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AUD.USD: Is Optimism about to Shift?

Burkhardt's picture




 

Optimism strikes. The “bulls” began to flood the market yesterday after the release of the Australian employment report causing a rally that squeezed the “bears”. The Australian Bureau of Statistics showed that the unemployment levels fell to 5.1 percent in August from 5.2 percent the previous month. This small change in the unemployment level was the catalyst for the beginning of a trend reversal.

Today the AUD continued to rally against the USD after a more than disappointing U.S. employment report. The end result was that the AUD surged to a monthly high of $1.039 against the USD. Where does the AUD.USD go from here?

Trader Insights

On August 17, 2012 I forecasted a trend reversal in the AUD.USD and stated that the pair would zigzag downward finding its bottom just past parity. If we take a look and the emerging trend, it's obvious that we could have anticipated this reversal. After the pair completed its “(A)” wave move, it then bounced off the bottom trend-line to begin the “(B)” wave. The "(B)" wave has since retraced 50% of the previous downtrend which is the expectation for this type of correction and is getting ready to turn.

Don’t be fooled by this recent rally, find out what’s really going on with the AUD.USD. Join the Forward Thinking waiting list today.

Indicators on Watch for the AUD.USD

  • NZD Reserve Bank of New Zealand Rate Decision (Wednesday)
  • USD Producer Price Index (Thursday)
  • USD Initial Jobless Claims (Thursday)
  • USD Federal Open Market Committee Rate Decision (Thursday)
  • USD FOMN to Release Projections of Economy and Fed Funds Rate (Thursday)
  • USD Fed’s Bernanke Holds Press Conference (Thursday)
  • USD Consumer Price Index (Friday)
  • USD Advance Retail Sales (Friday)
  • USD U. of Michigan Confidence (Friday)

 

Your currency analyst,

Justin Burkhardt

 

 

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Sat, 09/08/2012 - 13:18 | 2774791 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

just wait until that $2/hour wage rate takes effect and unemployment will become zero. /sarc/

Sat, 09/08/2012 - 12:30 | 2774693 BattlegroundEur...
BattlegroundEurope2011's picture

I am sure Oz will be "A OK" with the income stream from US Military bases on their soil ;)

 

Sat, 09/08/2012 - 03:23 | 2774093 Parrotile
Parrotile's picture

Well the over-reliance on being the World's favourite big hole in the ground, and the sheer good luck in being able to ride bubbles in iron ore and coking coal, have meant there was no need to take the "extra risk" of investing in innovation or in local productive enterprises - so we see the widespread Aussie "Buy it from China and flog it at a profit" mindset.

Now the tide has turned, and it's of note that the rate of job losses (well paid jobs at that) has increased, and the contagion has even found its way to that holy of holies - the Mning Sector! Seems the "drop" in unemployment may have been more to do with a big drop in participation - people are simply giving up on looking for work (and note that the "definition" of employed Down Under is ONE HOUR's Paid employment per FORTNIGHT), so even the massaged figures might be less than truthful.

Just wait until the shoppers are all on the breadline - Westfield Group and others are going to get a creaming!

 

Sat, 09/08/2012 - 03:36 | 2774101 Peter Pan
Peter Pan's picture

Westfields is nothing more than an opportunistic parasite that feeds off its tenants whilst binding them and their homes to voluminous leases.

Their rapacious rent increases have been funded by ever decreasing profits of shopkeepers while the owner Lowy seems to think that he can buy redemption by making donations to the University of NSW so he can secure naming rights to one of the university's institutes.

An associate swears that the Lowy motto is, " if you haven't got 10% vacancy factor, then you aren't charging enough."

Sat, 09/08/2012 - 02:29 | 2774032 Peter Pan
Peter Pan's picture

The cowboys riding the computer screens are adept at milking the moment to moment movements in sentiment so as to turn a profit. However, the fundmental flaws and weaknesses of the world economy are locked in on a collision course with reality.

Australia has lived a charmed life based on two major customers - China and Japan, and two products - iron ore and coal. Its leaders however have not grasped the big picture requirements and as a result allowed its population to bask in the joys of residential speculation, high gearing and senseless spending. These failings will come home to roost..

Even during the GFC the government embarked on a multi billion dollar of stimulus which filled the nation with new school halls rather than spending money on repairing existing schools.

More importantly, they omitted to speed up the payment of government creditors which would have released a great del of cash into the economy without adding to the nation's debt.

The destination of the AUD dollar against the US dollar is secondary compared to where they will both be in comparison to the price of gold.

