To find out the earlier part of the trade, read below:
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The latest developments in the political bickering between the Republicans and Democrats in the US is threatening to result in a government shutdown by September 30th, 2013, the end of the current fiscal year, which would mean that most of the services provided by the government will close down temporarily, barring some essential services ie, any federal program or agency which is tasked with protecting life & property, such as air traffic control and food inspection. (The latest on the political battle that caused this whole ruckus : http://edition.cnn.com/2013/09/20/politics/congress-spending-showdown/index.html). There is also the matter of raising the debt ceiling, which is also touched on in the article.Apart from the obvious effects this would have on the US economy, such as uncertainty in the markets, which would hold off a lot of investment activity, which would eventually hit the jobs sector and consumer spending, there are many other negative effects which could spiral out of control.
"On the House floor on Friday, legislators warned of the serious consequences of a government shutdown. The last shutdown, which occurred during the Clinton administration more than 17 years ago, comprised a total of 28 days and cost the nation more than $1 billion, according to congressional researchers."
For more of the potential effects, read http://money.cnn.com/2013/09/23/news/economy/shutdown-economy/.
The effect of this matter on the financial markets is that traders have shown a tendency to discard the USD in favor of safe haven currencies, such as the JPY, as uncertainty dominates the markets.
Since last Thursday, I had a few short positions in the AUDUSD to take advantage of the realisation by traders that even with the weakness of the USD, the AUD is still overvalued, what more with the currency war on the table among all the major central banks of the world. Take a look at the chart below; my positions are indicated by the lines and the arrows
The previous rally in the AUDUSD was largely due to USD weakness because of the confusion in the run up to the announcement of the FOMC decision on the matter of taper or non taper of its current QE measures, however the latest developments in the US have thrown in new fundamental factors to consider in this position that I am holding.
Come Monday morning at the market open there could be a gap up in the AUDUSD, and I am considering whether I should fold on this hand; or should I be a little patient stay in the game, and wait for a chance to raise my stake in this round?
What do you think? Will this factor be a strong enough catalyst to reverse the AUDUSD latest minor sell off? The fact that this latest game of poker had extended itself to over the weekend, I am unable to do much but to come up with a plan to deal with the outcome come Monday morning market open.




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