Posts by "rezz"

3.5% inflation expectation for Australia, slightly lower than last month. Got a quick bounce of ~10pips but trend was down.. likely will get longs squeezed now. Shorting at 1.0470, target 1.0420.

A related article today at DailyFX: "Oil, Gold and Silver to Fall if Risk Appetite Sours After ECB Rate Decision" http://bit.ly/hGqB7M
My own thinking is that an ECB rate hike will affect bond yields across the short and long ends of the yield curve, hence "cost of equity capital" rates go up which is negative for equity valuations. The Euro economy is over 15 trillion dollars so any slowdown in euro growth even by fractions of a % can affect commodity prices.

chloe, I decided to be neutral on the Euro going into rate decision, and switch my short to NZD and AUD shorts. The EURUSD charts show more upside momentum and room to run even to 1.45 ish. On the other hand, Eur crosses against aussie and kiwi could go through rapid short covering in event of hike (plus narrowing rate differential should be supportive at least in short run), which i believe will limit losses on my AUDUSD or NZDUSD shorts. In event that market sells off, well I expect all risk trades to come off.

With so much already priced into the Euro regarding rate hikes, I wonder if we will be having one of those "buy the rumor, sell the news events" come post ECB.
I'd think that if the ECB rate hike goes through, it may cause a selloff in equities & commodities. Whether it continues to be a positive for the Euro (considering 75bps are priced in for the year) I dont know, but it seems that the commodity currencies might have more to loose on an ECB rate hike, if some speculative money gets out of commodities.

chloe, i am not sure if fundamentals are whats keeping the AUDUSD at these elevated levels, but I am surprised it didnt maintain the dropping trendlines below 1.010 ish considering it had broken major support at 0.98 earlier, which should be a bearish signal. The market wants to frustrate the weak hands before a major reversal, but thats just my opinion.
I calculate a 5.7% gain from the 0.974 area to 1.0295 without much correction which is very odd. Even the canadian dollar which had more reason to stay high with high oil, hasnt gone above its earlier highs in such a fashion. So i have feeling that the AudUsd rise is because of 1) volume being very light, and 2) many longs in EURAUD closing positions.. the chart from 1.425 to 1.3690 is telling somehow.