AUD.USD

[arco]

Just spotted this..........

Dollar set to plunge
By Nicki Bourlioufas
May 12, 2005
The good time could be over with the local dollar set to plunge below US70 cents as commodity prices come off highs and foreign investment into Australia slows, according to Westpac Bank.

Westpac has forecast the local dollar will fall to US72 cents by December 2005 and to US64 cents by December 2006.

"The Australian dollar looks set for a fall in the second half of this year," said Westpac in a research report released today.

"The fundamentals do not improve in 2006 either. In fact, the unfavourable trend accelerates."

"We will see a combination of factors which have been positive over the last few years become negative," said Westpac senior economist Andrew Hanlan

Westpac says a narrowing gap between US and Australian interest rates will slow foreign investment into the country as the return on investments in Australia becomes relatively less attractive. That will drive down demand for the local unit.

While Australian interest rates are forecast to stay on hold at 5.50 per cent, US rates are set to climb to 4 per cent by the year's end and to 4.5 per cent by the end of 2006.

"With the US Federal Reserve moving short rates (up) faster than the long end sells off, there will be another consistent weight on the currency through most of the period under discussion," said Westpac. The pace of global growth is also set to slow, "which is a sign that commodity prices will start to peak out," said Mr Hanlan.

Already commodity prices have eased, which has hurt resource and oil stocks like BHP Billiton, Woodside Petroleum and Rio Tinto.

Westpac expects the huge US current aco**** deficit will stablilise, which will push back up demand for the US dollar, to the detriment of the local dollar.

Westpac forecasts Australian interest rates will stay on hold through 2005.

"We have argued consistently that the March rate hike was going to be the last in the cycle. We have argued that there is evidence that the economy was already slowing and that the household sector would be particularly sensitive to the move.

The Reserve Bank's official communication is now dovetailing with that view," said Westpac.

http://www.theaustralian.news.com.au...5E1702,00.html

[slam]

Anyone else go short on this pair?
Nice orderly drop so far.
Coming up to some resistance at present but if we get through this next biggie is mid .75's

Cheers Slam

[arco]

Hi Slam

Yes as I said yesterday.....

"However, I do think AUD is a good candidate
for a lower move for a number of reasons"

Entered short at 7720 - Currently +65

arco

[Xerof]

Arco, good to see you are following your Buffet motto


7630 KEY

[arco]

Yes Xerof, I am often thinking opposite to the crowd,
and I often get butterflies

Interested to know the key level 7630 mentioned
is based on what please ? (Inside info )

FYI I have areas that could give some support @

Circa 7612-7628 - last 3 support pivots.

7568 - 7324 Gann Levels.

7429 - Fib 50.

Yesterdays (EOD) black Marubozu
is considered a very bearish candle.

Go with the flow.

arco

[Xerof]

No inside info, just looking at daily chart, it has held there twice recently, and as you say, three times if you count the earlier bounce from slightly lower.

IME, third time is usually lucky, i.e it breaks

Xerof

[slam]

Hi arco
Shorted at 7721
My resistance/support mentioned was just taken from a daily support level.(as Xerof and yourself stated)
only my 3rd day trading the forex, just trying to work it all out guys

Cheers
Slam

[arco]

If this is the correct EW count then there should
be more southward movement to come medium term.

[Xerof]

Looks pretty good to me Arco - also seeing similar count elsewhere - 7500 target for current wave 3? (then 7570 again before hard south below 7500)


Xerof

[arco]

Still holding this one as a longer term trade
and currently + 126. Looking at the area
7568 - a Gann line for possible hiccup.