Tuesday, November 1, 2011

RBA cuts rates, AUD falls 50 pips

The RBA cuts cash rates to 4.5%, but I missed the boat trying to short the AUD/USD as I had been going long on the pair the whole month - just felt weird pulling the trigger.

Even despite the favourable macro events - Euro falling, sp500 selling at month's end, Yen intervention I still found it hard to get set in the short AUD/USD trade.

One key reason why it was hard to take some shorts was that I've been long the past month and I'm still biased towards the bull cycle for the final quarter, as seasonality articles are depicting a likelihood of positive returns.

However, some negative sentiments around the Man Financial filing for bankruptcy and lower China PMI data today is making me bide my time before I get set for my long positions. The Italy bond yeilds are at 6.17% which isn't a consistent with a equities on the euro front.

Looking for the sp500 to hold the 1250 line, to maintain the bullish bias - however, given that it fell 30 points in 1 session is also a sign to be cautious in setting up longs here. The only offsetting fundamental in this price action is that it could've been massive end of month rebalance out of equities.