Risk Currencies Not Participating

In the usual “risk on environment” the commodity related currencies are usually the big winners.

When investors feel that things are generally “safe” money moves from the safe haven’s into higher risk related assets and currencies in commodity related countries such as Australia, New Zealand and Canada.

This is not happening.

In fact (generally speaking) the commods (in particular AUD) are getting more or less hammered, and exhibiting extreme weakness in the face of equity markets still clinging near their highs.

When you see USD cratering as it has over recent days, but in turn see that the Australian Dollar is EVEN WEAKER – you know without question – Houston we have a problem.

With Australia’s economy so tied to its trade with China, there is little doubt that the global macro shift towards “risk aversion” is already very much in play as AUD has been completely obliterated with lots of room for further downside.

I’ve tried on several occasions to “trade a bounce” as we’ve seen surface evidence of “risk on” in equity markets but unfortunately – that’s all it is….. “surface”.

Clearly our friend “risk” is quietly sneaking out the back door.

21 Responses

  1. schmederling June 10, 2013 / 12:27 pm

    So after our 28 week neg squeeze fire in the Aussie, we have lost some 850 pips since the fire. Looking at the monthly squeeze now which is on month 15 of it’s squeeze which is setting up to also fire Neg to take use lower in the Aussie to reach a bottom.

    Could we bottom @ .06049? Seems extreme but will have to see how the monthly fire…. right now its not looking good…

    • Pot Stock Watch June 10, 2013 / 12:35 pm

      Its interesting to compare / see where you’re at as I must say – it looks like a “pop” before more downside may not happen.

      As the normal “zigs n zags” of forex charts go – I was waiting to see AUD move up…but now considering that ( as per last post ) “risk” has already been sneaking out the rear exit.

      Aud looks bad…….real bad.

      ________________________________

      • schmederling June 10, 2013 / 1:51 pm

        Yeah – it is what it is….. Canada has raised rates so lets see if it continues to hold it’s own….. right now it’s not doing too bad…

        The Aussie does look sick & the monthly fire will continue the continued down-draft I am expecting…. I have not used the squeeze in currency trading but appears to provide the info to spark review & position one’s PF. I’ll us until it’s no longer working – until then it seems to be working for me anyways….

  2. Superpositron (@superpositron) June 10, 2013 / 5:55 pm

    I got my wrists slapped playing long aussie on a few pairs. Im now interested in stalking GBPUSD and EURUSD pairs for a short. Probably more upside still to go but i think the risk is mostly to the down side. On the sidelines watching the gong show.

    • Pot Stock Watch June 10, 2013 / 6:10 pm

      Don’t do it buddy…..

      He he….sounds like something outta a movie – no no…what I mean is – USD is gonna spin here a day or two longer to the upside but not long enough to consider initiating trades “long USD”. Instead – patience and long entries in both GBP and EUR vs USD – just not today…..or tomorrow.

      As well…long AUD = bad! When risk sells off here ( as it will ) AUD gets smoked EVEN MORE!

      Stay out brotha – stay out a day er two and regroup.

        • Pot Stock Watch June 10, 2013 / 6:52 pm

          All I’m saying is…..if you are nimble enough – sure…..but the trend in USD is down.

          Often traders get stuck on one time frame or another and miss larger pictures.

          Sure USD has taken a big dive, and will retrace a portion of that….but that’s exactly what it is – a “retracement” in a downtrend.

          Or at least “how I see it”….damn that wig is lookin pretty good ” as is!”.

  3. Alex Red June 11, 2013 / 6:45 am

    You said “risk off” but are against “long USD”? Don’t the two go hand in hand?

    • Pot Stock Watch June 11, 2013 / 7:31 am

      Oh Alex.

      You’ll need to go back through the last like “20 posts” as I’v eoutlined how the USD has been trading down alongside U.S equities.

      It’s been that way for quite some time now

      Risk off = JPY up = USD down = SP down

  4. schmederling June 11, 2013 / 12:32 pm

    Aussie touched support @ the .93 & change level – we need a aggressive bounce here or we go & test the upper 80’s…
    It’s do or die for the Aussie IMHO for the moment….. damn Soros….. currency King!

