Money Matters

Chart of interest - AUD/EUR (the sleeper trade of 2013?)

Posted by Graham Parlane on 8 March 2013

Hi all

This is one of my dead set favourite trades.

Since the onset of the GFC the Australian dollar has appreciated against the EUR, almost doubling in value as the market sought refuge from the beleaguered EuroZone and finding haven in the high yield, proxy to China growth, AAA rated Australian dollar. What an incredible run.

AUDEUR – click here to view chart

However late last year things began to change with the Troika providing enough funds, and therefore time, for the EuroZone politicians to make the required fiscal changes i.e. labour market, pension reform etc. Meanwhile the RBA forecast an earlier peak in mining investment and resumed cutting rates.

It is my belief that the NZD and AUD currencies are vulnerable to their own success of the last few years (the cure for a high currency is a high currency – eventually it’ll hurt). I think too that Eurozone data will surprise to the topside in as much as it surely can’t get worse.

Technically the picture looks intriguing. We had the ‘head and shoulders’ break down below the neckline and then, as so often happens the retest. Now we look likely to resume the move that should head towards 0.7000

AUDEUR a closer look – click here to view chart

Cheers G.

Tags: AUD, AUDEUR, Australia, Broker, China, EUR, Eurozone, Foreign Exchange, FX, FX trading, GFC, Labour market, NZD, Pension reform, RBA, Trader

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NZD/EUR & AUD/EUR - The Draghi Put

Posted by Graham Parlane on 27 July 2012

All

The NZD and AUD have been displaying ‘topping’ signals against the EUR as suggested in my piece of Wed 25^th (NZD and AUD – Now the weakest?). Whilst I got the direction of the NZD/USD and AUD/USD spectacularly wrong, the NZD/EUR and AUD/EUR are still displaying all the hallmarks of being exhausted on their upside moves that have occurred over the last 2 ½ months.

With Mario Draghi’s stunning “ECB will do whatever it takes to preserve the euro”,  adding, “believe me, it will be enough” comments I’d suggest that the drive to diversify into NZD and AUD will not be there in the near term. Further the EUR currency, given its bleak outlook and low interest rates had been used heavily as a funding currency for the ‘carry trade’. Now surely with these comments this flow will be reversed. In other words we now have the ‘Draghi Put’ where you can buy EUR knowing that the ECB ‘has your back’!!!!

Now the USD pairs have been very difficult of late, think risk on/risk off every other day, so these look like a lovely place to be in right now.

AUD/EUR – Made a ‘reversal’ day Monday after significant uptrend. Should be able to see 0.8300 even if this period only turns out to be a consolidation of the recent up move.

AUDEUR – click here to view chart

NZD/EUR displays very similar traits.

Regards Graham

Tags: AUD, AUDEUR, AUDUSD, Currencies, ECB, EUR, Futures trading, FX trading, NZD, NZDEUR, NZDUSD, USD

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