AUD 01 (May 08 - Feb 12)

[LenaHuat]

My 1 cent, look at how attractive the yield on the Aussie govt securities are :-
http://www.rba.gov.au/statistics/tables/index.html#interest_rates

[mojo_]

Lena, TQ this is another site that gives the govt yield curve:
http://www.bloomberg.com/markets/rates/australia.html

K, your last post above - now u're sounding like a professional cnbc "talking head guru"

[Chinaman]

this is one issue that all FCFD players face...

the inverse relationship between Interest Rates and fx currency fluctuations risk....

simply... whenever IR is high ... the risk of that currency tumbling during the fixed deposit period is also high...

so, my take to C's question is simply this...

a) are you looking at yield
or
b) are you looking at fx currency appreciation?

if you are looking at interest rate play...and the amount of FCFD is significant...and i mean really large sum...then, you must protect your fx risks...by going into the fx market and do a hedge...

but if you are looking at fx currency play...FCFD is a wrong instrument to use...

Wow! professor K,
Your 'gor chiam' evaluation very tok kong man, dun play play econ (BSE) student.

Oh ya, I going for yield but dun have large sum, then how to protect forex risk leh?...any tip how to hedge, my seed money only 30k, can achieve 3% happy liao but at what risk...win 3% / loss ?%.

[kennynah]

boss C.... me not BSE grad... O level almost cant make it category one...

by FCFD AUD, you are actually Buying AUD and Selling SGD...

so if u are worried that after you fix deposit AUD...it loses value against SGD, then, you might wana sell aud/sgd in fx cash mkt...

say you decide to use SGD30K...maybe you could split 1/2...$15K AUD/SGD FCFD....and $15K Short AUD/SGD...

of cos, it is not do this and then go fishing for the next 12 months...cos, if AUD rises against SGD, your fx positions will start losing money....and comes a point in time, when margin call can happen....

but even if you did this "hedge"..it is not without cost... becos if this is a "perfect" hedge..then, no one needs to work anymore and the banks will effectively be giving you 5% for free; ie i FCFD $X earn 5%pa. and then sell in fx mkt to perfectly ensure i wont ever lose in fx exchange.....cannot be right?.... so, how do the banks then ensure they profit from you... #1, they wont give u RBA's interest rate...it will be lower...#2... banks will have a very wide bid/ask spread...you buy ask and sell bid...they earn here..

which leads to the next issue...below

as for FCFD... you must be aware of what Maybank's aud.sgd bid/ask spread is?? most respectable fx brokerages give you about 8-12 pips for this cross pair... but banks can have 50 or more pips spread...so, when u enter into a FCFD...you buy the ask and later when it matures, you sell the bid....here already the bank makan you kuat kuat already....

[Chinaman]

#2... banks will have a very wide bid/ask spread...you buy ask and sell bid...they earn here..
so, when u enter into a FCFD...you buy the ask and later when it matures, you sell the bid....here already the bank makan you kuat kuat already....

Forex xput bro K is right, bank pow siak, all are same same no different from Conman...enter eat u, exit also eat u.

My retired brother warned me not to put money is Wespac FCFD. They advertised 5% p.a. so by right your $30k x 5% = $1500 not so careful hor. He told me they cheat u on the no of days interest paid by minus 11 PH and 52 Sunday so when mature they paid u in this way: (365 -11-52 = 302 days)
302/365 x 5% x $30k = $1,241 only and not $1,500 which u thought so.

After thinking left and right, i finally decided to throw my 30k in CIMB starsaver earning 1%, no fish, prawn also can. This 30k is from a mature single endowment bot 2 yrs ago, actually my bro told me to convert to RMB cash and keep at home, it might give u more than 1% after one year...hmms can consider hor.

[kennynah]

Aud/usd, imo, is poised for a drop soon. My suspicion is that at 0.92, we may begin seeing selling pressure n if it gets to 0.94, I won't hesitate to go Short aud/usd. This is now not a good time to get into aud fcfd even when the IR seems attractive.

My opinion is formed only from technical chart reading n a little FA incorporated

Your views, pls.

[millionairemind]

I was just looking at the 1yr chart of AUD/USD. 0.935 seems to be heavy resistance. It has hit it 4X in the past 12 months before rolling over.

[eauyong]

08/22 18:31 AUD/USD: Holding Up As Market Wary Of Selling Into Weakness

SYDNEY, Aug 23 (IFR) - Traders say that trading in the AUD/USD has been relatively light, as the market is hesitant in selling the AUD aggressively despite the uncertainty associated with a "hung parliament".

Centrebet Australia has made the Tony Abbot-led Coalition firm favourites to form a government and traders feel the AUD/USD would likely spike higher if that result was announced at any time. The Coalition has promised to scrap any plan for a mining tax and therefore would remove investor uncertainty on what the ramifications would be if one was imposed.

Investors would probably get a bit unsettled if Labor managed to form a government by making deals with the minor parties and independents. This would raise the possibility that Labor would stiffen up the mining tax proposal.

The AUD/USD has recovered from the 0.8833 low hit first thing this morning and might be in the process of filling in part of the gap from the NY close around 0.8940. The AUD/USD trades 0.8873/78. --reuters

[eauyong]

Upbeat

RBA Governor: interest rates may be up to curb inflation
13:32
Infocast

(Infocast News) Glenn Stevens, Governor of Reserve Bank of Australia, said that the operational condition of retail sector in Australia is in fact not as tough as it was and that the inflation rate is expected to bottom out soon. Australia might need to increase its interest rates in order to deal with the situation, the Governor said.

Stevens pointed out that the bank would talk to 25 larger-scale retailers every month to try to get to know their operating conditions. It seems that consumers now hold a more cautious attitude towards buying, but the situation is not as difficult as it was. It is believed that inflation rate will not fall and that economic growth in 2011 will be strong.

[kennynah]

Solid lah this money kangeroo..inflation bottoming out, retail sector maybe hit...and he wants to raise IR...
I need to relearn my econs101 man

aud now back on my radar...finger on the "shoot it down" button...