{"id":19616,"date":"2013-09-11T22:04:23","date_gmt":"2013-09-12T05:04:23","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=19616"},"modified":"2013-09-11T22:04:23","modified_gmt":"2013-09-12T05:04:23","slug":"the-australian-dollar-strengthens-in-the-absence-of-a-new-catalyst-for-rate-cuts","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2013\/09\/11\/the-australian-dollar-strengthens-in-the-absence-of-a-new-catalyst-for-rate-cuts\/","title":{"rendered":"The Australian Dollar Strengthens In the Absence Of A New Catalyst for Rate Cuts"},"content":{"rendered":"<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on May 19, 2013. <a href=\"http:\/\/seekingalpha.com\/article\/1671732-the-australian-dollar-appears-to-bottom-without-fresh-catalysts-for-rate-cuts\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>Time to swivel heads around on the Australian dollar (FXA) yet again.<\/p>\n<p>In &#8220;<a href=\"http:\/\/seekingalpha.com\/article\/1645642-australian-dollars-relief-rally-ends-with-the-latest-rba-meeting-minutes\" target=\"_blank\">Australian Dollar&#8217;s Relief Rally Ends With The Latest RBA Meeting Minutes<\/a>,&#8221; I concluded that the Reserve Bank of Australian (RBA) signaled it is willing to continue cutting rates until the Australian dollar drops to more acceptable levels. Now, I am not so sure as <a href=\"http:\/\/www.rba.gov.au\/media-releases\/2013\/mr-13-17.html\" target=\"_blank\">this week&#8217;s statement on monetary policy<\/a> excluded the critical cover that the RBA has used to signal the potential for lower rates. <\/p>\n<p>{snip}<\/p>\n<p>September&#8217;s statement said absolutely nothing about scope and did not reference the outlook for inflation. The RBA only stated that inflation &#8220;has been consistent with the medium-term target.&#8221; Implicitly, the RBA seems to be suggesting that the cash rate target has gone as low as it can given current inflation (and the outlook). I almost missed these subtle changes. {snip}<\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_19619\" aria-describedby=\"caption-attachment-19619\" style=\"width: 290px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_VariousAustralianEconomicIndicators.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_VariousAustralianEconomicIndicators-300x217.png\" alt=\"Various Australian Economic Indicators (January, 2007 to August, 2013)\" width=\"300\" height=\"217\" class=\"size-medium wp-image-19619\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_VariousAustralianEconomicIndicators-300x217.png 300w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_VariousAustralianEconomicIndicators.png 912w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-19619\" class=\"wp-caption-text\">Various Australian Economic Indicators<br \/>(January, 2007 to August, 2013)<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.rba.gov.au\/statistics\/tables\/index.html\" target=\"_blank\">Reserve Bank of Australia Statistical Tables<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>So, the cash rate target (thick red line) is now roughly equivalent to the inflation rate (green line). There appears to be no further &#8220;scope&#8221; for lower inflation. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_19630\" aria-describedby=\"caption-attachment-19630\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_AUDUSD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_AUDUSD.png\" alt=\"AUD\/USD bounces without making a lower low\" width=\"550\" height=\"375\" class=\"size-full wp-image-19630\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_AUDUSD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_AUDUSD-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-19630\" class=\"wp-caption-text\">AUD\/USD bounces without making a lower low<\/figcaption><\/figure><\/p>\n<figure id=\"attachment_19629\" aria-describedby=\"caption-attachment-19629\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_AUDJPY.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_AUDJPY.png\" alt=\"A breakout above the 50DMA could signal a bottom in the making for AUD\/JPY\" width=\"550\" height=\"375\" class=\"size-full wp-image-19629\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_AUDJPY.