The black clouds have gathered over all corners of the world and when the storm comes those gold and silver umbrellas might come in handy. If that storm turns into a flood then even those umbrellas might need to be buried for safer times.

Sat, 09/08/2012 - 01:52 | 2774009 SouthernX
SouthernX's picture

The downdraft is ALL about China.

The updraft is ALL about China.

Get it?

Iron ore is in the shits, picture Gina here... Met coal, or is it thermal(?) has gone from $114/ton to $85/ton.

Besides rocks and chest thumping Oz spends its time licking the US's ass, saving the rim job for China.

The flaming red haired BHP bought and paid for whore will be replaced by the rat-faced BHP/bank paid for bum boy; so no big deal when an election goes down.

All in all, business as usual, after all who listens when someone on their knees or bent over speaks.

Skippy is road-kill, Crocodile Dundee fell on his knife, and the POMS will keep The Ashes.

Fri, 09/07/2012 - 22:07 | 2773770 hannah
hannah's picture

employed persons went from 11,507.9 to 11,509.1

unemployed went from 628.8 to 629.1

the above are the NONseasonaly adjusted numbers and the unemployment rate stayed at 5.2. i doubt very seriously that the bulls bought into the market on this info. tell us what the TRUE REASON was and maybe i'll buy your fucking newsletter.

Fri, 09/07/2012 - 22:47 | 2773848 Dr Benway
Dr Benway's picture

Yeah I know. But in fairness this shit is legion in financial reporting. If a price moves, ascribe it to some random piece of news after the fact.

 

Besides, what are they gonna say? 1/3 of price movement is random noise, 1/3 reactions to the fart smells of central banksters, and 1/3 manipulation.

Fri, 09/07/2012 - 21:41 | 2773740 fukidontknow
fukidontknow's picture

It's rather trendy here in New Zealand to wag our fingers at the feckless Greeks and Spaniards and tut tut about their contagion ruining our property market and making us less fabulous. I guess it's easier than admitting that when it comes to ticking it up we're in with the piigs.

 

http://en.wikipedia.org/wiki/Net_international_investment_position

 

Fri, 09/07/2012 - 23:11 | 2773866 Freddie
Freddie's picture

Is NZ going to tell Obama to Sod Off for going after Kim.com?  Total police state BS.  My impression is NZ is not happy that Obama made NZ look like the Goose-stop-o.

Sat, 09/08/2012 - 02:14 | 2774018 fukidontknow
fukidontknow's picture

@Freddie, Hell no, Kiwis don't like high flyers, as a people we enjoy seeing them cut down, you'd be amazed how mean-spirited we are considering we live in a land of milk and honey. Our prime minister came straight from Merrill lynch and the NY Fed, he even had some buddies from over there come and rewrite our copyright law thank goodness otherwise .com may have walked. One of our best MP's the Honorable John Banks even had the good sense to take some .com bribe (I mean) election donation money before having him busted    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10827771.  No Kim.com made a big mistake coming here and you can expect him in the US for prosecution shortly.

Sat, 09/08/2012 - 05:28 | 2774139 rivoniaboy
rivoniaboy's picture

Remember what Steve Eisman said about Merril Lynch,"Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things."

As an ex Merril Lynch employee,that more than explains how John Key is fulfilling his assigned role in allowing Kim Dot Com to be treated as a terrorist at the behest of Obama.

Coward!

Fri, 09/07/2012 - 21:21 | 2773702 Counterfiat
Counterfiat's picture

dollar up, buys less, purchasing power down

Fri, 09/07/2012 - 21:13 | 2773690 tooktheredpill
tooktheredpill's picture

it is a confidence currency but confidence is waning - like all bubbles...

Fri, 09/07/2012 - 19:26 | 2773499 butchee
butchee's picture

Aussie to 80!

Fri, 09/07/2012 - 18:50 | 2773414 bank guy in Brussels
bank guy in Brussels's picture

A couple of Foster's Lagers and we'll know exactly where the Aussie dollar is going

'It's a pisser!'

- Australian cinema sage Barry McKenzie

Fri, 09/07/2012 - 21:16 | 2773695 Praetor
Praetor's picture

VB mate, no-one drinks Fosters. AUD to 0.75.

Fri, 09/07/2012 - 21:34 | 2773727 bulbous_walrus
bulbous_walrus's picture

Hopefully soon.  Been getting squeezed for years.

Fri, 09/07/2012 - 22:52 | 2773854 Dr Benway
Dr Benway's picture

Don't worry. On the ground here in Oz, the desperation of the ponzi operators is palpable. Won't be long.

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