Saturday, 9 April 2011

Peso del Pacífico

Deus Forex Machina at macrobusiness has written some good stuff in the past on what 'drives' the AUD.

Its getting dizzy up there. With Mr Bernanke still having over a 2 months and a half of QE2 to go I won't be shorting it with my money.

I might with Mrs Livermore's Wednesday morning bingo winnings but not my money.

Other than Bernanke's raison d'être to destroy the $USD whilst cackling to himself like some mad bugger in the top floor of a misty Balkan castle, I think it still has some upside.

If I did find the Bingo money what would I be looking for? A pullback to around parity short term.

Because whilst the rising wedge is a setup for a big fall it is unlikely whilst Big Ben allows QE2 to run its course to the end of June

Lets look at the daily chart (graphs expand on clicking)....

  1. So the rising wedge looks set but QE2 has a few months to go.
  2. Portugal went tits up but no one cared.
  3. Oil is going up like a raped ape as the Libya fiasco appears to be a West End musical choreographed by me after a bottle of Laphroaig and its 'ho hum' in NY.
  4. The rain drops around the Japanese islands (and NE China, Taiwan and Koreas) glow in the dark and folks are more concerned with whether Charlie Sheen snorts a line and then swigs or vice versa. 
  5. The Australian house bubble is unwinding and it appears resource juggernaut Western Australia is in technical recession and yet the AUD adds 3c (WTF!!).

Markets can remain irrational a lot longer than you and I can remain solvent

Anyway the correct way to trade a rising wedge is on the breakout confirmation. 

Top pickers are generally primates chasing a cheap feed whilst grooming  and bottom pickers tend, at best, to be Rugby League players with smelly fingers.

But counting down to June - QE2 ending, Spain to default (?), Civil war in Greece (?) and $150 Oil (?) lets look back at see what the big one will bring. Technically, when we broke out of the rising channel on the monthly we entered the twilight zone but the RSI 7 shows we can squeeze another 2 months outta this weirdness and the finance columnists at Fairfax and Newscorp can buy a few more jars of KY.

The next few months will be interesting as the world turns to shit and the only thing holding equity, commodity and risk currency markets in the stratosphere is Bernanke's bubble blowing.

The can they kicked down the road in 2008 is now in sight and we are closing fast.

Will there be a QE3? I reckon so. As soon as Bernanke takes the punchbowl away everyone at the party will turn nasty.

He'll try and bring out a new batch (QE3) but when they are 'glassing' each other will it be too late?

One thing though. There are number of bloggers and commentors calling for the RBA to short the dollar to save exporters.

Australian Dollar has a half brother who is actually a cousin, also, like him, sired by Uncle Risk Awnn.

AUD and Crude, Daily.


Let it go interventionists, let it go.

You separate those boyos and you'll add 10% to grocery bills as diesel spikes and Bazza Beerslab will be paying $1.80 a Litre at the pump in a heartbeat WITHOUT the Middle East going up in flames.

Be careful what you wish for.

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