a Long AUDUSD .05 (5%) at .8700 and AUDJPY at 77.00 with tight stops on today’s pullback resulting from Bank lending news out of China. It is a small position as we proceed with caution at the high end of the trend looking for a decline in the coming weeks/months.

    Position entry is often at support or big figures +10-15 pips, as these are areas where we often see shifts in flows and options protection.

    As traders, our view of the market can change quickly. A killer of many traders is to stubbornly remain fixed on a view when all signals are confirming otherwise. In the current case of AUD we have considered the following in our change of view.

    Recent data heavily supports AUD:

    1. Trade Balance 1.65B vs 0. 53B expected
    2. Hawkish RBA statement
    3. Employment change 45.9K vs 15K expected
    4. Unemployment Rate 5.1% vs 5.2% expected
    5. China Trade Balance 20B vs 15.3B expected
    6. Home loans 1.9% vs 0.7% expected
    7. Relief rally in equities and stable markets
    8. Market expectation of further rate hikes widening the IR spread (this will likely be put on hold if equities fall and global economies contract in the coming months, a scenario we are preparing for)

    CAUTION – China CPI and GDP this week could have significant impact!

    The AUD is likely near the end of its medium term rally, so we take conservative long positions on pullbacks. In the event of aggressive risk averse moves, we remain on hold until the move begins to slow.

    The USD index still has room to see the USD lower which throws caution to moving into USD longs too soon on this cycle.

    Our longer term goal is to wait as long as necessary for AUDJPY, AUDUSD, NZDUSD to move materially lower to take on long positions.

    Good Luck with your trading and be careful out there
    G2
     

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  2. ivylwells

    ivylwells Recruit

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    Thank you

    Thank you for the detailed update, Ivyl
     
  3. digital_soul

    digital_soul Private, 1st Class

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    I'm SO glad to have a fellow Giant who focuses on AUD. I live in Sydney and tired of the fact that I can't seem to find any methods to make any money unless I trade GBP or USD which are out of my timezones!

    THANKS G2!
     
  4. moom

    moom Recruit

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    thanks

    thank you very much Giant #2.:)
     
  5. zenfish

    zenfish Recruit

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    Good Call.
     
  6. hanan

    hanan Recruit

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    +250 pips

    very thanks i got 250 pip thanks
     
  7. blinko

    blinko Recruit

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    The tops

    Thank you very much for this great analysis on the Aussie.
    Another top quality Giant with FPA.
    Welcome
    JR
     
  8. rockydewantara

    rockydewantara Recruit

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    thanks giants, a have 125 pips.
     
  9. gifog

    gifog Recruit

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    Very interesting

    Thank you for a great analysis and sharing.
     

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