Australian Dollar to 90 cents?

May 9, 2012

FOREX

As a mate of mine just said to me – the Aussie Dollar looks like a lead canoe this morning and my thoughts on it heading below parity remain undiminished.

Here is the chart of how it looks at present and nothing in the fundamental outlook has changed from the piece I wrote the other day. The target is the green zone which is the 0.9960 level I identified a while back now and also the 0.9986 level which is the 138.2% move of the recent selloff then bounce that has now given way. This remains my initial target.

But just like last year when I formed the view 3 year swaps were going to fall precipitously so I am now starting to get the tingling that the Aussie Dollar is actually had its time in the sun and will, over an extended period head back toward 0.9000 against the USD. As I say this is a big picture long term view and I am working on my thoughts so this is just a warning about the Panglossian expectations of Aussie Dollar pre-eminence.  And yes I know I’ve used this expression twice today in two posts – but what a great visually.

Anyway, here is a chart a mate from one of the Big Banks sent me which highlights how precarious the Aussie is on the weekly charts. he reckons 0.91 is starting to look likely as the very long run 200 week moving average.

This is a long run chart and captures the move from 0.6249 to last years high. A normal retracement of  such a move would be 38.2% which brings it back to 0.9225 – remember this was my target last year when we got into the 0.9300/0.9400 region and it would have to be something catastrophic that drove it through here and the 200 day moving average.

particularly catastrophic economically or market based for the Aussie to fall through  here given everything it has weathered over the past couple of years but then the Aussie is a safe harbour (not haven) in the current economic storm so if things turn sour in our economy the Aussie will no longer be a port of safety for international investors.

I’ll update my view through time and for the moment the 0.9960/90 region remains my initial target both fundamentally and technically.

Have a great day

Gregory McKenna

www.twitter.com/gregorymckenna

Please remember these are not recommendations for you to trade these are my views and I have my risk management tools and risk parameters that you do not have access to. Thus, this blog is for information only and does not constitute advice. Neither Greg McKenna nor Lighthouse Securities has taken your personal circumstances, objectives or financial situation into account. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.

If however you do need advice on Investments, Economics, Funding and Liquidity, Interest Rates and Forex and Derivative markets we are happy to help.

Please Email the team at Lighthouse at info@lighthousesecurities.com.au or Greg directly on greg@lighthousesecurities.com.au

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3 Comments on “Australian Dollar to 90 cents?”

  1. SM Says:

    AUD is also below the weekly cloud for the first time since 2009.

    Reply

Trackbacks/Pingbacks

  1. Australian Dollar oversold? | Lighthouse Securities - May 23, 2012

    […] am not walking away from my call on May 9th  that the Australian Dollar is going to head toward 90 cents but there seems something wrong with today’s very aggressive selling which has knocked it […]

  2. Australian miracle ending, Dollar sell off not finished yet | Lighthouse Securities - June 1, 2012

    […] was that the Aussie Dollar was headed to 90 cents against the US Dollar which I made on May 9th. Here is the link to the piece but my summary was, … just like last year when I formed the view 3 […]

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