VIX Ahoy 2

Did I mention the VIX was high yesterday?I meant that it seemed to be getting a bit heated.Today the VIX is high.Tomorrow? You tell me.

ECB Liquidity Changes

I noticed something in a news item that I read today that I thought I'd share.While the big news is focused on the coordinated drop in central bank rates, the ECB did something else. They also eliminated their auction system. No, no, they haven't stopped providing liquidity, they are just doing it a different way than the standard auction process.What now?They are making unlimited amounts

VIX Ahoy

So, we didn't have any type of bounce off the AUDJPY recovery support trend line. If you were watching the DOW or the NIKKEI you knew what was happening.At the same time we have a new high water mark in the VIX. Look at that thing. I mean, seriously?The only thing I can really point to that may be encouraging is that these higher VIX levels don't seem to be equating to lower lows in the

AUDJPY Technicals

I'm looking at my AUDJPY trend line.We've seen some good movement, recovering from the recent meltdown in short order... probably due to the coordinated rate changes.While I like the move I think we're getting to the top of our current trading channel. How we handle the reversal, assuming there is soon to be one, will set the tone of the next couple of days.If we bounce back up on or before the

Outlook for the AUD-USD - support is in sight?

The AUD has been absolutely hit in the last few months, falling from a high of $US0.985, just short of parity to $US0.6995 in recent days. The currency has since recovered to 0.714. The question is - Is this the bottom? The market talk is that the Australian government, having lead the central bank cuts with 1%, might be looking at another 1% in future. In fact the ECB and Fed are taking the same direction. As long as asset prices are falling there is no possibility of stimulus. The flipside of that is that interest rates are ineffective as a basis for stimulating the economy. if asset prices are falling because people buy generally when they think prices are going to rise. Asset prices will keep falling for as long as people think they are overpriced. The market talk is that property prices need to fall another 25% in Western markets.
The argument is - Is the carry trade over? No, not for years yet I suspect. Until the Japanese government decides to adopt some fiscal courage there is no possibility of the Japanese central bank raising rates. The unwinding of the carry trade has brought the AUD down, but watch as people jump back on board that boat. This is why the currency is so volatile. Traders are going to trade it back up again.
The next question is - What is the bottom for the AUD? The AUD did hit a support at 0.704 and recover, though I would not be surprised to see it test $0.678 in the next two days. Certainly your trades should reflect that possibility. This is a sweet opportunity to buy AUD. The Australian economy is among the most healthy.
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Andrew Sheldon www.sheldonthinks.com

Carry Trade Musings

Did you see the carry trades collapse today?Neither did I.In fact, things looked downright orderly. Nay, they looked rational. Is this a trick or have all the truly skittish abandon ship at this point?Be warned, I'm almost always too quick to look past current issues, discounting the ability of the current situation to cause additional convulsions before passing. However, with that said, I'm

Aussie, Aussie, Aussie

Oi, Oi, Oi.Yeah, okay, it's a big honking rate cut.Scuttlebutt has it that there might be some coordinated activity in the works, which this RBA rate cut is a sign of.I'm a bit skeptical of this, but you never know.However, with their rate now down "all the way" to 6.00 percent, a very high employment rate and a huge public works infrastructure project in the pipeline, funded by recent record

Europe Gets Crushed

Well, it's been an interesting 24 hours on the Forex markets.I'd like to say I was on top of everything and made a boatload, but instead I have to admit this has been a lesson style experience. My stops were hammered mercilessly and then the markets dumped me unceremoniously on the pavement. So to speak.I guess the theme of the day is weakness in Europe. Another theme might be strength in