Aussie Bears Celebrate the RBA’s Surprise 50 BP Rate Cut

| Tuesday, 1 May 2012 11:44
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(eToro Blog)  Sentiment on OpenBook for the AUD/USD pair is predominantly bullish with investors buying the pair at the dip, now that the Reserve Bank of Australia offered a 50 basis points reduction in the cash rate – double what the consensus of analysts had been expecting. While the AUD/USD pair is currently lower by nearly 1%, the Aussie Dollar is in fact broadly softer, down more than 1.10% against the Japanese Yen, and a nearly equivalent move against the Euro.

OpenBook trader KENT1668 from Malaysia who has 907 followers and 48 copiers as of this writing, has been cashing in on the Aussie’s weakness in a big way, closing out eight short positions with gains that ranged from as little as 2% to as much as 53% while one open long position bought at 1.0333 is now showing a 1% gain. This trader allocates more than 96% of his portfolio to the AUD/USD pair which has provided him and his copiers with a 1.8% gain over the last six months, and in the last month the allocation has been raised to 100% for a gain of 6.6%.

Meanwhile, another Malaysian trader, Sasi83, caught the Aussie’s fall not only against the U.S. Dollar but against the Japanese Yen, and booked an 89% gain on a short position in the AUD/JPY. Australian local Nadine01 pitted her Aussie Dollar against the fortunes of the Euro and booked a 200% gain on a long EUR/AUD pair; she also captured profits on a pair of shorts in the AUD/USD, with profits of 46.5% and 65%. In the past six months, this trader’s 1.3% allocation to the EUR/AUD has yielded a 37.2% gain,

Glenn Stevens, the Governor of the RBA, offered investors clues that more easing could be on the way, stating that the RBA’s inflationary expectations might in fact not be realized. Markets are already considering the strong possibility of another equivalent rate cut within 12 months. In the statement, the governor said that the board determined that the 50 basis points reduction was necessary to make financial conditions easier given the current economic climate; whether banks pass that savings onto their customers is doubtful, as analysts say that in light of higher funding costs they would likely only pass through a fraction of the savings.

It’s a slightly different problem for the Reserve Bank of New Zealand, which has been under some pressure to hike interest rates in response to rising inflation. Last week, the central bank decided to leave the key lending rate at the current 2.5%. Recent data shows that wage inflation slowed over the first quarter which critics say should give the central bank a little breathing room. The NZD/USD pair is currently trading lower at 0.8146, and sentiment on OpenBook is bullish by a 4 to 3 margin. OpenBook trader adsnap booked a 24% gain on a short position in the pair which paled in comparison to the 142% gain on the AUD/USD short closed a few hours earlier.

Over the past three months, OpenBook guru Hschinner has increased his allocation in the NZD/USD pair to 26% from 11.6%, for a gain in the quarter of 5.2%. Earlier today, a short position in the pair hit its TP and closed with a gain of 5% for this guru and his 1473 copiers. For the past six months, this guru’s P&L is recorded at 113.6%, and is at 99.9% for the year.

Copyright 2012 eToro Blog

Note: Past performance is not an indication of future results. This post is not investment advice. CFD trading bears risk to your capital.
| Tuesday, 1 May 2012 11:44
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236
number of times this post has been viewed
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