A short note to tell you we are buyers of AUDJPY. We anticipated a short pullback on the AUD, resulting from todays statement, as an opportunity to take some medium to long term long positions on AUDJPY. We initially looking at 81.20 level, but after the rejection at 81.40, we have added to our long term long positions on the pair at 81.50 and 81.60.
Please refer to the previous post to further understand the pair and our approach. On the last post, i failed to include the link, so many of you have missed the information. It is important you study the movements on the pair.
The hold of cash rate at 4.75% was widely expected, particularly as the took a very balanced tone in its comments ahead of the meeting. This is very important, because the is known to give directives on their forthcoming statements. We covered this in a previous thread.
Also confirmed it is comfortable with current interest rate levels and states the currency strength will act to stem . Stevens referred to the high terms of trade levels which resulted from high commodity prices and attractive interest rates. While this is having a supportive effect on private investments, it also led to a significant rise in AUD exchange rate which will assist, at the margin, in containing pressure on over the period ahead. The expects to be relatively stable in the short term, but warned that it "is likely to increase somewhat over the medium term if the economy grows as expected." This means eventual higher rates and stronger currency and more yield for our institutional trading.
We expect rate hikes to continue at an approximate rate of .25% beginning Q2 2011 and continued fx flows. Risks are weak equities and too much tightening in China.
We are looking for bouts of sharp risk aversion... sharp sell offs in AUDJPY, which will be opportunities to buy. This long move is more likely to be a slower grind than an aggressive trend.
We will touch base soon
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Thread: We are Buyers AUDJPY
12-06-2010, 11:15 PM #1
We are Buyers AUDJPY
12-07-2010, 02:06 AM #2
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