AUSTRALIA FOCUS : AUSTRALIA UNDER ATTACK
It would be a fool’s quest to attack Australia and the last time anyone thought about it was during WWII and even the Japanese took a deep breath at that thought. As for New Zealand ? Impossible !?
New Zealand wins ! even if they lost the cricket world cup last week. What a nice revenge in the AUDNZD ! A new record low was set daily for the entire week culminating in a near parity closing which we will most likely visit next week given the “free fall” look of the chart. And like I have said many times to people who asked me, it is a “gangster” pair that I never liked and would never dream of touching.
For currency attacks, it is another matter and Australia bucked global trends for the week, underperforming Somali, Georgia, Uganda and Iran ! 4th worst performer against the USD in the currencies universe and central bank impotencies.
It has not been such a bad week in Australia with only home sales showing a slowdown in growth (still growing though), building approvals falling less than expected on the month and inflation still a healthy 1.5%, according to TD Securities for the month of March.
No new developments – Iron ore is lower, coal looks horrid and the government is looking to tax deposits again cum their May budget, increasing their unpopularity in the process especially amongst the pensioners.
The only thing that has changed is that the expectations of an RBA rate cut has risen considerably since mid March, from around 40% to 75%, and the RBA meeting is scheduled for 7 March, immediately after markets come back from their Easter Monday break. Perhaps some position squaring into that ?
My thoughts are the same – to steer clear at the moment. There is certain temptation to get back into the AUD for the medium term but I will pick the moment wisely. Investors are still bullish on the country with Indian companies looking to buy gold assets and now Malaysia property groups zoning in on commercial real estate – there is so much land and untapped potential for wealth (land = zero, build on it = real estate wealth created), just keep building !
Bonds do not appeal to me at the present as 2% becomes the new 4%. Might as well take my chances with China whose fate Australia is intertwined with and their 4% bonds.
It is also ironic to note that we are not getting too many calls to buy Australian homes and apartments these days with the AUDSGD at 1.03 ! I hope prices have risen to make up for the 16% currency loss (5 year average 1.229) for those who have invested.
1.03 is a new 6 year low for the AUDSGD, its 10 year low was 0.9066 on 28 Oct 2008, before it rebounded to 1.09 within 6 months. Given that the weekly candle blew out my “higher lows” theory, I will stick to what I have been doing for most of this year – trade, not invest – and Tuesday looks like a good day.
Leaving with the indicative prices and wishing everyone a happy lunar eclipse tonight which will be shortest lunar eclipse of the 21st century, lasting less than 5 minutes.