Battle of High Yielders
The high yielding Aussie may be outperforming all currencies but not against the next highest yielderthe NZD. With Aussie rates kept unchanged at 3.00% and Kiwi rates at 2.50%, this looks to drive a textbook case of carry trade, whereby the higher yielding Aussie rallies during improved risk appetite. Today for instance, AUDNZD rallied in early morning US trade after better than exp ADP figures and the clarification of the BoA story. But technicals on the weekly AUDNZD show a resounding sign topping out, namely a triple top at 1.29 since December 2000. Further declines in the pair could unfold on at the next bout of risk aversion, especially as Aussie rates are superior to their NZD counterpart. Note that the pairs last retreat coincided with the March recovery in global appetite only to be reversed in April amid improved economic data in Australia and protracted pick up in appetite favouring higher yielders. Failure to break above the 1.2930 high risks in triggering a decline to the initial 1.2740s, followed by the 1.24. While I often said long AUDUSD is a preferred long term trade, long AUDNZD could be a long term hedge against reduced risk appetite.
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Ashraf
I really appreciate your online work book. It is helping me to analyse the FX markets very well.
Keep bringing such online books in future too.
Thank You
Samso
Ashraf
Dear Ashraf,
Where do you see the euro going, long run? With euro zone problems seeming worse than those of US and with the expectations that the US would recover before the eurozone, could we see Euro going to $1.18 or even parity?
thanks
Ashraf
Ashraf
Can you tell what will be in your opinion most important events for EURUSD this and next week (I guess tomorrow's US April retail sales is one of them)? On which day it will occur and if you know the time would be great.
Also, is there any chance that some of these events push EURUSD lower even without pullback in stocks? (I've shorted EURUSD two weeks ago and now I'm thinking should I cut my loses or should I add more to short position)
Thanks
Ced
Ashraf