RBA Rate Hike Surprise?
01/02/10 22:29
Traders...
Todays Forex Notes Below "Bobsledding".
Come Bobsledding with World Cup Champion, Chris Lori!
Hey Traders!
My old teammates and I rent the Calgary Olympic bobsled track for a few hours and have a blast. We take the opportunity to take down our friends who have always asked if they can have a ride down. You won't sleep for 3 days after this experience! It is entirely a non profit cost sharing event. The cost is $75 per ride. Public rides on any other track are at least $250 and not nearly as intense. This is the closest you will ever come to the actual athletic experience of being in a World Cup or Olympic competition. Make sure you have your mommy's permission!
We will be joined by a few FX guys, as well, so pull yourself away from the charts and come join us!
Details:
Date: Feb 9, 2010
Time: 2pm - 4:30pm
Location: Canada Olympic Park, Calgary, Alberta
Other details: We will be hanging out in beautiful Banff, Alberta the night before. Most of our group are staying at the Buffalo Mountain Lodge.
Please email: info@chrislori.com for more details. This has only been made possible due to cancellations, so there are only a few spots available. First Come First Serve!
Todays Forex Notes:
RBA Rate Hike Surprise?
Come Bobsledding with World Cup Champion, Chris Lori!
Hey Traders!
My old teammates and I rent the Calgary Olympic bobsled track for a few hours and have a blast. We take the opportunity to take down our friends who have always asked if they can have a ride down. You won't sleep for 3 days after this experience! It is entirely a non profit cost sharing event. The cost is $75 per ride. Public rides on any other track are at least $250 and not nearly as intense. This is the closest you will ever come to the actual athletic experience of being in a World Cup or Olympic competition. Make sure you have your mommy's permission!
We will be joined by a few FX guys, as well, so pull yourself away from the charts and come join us!
Details:
Date: Feb 9, 2010
Time: 2pm - 4:30pm
Location: Canada Olympic Park, Calgary, Alberta
Other details: We will be hanging out in beautiful Banff, Alberta the night before. Most of our group are staying at the Buffalo Mountain Lodge.
Please email: info@chrislori.com for more details. This has only been made possible due to cancellations, so there are only a few spots available. First Come First Serve!
Todays Forex Notes:
RBA Rate Hike Surprise?
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UBS looked at a select number of global equity
indexes and look at the "currency effect" where
they roughly take the difference between the
return in dollar terms and the return in local
currency terms. In 2009, Brazil and Australia
benefited greatly from currency gains but so far
things are not shaping up as clearly. This is yet
another signpost that selectivity will be key for
currency investors and risk-seekers overall in
the months ahead.
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While we are looking at the currency component, that is not to say that the local indexes themselves did not perform well. On the contrary, the Bovespa gained 82.7%, the KOSPI 49.7% and the S&P/Toronto Stock Exchange index 30.7% in 2009. But as the dollar remained severely under pressure in 2009, currency gains versus the dollar helped boost returns to 144.9%, 66.5% and 52.1%, respectively. The returns we have seen thus far have been the opposite of 2009, as a pullback in risk-seeking has benefited the dollar. The pullback has been seen both in the equity returns in local terms as well as in domestic currency weakness versus the dollar. The majority of the equity indexes are down in both local and dollar terms though the Nikkei is showing a positive currency effect as domestic investors are repatriating overseas investments and as the yen remains a safe haven currency. The yen could continue to benefit in the near-term from muted risk-seeking and because our Asset Allocation team notes the risk of a quick rebound in Japanese share prices as investors rebalance portfolios. But should risk-seeking return, we do not think we will see such a one-way run on the dollar as we saw in the currency effects across various indexes. I anticipate some relief from the risk averse pullback, but will continue to look for further downside to risk appetite. More USD strength ahead, as it is benefiting from weak equities, as well, supported by positive data out of the US. |
We expect the RBA to hike 25 bp but the accompanying statement will be crucial for future policy guidance. Upstream price pressures have started to fade as evidenced by last week's record PPI low and with the impact of previous hikes still to filter through the economy, the RBA may prefer to wait several months before considering their next move subsequent to Tuesday's meeting. We expect the RBA to pause after this meeting until the 2H of 2010. We continue to look for AUDNZD downside on the basis of narrowing policy differentials. On the surprise side, RBA could wait and hike at next meeting if global equities stabilize.
Source: UBS, Bloomberg