Feb 05 2008
Trading Insight from Zoltan
One of the things I enjoy the most is being in the environment I am in with all sorts of varied influences. With Zoltan Vass and Douglas Sereda, there are two schools of trading that I am exposed to.
I received some insight from Zoltan today that I'll share with everyone. In the past week we've been talking about the AUD/USD, which coincidentally just hiked it's interest rate up to 7%.
In general, I am bullish on the USD this year opposed to others. My main reason is the rate cycle difference among the developed countries, i.e., since the USA has started to cut its rates, it's just question of time when others should/will follow it. The first will be the UK this week. Therefore, although Australia has certain advantages, their rate hike move will probably be the last one before they "capitulate," i.e., the AUDUSD may go higher, even challenge its previous high but will eventually fall and follow the EURUSD which will be the next victim and it will decline very sharply.
Nevertheless, it needs to be confirmed still! But more and more technicals and fundamentals have been showing at least a slow down in the march of the EURUSD and this "fatigue" can quickly turn into a huge sell-off.
I like the USDCAD buy due to the above reasons and others as well. Here, the commodities' decline -oil, gold - will play a big role along with the expected Bank of Canada rate cuts in mid future. Although Canada has a better economy, it may not be able to offset the US's impact.
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