Forex Investment and Currency Trading

The AUD has fallen for ‘good’ reasons – a fall in commodity prices and a narrowing in interest rate differentials. Both of these factors are likely to continue to weigh on the AUD as the global recession undermines commodity prices and the RBA cuts interest rates faster than most other central banks.
Support for this view is also derived from the sharp decline in bulk freight shipping rates which have fallen more than 85% from peak levels earlier this year.
That said, the AUD has fallen very sharply from the recent peak of US$0.9849 recorded in July.
As noted above, the AUD fall [...]

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AUDUSD has moved 34 big figures (35%) in three months…or the same range as the previous 5 years

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Despite AUD/USD hitting post float highs in May, the RBA’s net selling of A$ on market was no more than average, and is actually lower than average.
The RBA sold a net A$336mn in May (from selling A$305mn in April).
One of the reasons for the bullish view on AUD is that market suspects the RBA could be hoping a higher AUD will do its work and help it avoid having to hike rate further. Given the stress the household sector is undergoing (high mortgage rates, food and fuel prices), the RBA likely prefers to see the external sector rather than the [...]

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Australia: Rate Cuts Looming as the Economy Stalls

The RBA remains on track to deliver an interest rate cut during the December quarter. The first move may be a 50bp cut in line with the start of previous easing cycles.
The monetary policy easing cycle is likely to deliver 125 to 175bps of ratr reductions by the end of 2009. The cuts will be more than this if the commodity price bubble bursts within the next year.
As a result, the AUD is looking vulnerable to the downside, despite booming commodity prices. Flat GDP, an erosion of the interest rate gap and a [...]

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