In a game of relative value, there’s been good reason to put your money on the Australian dollar. The simple carry-trade theme makes Australia an obvious choice during a time when general financial market risk is surprisingly absent.
The following chart of AUDUSD next to the VIX (indicator of risk or investor fear in the market) shows the inverse correlation rather well – when risk goes down, the Aussie goes up.
We had a couple of clients contact us on Friday with concerns that euro might surge on any deal to save Greece. We had to agree with them: Yes, that is exactly what we might see. But we also said we don’t want to lose the position because the deal, if there was one, wasn¡¦t going to change things longer term. The fact is this is a band aid on a gaping wound gushing tainted blood across the body of the European Monetary Union, threatening to infect the entire European banking system. Was that dramatic enough?
David Newman here ... on Investing versus Trading
How many times have you seen pictures of people sitting on the beach with their laptop in hand in those “Trade Forex Commission Free” advertisements? Open a FX account, quit your real job, sit on the beach and get rich is the implicit message. It’s ridiculous! But unfortunately that is what sells.
It doesn’t have to be that way. You don’t have to buy into the hype…and you don’t have to take that much risk in order to get involved in currencies. Trading can be profitable; but it requires extreme focus and discipline. There is another way if you want to “invest” in currencies.
When the “moral champions” of the world gang up on Arizona, Arizona sells pesos.
That seems to be what happened this week in the wake of Arizona’s crack-down on illegal immigration.
Gotta love that quote: “…simply transferred from one perception to another.” It really does sum it up well. We know Blue Horse Shoe loved Anacot Steel…we know gold bugs love gold…we know commodities bulls love all things commodities…and we know Morgan Stanly loves Brazil…
