Another fine mess for AUD traders

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Which is the aberration? The slide on the RBA’s failure to act or the rally as the globe prices in aggressive quantitative ease from the Fed, the BOJ, maybe the BOE and who knows who else may toss their hat in the ring before long.

The term “currency war” is being bandied about from Sao Paolo to Tel Aviv and the dollar is winning hands down in the race to the bottom.

Against a backdrop of record gold prices and surging industrial and agricultural commodities and a swooning greenback, the Aussie has recouped  all of its RBA-led losses and then some and trades back above its broken trendline on the daily chart at 0.9695.

I’m at a loss to tell you how to trade it from here. Some are clearly relieved to sell AUD/USD anywhere near 0.9700 after the near-death experience of having sat through a slide to 0.9543 following the RBA meeting. We trade now at 0.9716, a mere 30 pips from trend highs. Too late to climb back on board the long side, in the near-term but not too late to take profits if 0.9750 holds.

10-5 aud

12 Comments

  1. Yes, Jamie, another fine messyou got us in Olie…

  2. Insanity! Did anyone here honestly think aud/usd would bounce back this far today? Time after time this currency shows it’s resiliency, perhaps the sell off last night was a bit overdone…

  3. Gents, the sell off last night showed how many specs were betting on a rate hike which did not materialise and they were rushing to the exits…honestly I did not expect this kind of rebound either but was expecting some of it due to the yield hunting/asset rebalancing going on at asset managers currently…as for where from here, I would totally agree with Jamie…IMHO the rebound is now overdone but might drag us to .98 maybe, a number I would place a short or two or three… : ) good luck out there – safe

  4. lulz what a friggin freakshow… I’ll be watching 9750 and 98… until then, no friggin clue.

  5. hehaha…very funny.
    I was fortunate to grab a short from 9844 on friday. But I freaked when it closed at 0920s. So, I closed it…. then the it freaking crashed like almost 200 pips from that freaking entry. This was because the analyst forecast for the rate hike changed over the weekend, and didn’t make me confident on the short anymore.

    Freakshow alright.

    Back to the drawing board. I’m monitoring how low USDCHF can go. We’re reaching super lows now.

  6. An honest question here. Why shouldn’t aud/usd come right back to where it was? Isn’t the Australian economy and the short/medium term outlook for their economy just as robust today as it was yesterday? Couldn’t you make a case for the RBA’s decision just being cautious while maintaining a very optimistic outlook going forward over the next 6-12 months?

  7. DonC – while I’m not claiming *any* level of expertise, the reason I’m befuddled by the motion of AUD/USD is because it has been sideways for a couple days now, almost looking as though it was topping. As such, it was hoped that the drop from the RBA news would induce a downtrend, since there are some that view the AUD as overvalued. The idea was that it would stay below where it had dropped from, or at least below the previous uptrend resistance.

    I agree with your points about RBA’s cautiousness and optimism, and the state of the Australian economy, but the surprise came when the slide from RBA’s announcement didn’t just come back up to where it had fallen from, it continued to rise for another 50+ ticks, back into the previous uptrend’s territory, after consolidating through the trend, into sideways territory, then nearly into a downtrend. Not necessarily the expected reaction, and I know I’m not the only one thrown off by it… Just my thoughts :)

  8. Jakemo – thanks for your thoughts. I think people are still thinking, even if a bit more warily, that having your money in aud is still more stable than many of the more “normal” currencies what with so much uncertainty afoot… We will see, we always do, won’t we. :-)

  9. DonC you are right, nothing changed overnight, apart from that this was yesterday and today we trade tomorrows thoughts of next month… : )

  10. The AUD bounce has caught me also by surprise, and a painful loss. Jakemo’s thoughts are probably typical of traders in Asia. My thoughts, after obsreving the NY action is that the AUD would’ve gone down a bit more, and not recovered so high, except for the heavy wave of $ weakness from NY which is blasting everything in its way. The AUD rise is an effect of the currency wars and traders clearly feel that the Fed will win any such showdown. They are pushing the $ down because the Fed has indicated very clearly that they want the $ weaker.

  11. Ouch for me too. (Note to self: do not look at the trading while actually at my real job, and don’t believe the expert opinions – it was Terry McCrann that convinced me, I thought he was pretty in the know.) I agree that the aussie is still looking strong and stable. If only I would learn my lessons a bit cheaper ……

  12. I certainly got hurt via the aud. Should have taken profits last night back in the .9570’s range instead of sleeping expecting the sell off to continue -_-. Safe money is smart money.

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