All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

Aussie Remains the Strongest Bet on Recovery

Last updated 11/12/2009 3:56 AM ET (GMT -5) 6 Comments

• Share this:

Boris Schlossberg

Director of Currency Research, GFT

Australian employment data surprised to the upside printing positive for the second month in a row  as job increased by 24.5K against expectations of -10.1K drop. The unemployment rate ticked up to 5.8% from 5.7% in September but has essentially  remained steady at these levels for more than 6 months.

The Australian economy has generated more than 75K jobs since June in sharp contrast to the rest of the G-20 universe where  job losses continue to be the rule rather than the exception. The latest employment statistics suggest that RBA will now likely raise rates yet another 25bp in December putting the yield on the Aussie at 3.75% - the highest amongst industrialized nations.

After hitting another fresh yearly high at 9370 in the aftermath of the news, the AUD/USD sold off for the rest of the night on profit taking and broad risk aversion flows. If equities continue to weaken for the rest of the day, the pair could drift lower to test support at 9300. However intermediate term prospects   for the Aussie continue to look extraordinarily positive as the unit benefits not only from the anticipated rise in yield but from the persistent rise in gold as well. The yellow metal hit yet another record high today reaching $1122/oz. on reports that Barrick Gold will no longer hedge its book, lifting a massive offer from the market.

We continue to be bullish Aussie as the primary proxy for the recovery trade and believe that it can reach 9500 if risk appetite remains supportive into the close of the year. Alternately, with RBNZ and BOC remaining stationary at least through Q1 of 2010 the unit should also outperform the kiwi and the loonie on the crosses as interest rate differentials continue to widen.

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

• Share this:

Comments (6)

FXDragon

November 12, 2009 at 06:16 AM ET

"reports that Barrick Gold will no longer hedge its book, lifting a massive offer from the market." Could you explain that? Excuse my language.

FXDragon

November 12, 2009 at 06:18 AM ET

I mean what do you mean by hedging the book and lifting massive offer from the market?

Thanks,

bschlossberg

November 12, 2009 at 06:37 AM ET

Barrick in the past has hedged their gold production meaning they went out and sold futures contracts. Now that they decided not to, a massive seller is out of the market

FXDragon

November 12, 2009 at 08:04 AM ET

Im not experienced on gold futures, does that mean they think gld will continue uptrend so they dont even need futures for hedge purposes?

bschlossberg

November 12, 2009 at 08:06 AM ET

Correct

Stephan Smith

November 12, 2009 at 10:25 AM ET

Australia is doing it right! Great numbers. AUD is going to be dominating the USD for some time now. GOLD is continuing to go up too? That means the USD is going down. Profits anyone?

Add Your Comment

Please login to post a comment or sign up for an FX360® account.

Loading...

About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.