The Australian Dollar Emerges A Big Winner from U.S. Fiscal Fiddling

(This is an excerpt from an article I originally published on Seeking Alpha on October 21, 2013. Click here to read the entire piece.)

The Reserve Bank of Australia (RBA) must be getting a bit antsy at this point.

After working hard to drive the Australian dollar (FXA) downward in an on-going effort to rebalance the Australian economy, the currency not only seems to have bottomed for the time-being, but it also appears now to be breaking important barriers against a spectrum of major currencies.

{snip}

With this quote the RBA seemed to take solace that the Aussie was at least still below its peak. {snip}


Graph on implied expectation of Change to Target Cash Rate for November 2013 Expiry Month
Graph on implied expectation of Change to Target Cash Rate for November 2013 Expiry Month

Source: ASX RBA Rate Tracker

The charts clearly show an Australian dollar than continues a strong rebound.

{snip}


Australian dollar breaks out
Australian dollar breaks out

{snip}


The Australian dollar is pressing on a major bullish breakout against the yen
The Australian dollar is pressing on a major bullish breakout against the yen

{snip}


GBP/AUD looks like it is topping
GBP/AUD looks like it is topping

EUR/AUD looks like it is topping
EUR/AUD looks like it is topping

Source for charts: FreeStockCharts.com

While I seem to have successfully called the end of the Australian dollar’s decline, the continued strength has caught me flat-footed. {snip}

{snip}

Be careful out there!

(This is an excerpt from an article I originally published on Seeking Alpha on October 21, 2013. Click here to read the entire piece.)

Full disclosure: net short the Australian dollar

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