A Dang Good Year for AUDCAD … So Far!
Source: http://blogs.moneyandmarkets.com/blog/currency-corner/0/0/a-dang-good-year-for-audcad--so-farPosted on Monday, July 7th, 2008 | In Current Market News
A Dang Good Year for AUDCAD … So Far!
If you bought the Australian dollar and simultaneously sold the Canadian dollar at the beginning of the year and you’re still positioned like that then you’re probably a pretty happy camper. That’s because year-to-date AUDCAD (Australian dollar vs. Canadian dollar) has jumped 1,000 PIPs – or 11.4%. And in the world of forex, that’s a huge move.
And having just tested its highest level in more than three years, we begin to wonder if this pair could be running out of gas. Buy-and-hold strategists will tell you the trend is your friend, so keep buying and holding. But we’ve got a different philosophy that keeps us asking: when is the trend not your friend? And when is the trend going to reverse and take you to the cleaners?
Right now may be one of those times … or it might not. But to us, the one-way climb and the underlying sentiment make this pair vulnerable to downside moves.
Much of our hesitation at these levels is because of our expectations for the US dollar. That’s because the Canadian dollar (a commodity currency) has become less tied to other commodity currencies (e.g. Australian dollar) and somewhat more correlated to the US dollar.
Why? Mostly because Canada’s economy is closely tied to the wallowing US economy. But maybe, just maybe, the dollar has found a bottom for a little while. If so, then maybe the Canadian dollar gets a little boost as well and outperforms fellow commodity currencies and the rest of the major currency pack during a period of dollar appreciation.
Taking the short side of AUDCAD is something to consider. Certainly a decent risk-reward set-up, we think.
Regards,
Jack & JR
Last 5 posts by Jack Crooks
- We’re Bullish on the US Dollar Today ... and Tomorrow! - January 5th, 2009
- Can we rest? Gold may lead the way. - December 22nd, 2008
- A super deal on the U.S. dollar - December 20th, 2008
- Underestimating the power of deflation is dangerous! - December 19th, 2008
- I Love the Smell of Rate Cuts in the Morning - December 16th, 2008
Amp, Australian Dollar, Buy And Hold, Canada, Canadian Currency, Canadian Dollar, Commodity, currencies, Current Market News, downside, economy, forex, Good Year, Happy Camper, Hesitation, Philosophy, Pips, Risk Reward, Sentiment, Strategists, Us Dollar
 About Jack Crooks (http://blogs.moneyandmarkets.com/blog/currency-corner)
John (Jack) Crooks is the founder and president of Black Swan Capital, an independent advisory firm specializing in foreign exchange and currency markets investing for retail and institutional clients. A seasoned financial advisory with nearly 20 years of investment experience, Mr. Crooks uses both quantitative and qualitative approaches to determine the fundamental driving force(s) behind the movement of the currency, capital, and commodities markets. He is the editor of Weiss Research’s latest investment offerings, World Currency Alert and World Currency Options, which were launched in August 2007. Mr. Crooks also founded Ross International Asset Management, a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. Previously, he was general manager of Plexus Trading, where he specialized in currency futures and commodities trading. During his successful career, Mr. Crooks served as chief currency and futures strategist of M2 Futures Inc., an investment boutique headquartered in Chicago, as well as vice president of Global Strategic Research for an international investment boutique, where he was responsible for providing daily advice and global strategy analysis. Prior to entering the investment arena, Mr. Crooks held various corporate finance positions. He has written extensively on the subject of global currencies and international economics and has been published in Asian Times, Futures Magazine, Barron’s, Bloomberg, Dow Jones Newswire, and across many financial websites. He has also appeared on Bloomberg TV and CNBC. Mr. Crooks holds a bachelor’s degree in finance from Florida State University and a master’s in business administration from the University of North Texas. |
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