This had the effect of taking us out of our short trade in AUDUSD, which
was under the control of our Mandelbrot algorithmic routine at the time, for a very small loss. The pair is still being monitored by Mandelbrot, and we will be
expecting to possibly re-enter when a downward trend is confirmed to its
satisfaction. As can be seen in the four hour chart above, we could be in such a
down trend, which is always characterised by lower highs and lower lows.
However, in this case, right now, it is by no means certain to play out in this
way.
Given our longer term analysis of the potential for the Aussie currency,
and the very long term trend for it on the charts, which is resolutely down, we
are not likely to be tempted to take a long position in this unit anytime soon.
Kiwi does the business
Our New Zealand dollar against the Aussie (AUDNZD) trade, which is also
to the short side (we have sold the pair) got a boost from the announcement, at
10:00 PM (GMT) last evening, that interest rates would be increased in NZ by 25
basis points (0.25 percentage points).
While the rise was expected and the Kiwi had been strengthening in
anticipation (AUDNZD was falling), the remarks of the governor of the Reserve
Bank of New Zealand, Graeme Wheeler, that came with the interest rate rise
announcement, were bullish in themselves on other aspects of the NZ economy,
and even went as far as to indicate that there are probably other interest rate
rises in prospect in the future.
This makes New Zealand the first
developed economy to raise interest rates since the onset of the Global Financial
Crisis.
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