Fundamental Analysis
From a trading stand-point, the AUD may truly fulfill its perceived status as the ‘Swiss Franc of Asia’, not by becoming stronger but being recognized as overvalued at any level above USD parity.
FX
takeaway is that the AUD may truly fulfill
its perceived status as the
‘Swiss Franc of Asia’, not by becoming stronger but being recognized as overvalued at any level above USD parity.
Te FOMC did the twist in September by rebalancing its long/ short portfolio shiſt and leaving the markets with nothing to chew on but an uncertain future. Many think the Fed ‘printing money’ with little to show so far in the way of tangible results is wrong, a stubborn 9% unemployment rate just won’t go away. Some commentators are even going as far to suggest that such an exercise might be construed as tantamount to counterfeiting. Tis is a matter for further debate of course
but opponents to this lambasting say the Fed is acting entirely in the spirit of the law given that U.S. law allows the monetary authorities to ‘strike coin’ as necessary - we’d love to hear feedback on this topic to broaden the discussion.
In the bigger picture we’d reiterate that the fact an inflation target is being mulled at this juncture by the Fed might have a three-fold effect, one of injecting confidence as economic expectations rise as a direct consequence of anticipation of better times ahead, two of deflecting or disarming criticism of recent monetary stimulus that many commentators have said would lead to out of control inflation, and perhaps more importantly, setting a realistic
level of expectations in the future as the country emerges from this continuing but unlikely permanent slump.
In case we forget, despite the current political stalemate, next year is election year and we expect some positive economic spin to begin very soon - if true, then JPY crosses are surely worth watching especially if the authorities somehow manage to learn from each other and/or conspire to generate some equilibrium in the global capital markets.
Good luck trading!
Kevin Sollitt Weekly updates
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http://greatlakesforex.wordpress.com/ FX TRADER MAGAZINE October - December 2011 13
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