Tuesday, 3 March 2009


Following RBA decison today and break above 0.6400, decided to go long AUD1m against USD at 0.6425. Review levels 0.6250/6550.


walter said...

I just read this sentence: Average household sector debt has reached 141per cent of disposable income in the US, 156per cent in Australia and 177 per cent in Britain. From a post by Nial Ferguson who is smart. Australias federal gov't and banks may not be in bad shape, but how are individual household finances doing in Australia? I must admit, when I read this, it put a little cold water on the long Aussie for me...what do you think?

Kiwi Trader said...

Hi Walter!!

Well the OZ Government position is strong. The household sector is over borrowed it is true, but I see the savings rates going through the roof as the consumer re-trenches globally. In Australia's case it is nearly all borrowed over property. Now whilst property has fallen, the Australian consumer is not hugely overextended, and property is not on an over supply situation. If anything there is a shortage. They simply do not have the mortgage crisis seen in the US and the UK, so most Australians will simply carry on paying their mortgage and life will go on.

As for the Banks, they recently raised good amounts of funding in Japan in Yen, and they remain well rated, probably the best in the world. So I'm still happy with the AUD deal. (But not the level after the GDP!)

Now waiting for the decoupling between Euro weakness and AUD weakness, so watching the AUD/EUR cross closely for signs as to when to add another leg to the position.



walter said...

That was my next question: If we can have some optimism and confidence about the AUD, Im wondering what to short against it: USD, EUR, YEN or some other crazy currency ... I would love to short it against the USD ... b/c I think my country is f--ked, but its got such a "flight to quality bid" .. Im wondering if doing a long Aud/short usd long-dated forward futures contract might provide better chances due to the inevitability, but uncertainty about when, the USD is gonna come under pressure ... I think its gonna take 6 months more for USD to start cracking ... the YEN looks weak too b/c the carry trade unwind looks to be over .... EUR looks weak but Marc Faber, a guy i like, says breakup in EUR might be bullish for EUR ...

Anonymous said...

W, just my two cents here -- and I'm nowhere near the level of knowledge that Kiwi has (and probably you as well) about macro factors. IMO, the flight to "quality" is taken in total disregard for longer term risks to the USD. USD shorts will have their comeuppance vs AUD, methinks. Stay faithful to your gut. As for the JPY, I believe in relative terms it will fall further against the USD, but not before another grind at the lows -- but there are other factors keeping the JPY low. They have big problems over there and the GoJ isn't being very transparent about them. I hope Faber is right about EUR, because I'm long vs USD and will add below 125xx. And I will enter an initial buy AUD vs. USD on a dip to Kiwi's review point and lower still for a turn up toward 68xx.