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The Bounce in the AUD/USD

The Australian Dollar has indeed experienced the bounce that I mentioned in my October 9th post when I had exited my profitable short position against the AUD. As you can see from the chart below, it did not take long at all for the currency to move nearly 1.7 cents against the US Dollar, which in currency terms is a very decent move in a short period of time. If I had remained short in this position, approximately half of my profits would have been eaten up in both the direction against me and the cost of carry in the interest rate differential between the currencies.While I am not yet taking up my short position again, I will likely start to build in another short position soon to take advantage of this bounce with a longer term eye out for the popping of the Australian housing bubble. Once that begins to gain steam, I expect a much more accommodative central bank to drive the AUD much lower.

(Click to open full-size in a new window.)

Please note that currency trading can involve a high degree of leverage and risk. You could lose all of your capital or even be subject to capital calls. These posts are for informational purposes only and are not intended to be a direct recommendation of particular investments or strategies.

Written By: Joshua Ungerecht
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AUD, Australian Dollar, Currencies, Currencies, Euro, US Dollar, Forex Trading, Currency Trading, Euro, Forex Trading, US Dollar