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_AUDJPY-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-19629\" class=\"wp-caption-text\">A breakout above the 50DMA could signal a bottom in the making for AUD\/JPY<\/figcaption><\/figure>\n<figure id=\"attachment_19628\" aria-describedby=\"caption-attachment-19628\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_GBPAUD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_GBPAUD.png\" alt=\"The uptrend in GBP\/AUD remains intact for now\" width=\"550\" height=\"375\" class=\"size-full wp-image-19628\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_GBPAUD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_GBPAUD-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-19628\" class=\"wp-caption-text\">The uptrend in GBP\/AUD remains intact for now<\/figcaption><\/figure>\n<p><figure id=\"attachment_19631\" aria-describedby=\"caption-attachment-19631\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_EURAUD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_EURAUD.png\" alt=\"An important retest of recent lows for EUR\/AUD\" width=\"550\" height=\"375\" class=\"size-full wp-image-19631\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_EURAUD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2013\/09\/130904_EURAUD-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-19631\" class=\"wp-caption-text\">An important retest of recent lows for EUR\/AUD<\/figcaption><\/figure><br \/>\n<strong>Source for charts: <a href=\"http:\/\/www.freestockcharts.com\/\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>Trading the Australian dollar now gets very tricky. {snip}<\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<object id=\"flashObj\" width=\"595\" height=\"390\" classid=\"clsid:D27CDB6E-AE6D-11cf-96B8-444553540000\" codebase=\"http:\/\/download.macromedia.com\/pub\/shockwave\/cabs\/flash\/swflash.cab#version=9,0,47,0\"><param name=\"movie\" value=\"http:\/\/c.brightcove.com\/services\/viewer\/federated_f9?isVid=1\" \/><param name=\"bgcolor\" value=\"#FFFFFF\" \/><param name=\"flashVars\" value=\"videoId=2639237195001&#038;linkBaseURL=http%3A%2F%2Fecon.st%2F18t8G32&#038;playerID=1425961410001&#038;playerKey=AQ~~,AAABDH-R__E~,dB4S9tmhdOo20g03jDsDgNBGDcclfHEU&#038;domain=embed&#038;dynamicStreaming=true\" \/><param name=\"base\" value=\"http:\/\/admin.brightcove.com\" \/><param name=\"seamlesstabbing\" value=\"false\" \/><param name=\"allowFullScreen\" value=\"true\" \/><param name=\"swLiveConnect\" value=\"true\" \/><param name=\"allowScriptAccess\" value=\"always\" \/><embed src=\"http:\/\/c.brightcove.com\/services\/viewer\/federated_f9?isVid=1\" bgcolor=\"#FFFFFF\" flashVars=\"videoId=2639237195001&#038;linkBaseURL=http%3A%2F%2Fecon.st%2F18t8G32&#038;playerID=1425961410001&#038;playerKey=AQ~~,AAABDH-R__E~,dB4S9tmhdOo20g03jDsDgNBGDcclfHEU&#038;domain=embed&#038;dynamicStreaming=true\" base=\"http:\/\/admin.brightcove.com\" name=\"flashObj\" width=\"595\" height=\"390\" seamlesstabbing=\"false\" type=\"application\/x-shockwave-flash\" allowFullScreen=\"true\" swLiveConnect=\"true\" allowScriptAccess=\"always\" pluginspage=\"http:\/\/www.macromedia.com\/shockwave\/download\/index.cgi?P1_Prod_Version=ShockwaveFlash\"><\/embed><\/object><br \/>\n<\/center><\/p>\n<p>Be careful out there!<\/p>\n<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on May 19, 2013. <a href=\"http:\/\/seekingalpha.com\/article\/1671732-the-australian-dollar-appears-to-bottom-without-fresh-catalysts-for-rate-cuts\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>Full disclosure: net short the Australian dollar<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This is an excerpt from an article I originally published on Seeking Alpha on May 19, 2013. Click here to read the entire piece.) Time to swivel heads around on the Australian dollar (FXA) yet again. In &#8220;Australian Dollar&#8217;s Relief Rally Ends With The Latest RBA Meeting Minutes,&#8221; I concluded that the Reserve Bank of &#8230; <a title=\"The Australian Dollar Strengthens In the Absence Of A New Catalyst for Rate Cuts\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2013\/09\/11\/the-australian-dollar-strengthens-in-the-absence-of-a-new-catalyst-for-rate-cuts\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[386,59,20],"tags":[308,310,309,247,1598,115,203,197],"class_list":["post-19616","post","type-post","status-publish","format-standard","hentry","category-australia","category-economy","category-forex","tag-audusd","tag-australian-dollar","tag-fxa","tag-gdp","tag-inflation","tag-monetary-policy","tag-reserve-bank-of-australia","tag-unemployment"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Australian Dollar Strengthens In the Absence Of A New Catalyst for Rate Cuts - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2013\/09\/11\/the-australian-dollar-strengthens-in-the-absence-of-a-new-catalyst-for-rate-cuts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Australian Dollar Strengthens In the Absence Of A New Catalyst for Rate Cuts - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"(This is an excerpt from an article I originally published on Seeking Alpha on May 19, 2013. 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Click here to read the entire piece.) Time to swivel heads around on the Australian dollar (FXA) yet again. In &#8220;Australian Dollar&#8217;s Relief Rally Ends With The Latest RBA Meeting Minutes,&#8221; I concluded that the Reserve Bank of ... 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