The AUD Movement...
by, 4th-August-2009 at 12:16 PM (1433 Views)
FYI. This is someone else's opinion...
** don't forget the AUD/JPY carry trade, I believe it is still on...AUD/USD pushed above its high of 0.8263 seen in early June yesterday. Apart
from this episode, there were only four episodes when AUD/USD appreciated above
0.80 after the mid-1980s. They were 0.8960 in February 1989, 0.8475 in August 1990,
0.8215 in December 1996 and 0.9849 in July 2008. In early June, AUD/USD rose
above the high of 1996 before retreating 6.8% to a low of 0.77 by mid-July on a
correction in Asian equities.
Yesterday, AUD/USD rose to an intra-day high of 0.8440, keeping its sights on the
high of 1990. Whether AUD/USD corrects down this time after crossing the 1990
high will depend again, primarily on how Asian stock markets hold up. It will also
be helpful if today’s Reserve Bank of Australia meeting and Thursday’s Australian
jobs data affirm its relative advantage over the US with regards to its interest rate
and economic outlook.
For now, these are sufficient reasons for the markets to overlook its overvaluation.
Bear in mind that Australia’s trade balance has returned into a deficit position since
Apr09 after posting eight months of surpluses. Tomorrow’s data is likely to show the
trade deficit deteriorating for a third straight month in Jun09.