This will get a little Macro for the die hard currency buffs and is a bit of a commentary on politics but, this FX acknowledgement is important to those of you importing and exporting to the land of Kangaroos and the best British prison ever.... Australia. AUD/USD article Male Voters Desert PM Julia Gillard article
Issue
PM Julia Gillard is going down in flames.... Hard. Aussie or not, woman or not, Labour party activist or not, under her stewardship "The Land Down Under" has seen a greater demand by China in trade (mostly mining), a strengthening of their currency against the dollar and what is inexplicably a very strange housing bubble (everyone thinks the bubble will burst, or has burst, or might burst, but it still costs 500,000 AUD to buy a 1 bedroom closet in downtown Sydney or roughly 475,000 USD for those of you who want a ballpark).
Nitty-Gritty
After being recently asked by a radio host if she was a lesbian, if her marriage was a sham, etc. (picture Rush Limbaugh interviewing Hillary Clinton and Hillary's husband was a garrishly dressed hair-dresser from the West Village, and then you get the tone of the interview) the Aussie PM has taken on a 'Gender War' mantle, causing circumspection in the male constituency and some scarlet lettering from fellow male politicians. There is a level of vitriol towards the PM that doesn't quite make sense to me, and it may go beyond the gender war It doesn't help that that there is wide held expectation that the PM's Labour party is about to get beat in a big way in the elections coming up in 3 months. Why should you really care about all this political rigmarole?
Loomis announced today that there the big short movement on the AUD/USD may signal a time to buy Link. There has been a slight rally today after AUD USD hit a 33 month low on June 11th. I don't think this is going to be a long term rally unless the political landscape lowers its volatility a bit. Loomis may think the suckers have cleared out of the short positions or that the bottom hit last week, but for those of you looking for a hedge on invoicing in your international business transactions...caution is the best policy. I might recommend call options as the way to go with a 3 month strike as a way to level out the volatility if you are willing to risk the premium. The other way to play this may be to lock in long term fowards contracts at the going rate and then simply buy shorter term puts if the currency moves against you to limit your overall exposure. Either way, just please be aware that the volatility in the region is going to impact the price of your widgets and the money you will get after you are done trading with the sovereign republic of whatever.
Issue
PM Julia Gillard is going down in flames.... Hard. Aussie or not, woman or not, Labour party activist or not, under her stewardship "The Land Down Under" has seen a greater demand by China in trade (mostly mining), a strengthening of their currency against the dollar and what is inexplicably a very strange housing bubble (everyone thinks the bubble will burst, or has burst, or might burst, but it still costs 500,000 AUD to buy a 1 bedroom closet in downtown Sydney or roughly 475,000 USD for those of you who want a ballpark).
Nitty-Gritty
After being recently asked by a radio host if she was a lesbian, if her marriage was a sham, etc. (picture Rush Limbaugh interviewing Hillary Clinton and Hillary's husband was a garrishly dressed hair-dresser from the West Village, and then you get the tone of the interview) the Aussie PM has taken on a 'Gender War' mantle, causing circumspection in the male constituency and some scarlet lettering from fellow male politicians. There is a level of vitriol towards the PM that doesn't quite make sense to me, and it may go beyond the gender war It doesn't help that that there is wide held expectation that the PM's Labour party is about to get beat in a big way in the elections coming up in 3 months. Why should you really care about all this political rigmarole?
- Aussieland is currently one of the largest exporters of mining byproducts in the world
- It ranks 3rd in trade partners with China
- When you also acknowledge that both the Thai Baht and the Japanese Yen are being actively driven down by their central banks, the Aussie Dollar has until now largely remained as a safe, liquid, Pacific Ocean currency with a relatively free float for to use as an invoice currency for international business transactions with SE asian exotics and emerging markets.
Take-Away
Loomis announced today that there the big short movement on the AUD/USD may signal a time to buy Link. There has been a slight rally today after AUD USD hit a 33 month low on June 11th. I don't think this is going to be a long term rally unless the political landscape lowers its volatility a bit. Loomis may think the suckers have cleared out of the short positions or that the bottom hit last week, but for those of you looking for a hedge on invoicing in your international business transactions...caution is the best policy. I might recommend call options as the way to go with a 3 month strike as a way to level out the volatility if you are willing to risk the premium. The other way to play this may be to lock in long term fowards contracts at the going rate and then simply buy shorter term puts if the currency moves against you to limit your overall exposure. Either way, just please be aware that the volatility in the region is going to impact the price of your widgets and the money you will get after you are done trading with the sovereign republic of whatever.
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