on the off chance..., page-9

I don't like the looks of the AUD. If the traders don't mind me issuing a warning: The AUD looks like it is going to accelerate pass 1.0070 and it probably will be heading a lot higher.

I have very little explanation for this move although on a cursory I think there is a lot of expectation of unwinding of positions in favour of buying the JPY.

As most would be aware S&P downgraded JGBs last week. This is negative news for a few reasons but the reason why I expect a short term continuation of JPY strength is that, there will be sell of US treasuries and also AUD carry trades to facilitate a buy back of JGBs. This will be a short term impact but it was also throw out a lot short-term speculators who, if trading the news, will suggest weaker JPY as the logical trade.

Enough of behavioural economics from me. I think I will step on the gas on AUD.