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Aussie Premium Precariously Perched on the Edge of a Copper Caldron?
By Jack Crooks   
October 20, 2011

I keep thinking that any day now the Australian dollar will take a very deep dirt nap. My pecking away has been rewarded at times, but my big spot FX bets (those based on max confidence moments), have proven painful to my trading account. I keep thinking the Aussie still has a bunch of growth premium embedded in the price, but...

Take a look-see:

Aussie- USD vs. Copper Daily: A big divergence? Who is leading here?

10/20/2011
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Aussie-USD vs. China’s Shanghai Index Daily: A big divergence? Who is leading here?

10/20/2011
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Aussie-USD vs. S&P 500 Index: Not so bad here…still a bit of premium in Aussie ...

10/20/2011
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Absolute Value in Chinese Imports from Australia, thru September: There is some evidence to suggest that China is catching a bit of cold. Hmmm….

10/20/2011
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The Aussie continues to ebb and flow on the “risk on” and “risk off” environment, along with the rest of the currency pack relative to the US dollar. Needless to say, a bad outcome in Europe would be bad for the Aussie. But even worse would be some type of growth accident news flowing from China. This I believe could be the next major shoe to drop for the global economy. It would be bad news for all asset classes and the Aussie would experience the deep pain directly and swiftly.

Remember, the Aussie collapsed 39% against the US dollar in just three months during the credit crunch back in 2008—that was a stunning move! Can you say ‘Repeat’? I can.

For more from Jack, visit Black Swan Capital and register for their daily newsletter, Currency Currents.

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