Thursday, October 9, 2008

AUD Has Downside Risks

The global liquidity crunch prompted the central banks to mount a flurry of interest-rate cuts to help arrest a slump in equities globally.

FED, EcB and BOE together with China and Hong Kong in a coordinated effort jointly announced rate cuts to save the world of a further meltdown in equity markets and economic growth.

The loosening of the monetary policies was a dose of confidence and it instantly stabilised the downtrends. But, alas, it is going to be very short-lived.

The rate cuts also revived the rate appetite of the Yen carry traders. As such, the strong Yen turned slightly soft against USD for the first time this month. AUD, a currency popularly pairing up with Yen in global carry trades also rebounded against USD.

But AUD continues to have a bearish outlook with a potential downside risk against USD.

If you are keen in AUD, you may keep tracking it.

Artist Lautra Gilbert printed "The Zero Dollar" as a protest against the breakdown of the American economy. She distributed 10,000 of the fake greenbacks in front of New York Stock Exchange on Oct. 7 to call attention to the economic crisis gripping the nation.

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