Australian Dollar Jumps to 14-Month High on Unexpected Job Gain

[Forex Goldmine]

Looking for a good time to start trading live? Now could be the time...

From http://www.bloomberg.com/apps/news?p...d=aV_RLmKjQcrI

Oct. 8 (Bloomberg) -- The Australian dollar surged to its highest since August 2008 as employment unexpectedly increased in September, boosting speculation the central bank will add to this week’s interest-rate increase. Bonds declined.

New Zealand’s currency touched the strongest since July 2008 on bets its policy makers may follow the Reserve Bank of Australia in raising borrowing costs. The number of people employed in Australia rose 40,600 from August, while economists had estimated employers had eliminated 10,000 jobs.


“It really vindicates the RBA’s decision to start raising interest rates and probably makes it very likely that there’ll be a follow-up 25-basis-point hike in November and December,” said John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd. in Sydney. “That means more interest rate support for the Australian dollar.”


Australia’s currency touched 90.33 U.S. cents, the most since August 2008, before trading 1.3 percent higher at 90.26 cents as of 4:37 p.m. in Sydney. The currency bought 79.61 yen from 78.96 yen.


New Zealand’s dollar gained 0.5 percent to 74.04 U.S. cents from 73.64 cents in New York. It touched 74.21 cents, the strongest since July 2008. The currency advanced by 0.1 percent to 65.29 yen.


“Unemployment has not risen as far as had been expected,” RBA Governor Glenn Stevens said in the Oct. 6 statement that accompanied the decision to raise borrowing costs from a half- century low.


Carry Trades


The Australian and New Zealand dollars also rose as the S&P/ASX 200 Index, Australia’s benchmark equity index, closed at a one-year high and Asian stocks advanced for a third day. Alcoa Inc., the largest U.S. aluminum producer, reported an unexpected third-quarter profit.
“The main risk is coming from the U.S. corporate earnings reporting season,” for the Australian dollar, Kyriakopoulos said. Better corporate results would boost risk appetite and be “supportive,” of the currency, he said. NAB expects the Aussie to peak at 93 U.S. cents in 2010 with the risk that it reaches that level sooner.


Benchmark interest rates are 3.25 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such so-called trades is that currency market moves can erase profits.


The premium investors get on two-year government debt in Australia rose to 3.67 percentage points over similar-maturity Treasuries and 4.30 points over Japanese bonds today.
Australian Bonds


Australian government bonds fell. The yield on one-year government bonds, which are sensitive to interest rate expectations, rose 12 basis points, or 0.12 percentage point, to 4.12 percent, reversing earlier losses. The yield on 10-year notes rose seven basis points to 5.25 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 declined 0.509, or A$5.09, per A$1,000 face amount, to 100.007.


New Zealand’s dollar has been the best performer among the 16 most-active currencies against the greenback over the past three months. The so-called kiwi appreciated amid speculation the central bank will raise rates by 1.58 percentage points over the next 12 months, according to a Credit Suisse AG index based on swaps trading.


“The market is looking at when things turn around, kiwi interest rates will move possibly faster than Australian interest rates,” said Derek Mumford, a Sydney-based senior consultant at HiFX, a foreign exchange risk management firm. “The New Zealand economy has been lagging but it’s certainly coming out of recession.”


‘Kick-Start’ Lacking


New Zealand Finance Minister Bill English said yesterday in an interview that the advance in the nation’s dollar threatens an export-led recovery. The country’s economy unexpectedly expanded in the second quarter, ending five quarters of contraction.


“We’re surprised that it’s as high as it is,” English said. “Generally when we’ve had a recession, a low dollar has helped us kick-start out of that recession. That’s clearly not going to be the case this time.”


New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose 10 basis point to 4.38 percent, the highest level since January.

[Groovy]

I would imagine having a good start in March to invest into aud this year but the risk and the bubble at 0.9 and higher on aud/usd makes me just wonder when it's gonna be stop and what reason the market will find to unwind carry trades

[Forex Goldmine]

Ah, if only we could predict the market. Anyway, I've been trading live for quite some time now and RoboMiner has always cruised right through issues like this. Yes, there is always drawdown with RoboMiner and RoboMiner Pro, but if your account is set up correctly according to the recommended settings, you will be fine.

[only20gp]

why would you say its a good time to go live? seems like the audnzd is heading north. it should accumulate alot of draw down. am i missing something? btw, already live : )) and very happy.

[Forex Goldmine]

Oh yeah, now is a VERY good time to go live. Being at the high means that you will place sell orders as the market heads back towards the middle of the range. If you have your settings correct, you will encounter some drawdown but you should be fine.

Even if you place a few orders as the range goes up, sooner or later the market will return down and you'll make profits.

Just be sure you don't have too large of lot sizes opening or too little equity, or you could get a margin call. However, if you follow the recommended settings you will be fine.

[expanse]

Based on your experience in Forex, when would you expect the AUDNZD to head south??

[Forex Goldmine]

I have seen the AUD/NZD spike like this a few times in the past, which you can easily see by changing the history in MetaTrader to the M1 (Monthly) view. In the past the Aud/NZD have been even higher than they are now, so it's entirely possible for them to continue to rise for a few more days to a few more weeks. In this case, you should see RoboMiner continue to place sell orders until it reaches the top of it's 33 ranges at which point no more orders will be opened.

If you're following the recommended settings you should have plenty of equity to maintain those open trades. If you've opened trades which are too large for your account (which coincidentally I did on the RoboMiner Pro account just last week) you will probably get a margin call.

My live account has about 1750% free margin for example - I have a LOT of breathing room. The RoboMiner Pro account with .1 lots on a $5000 balance and opening two trades at once is hurting right now, so it'll be a good example of why you should follow the rules.

[expanse]

Here it comes, lovely little run down south this morning!!