Short AUD Ahead Of Likely Rate Cut ?

Is anyone here short the AUD ahead of the likely rate cut ?

Does the trade still have an attractive risk reward ?

Or going long the ASX200

 

Do you see a positive expectancy well defined setup ?

If so take it, otherwise you are just gambling, and most important dont try to find confluence by asking strangers in a public forum. Consult your studies instead.

 

I just read many analysts in the news appear to think a rate cut is coming, but the actual statements from the reserve bank the last months all sound the same which makes the trade seem like a coin flip to me... but the analysts must be looking at something else?

April: "The Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. Further depreciation seems likely, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy."

March: "The Australian dollar has declined noticeably against a rising US dollar, though less so against a basket of currencies. It remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy."

February: "The Australian dollar has declined noticeably against a rising US dollar over recent months, though less so against a basket of currencies. It remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy."


(USA dark blue, Australia light blue; source economist.com)

I also just looked at home prices, they are still rising and closing in on a 400% increase since 1994! This is ridiculous, its like the USA without the housing correction. So my thought as a very casual observer of Australia is can they really lower rates? It seems they have been using Fed Doublespeak the last few months to lower the currency with psychology, but if they actually drop rates more aren't they heading for an even bigger housing crackup boom?

I know the analysts who study Australia daily will likely be right on this, but to take a less likely contrarian bet it would be fun to go long the AUD just based on the factors I mentioned above.

 

Long ASX200 doesn't look good at all to me. I looked at DAX/FTSE/S&P returns during the ECB/BOE/Fed rate hikes/cuts in the 2004-2014 period; stocks were more likely to close lower the next day after the cut than the last close before the meeting date.

This month ASX200 came down only 2.5% from its peak since 2009 and returned around 15% YTD. I have no idea about the underlying earnings/multiples but I'd be cautious about peaks with iron prices still low and affecting government finances and the trade balance.

 

I took a position and its soaring quickly, moved my stop to break even ill see how it goes.

 

well, how was that? That good enough for you? Everybody long or short that didn't get stopped out made money.

 

Wanted to go long with an etf, but markets closed here, trade would have worked as the rate cut was already priced in before the statement, Auzzie already up a percent, frustrating. Did you trade the move?

 

I took a position 5x leveraged long ASX at the open made 3% on my account in about an hour, good thing i didnt hold it though.