  5. schmederling June 11, 2013 / 3:49 pm

    When you unsure of what’s going on or what to expect – sometimes it’s just best to sit on the sidelines until the dust clears. Could one miss a large move out of a bottom perhaps but one could also avoid a large down-draft as well.

    I have not clue what is going on in the currency markets today – best to sit…. wait & see…

    • Pot Stock Watch June 11, 2013 / 3:57 pm

      For sure Schmed – as these days capital preservation should certainly trump any wild ideas about getting rich.

      AUD is most certainly hovering on the edge of doom – and frankly – as I see the “risk off” environment only now taking shape….I’m gonna side with you that AUD dives. I would still be much more comfortable with it spiking higher on some kind of short covering rally / bogus news headline that the “world is saved” but so we will see. As it stands – I can’t touch it vs USD but have done very well short vs JPY.

      • schmederling June 11, 2013 / 4:14 pm

        I think PM’s may take of the risk off position here…..I mean really where else is there to go? Diggers are also very undervalued here & will produce great % returns once they recover. Something has to give – this afternoon the market was like a dear-in the -headlights not knowing which way to turn as money is confused where to land & where to leak out of safely.

        Bonds are a ticking time bomb – we are just living in the after-math of 08…… life support about to be pulled or one last shot of morphine to end this with a BANG!!

        • Pot Stock Watch June 11, 2013 / 4:29 pm

          I am a firm believer in the underlaying fundamentals behind the miners – BIG TIME….as these are the guys that “get it outta the ground”!

          With every alien on the planet looking to fill his pockets with as much Gold as possible ( and please everyone…..you know where I’m at – not a wack job, as “we” clearly “are” the aliens ) you’d have to ask yourself exactly that – where else to go ?

          The damn thing is……the macro forces ( The Fed! ) just can’t allow for an easy exit of the “life giving life savings” of the common man (Kong all too included) as an escape into gold just appears to easy / obvious.

          You’ve been cut off – from viable and reasonable areas to invest your money – with few options other than walking into your nearest bank / brokerage…..and having the clown at the desk issue thru “door #3” – where you will purchase ETF’s that go to zero….and be fleeced by the dozen.

          It takes an incredible strong will to buy physical gold here – absolute balls of gold….yet only a few years later, I’m positive the world is your “petri dish”.

          • Pot Stock Watch June 11, 2013 / 4:30 pm

            Patience is the key.

            Letting this play out – as the Central Bank’s finally hit a wall – and slowly….building a poition over time….owners of Gold will be very rich indeed.

            It’s just not a trade.

  6. schmederling June 11, 2013 / 4:31 pm

    The low in the Aussie broke the support level by 20-30 pips I believe from back on Oct 3/11…. we had a counter rally for the next 2.5 to 3 weeks taking us back to 1.07 area….. if I were to call a bottom of June 4th call me crazy sure…. if this level does not hold then we are nowhere ahead LOL……

    • schmederling June 11, 2013 / 5:14 pm

      Sometime the simplest answer is staring us in the face the 90% will miss the writing on the wall…. you said it Kong…. going in PM or Gold specifically would be just too easy and obvious….. sounds good to me… I’ll take Silver….. all currencies are falling…. a race to debase…

  7. schmederling June 12, 2013 / 11:39 am

    AUD bottom in on June 4th? Very well could be…. for now…. small orders…

    • Pot Stock Watch June 12, 2013 / 12:51 pm

      I’m not quite there yet – but it does look to be ” a touch more stable”. NZD looks well enough vs USD here as well – BUT!

      My trading / short term tech doesn’t muck around with sideway action – so……these two can flounder around at this level for several more days / weeks / still go lower until “proven otherwise”. I’ll look to catch them when a solid / legit upswing has been shown.

      This is still a “touch” early for me.

      • schmederling June 12, 2013 / 1:49 pm

        you I am usually a little early…. still testing in real-time…. a tweak here & there! flipped a note..

        • Pot Stock Watch June 13, 2013 / 10:18 am

          I will now take a small poke long NZD/USD and even AUD as ya…it looks more n more like they will take their bounce….go figure ALONG SIDE USD strength.

          No wonder newbies have trouble with this stuff – here we will see Commods up as well USD up.

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