Currency Trading People In The Know

[mdklatt]

I'm thinking about buying an Australian CD, for either 3 or 6 months. I think this is a good idea for two reasons:

1) Australian interest rates are crazy high, yo.

2) The USD is in freefall against the AUD, and I don't see that changing in the short term.

Thoughts?

[Mjcpr]

It might work out for you or it might not.

YWIA

[Turd_Ferguson]

Buy shares of Vegamite instead.

[mdklatt]

Yeah, this is turning out about how I expected.

[Vaevictis]

Crazy high interest rates suggest future depreciation of the AUD against other currencies.

So basically, be aware that you're doing more than just betting against the dollar. You're also betting against expectations that the AUD will depreciate -- and rather sharply, if they really are offering "crazy high interest rates."

Check the AUD/USD forward rates. They should reflect this.

I'm not saying your speculation would be wrong, just that I think it's a little more complex than you're thinking.

[dolemitesooner]

I am investing in Soylent Green

[sooner_born_1960]

It's people.

[BillyBall]

I'm thinking about buying an Australian CD, for either 3 or 6 months. I think this is a good idea for two reasons:

1) Australian interest rates are crazy high, yo.

2) The USD is in freefall against the AUD, and I don't see that changing in the short term.

Thoughts?

What does the Aussie yield curve look like right now?

[mdklatt]

What does the Aussie yield curve look like right now?

Ummm...what's that?

[mdklatt]

Crazy high interest rates suggest future depreciation of the AUD against other currencies.



We're giving away money here in the US, and the dollar is still dropping. What's up with that?

[M]

Holy dooley! Ya better not look like a drongo, ya hear mate? Then ya won't have a brass razoo and you'll be drier than a nun's nasty.

[mdklatt]

Holy dooley! Ya better not look like a drongo, ya hear mate? Then ya won't have a brass razoo and you'll be drier than a nun's nasty.

They don't really talk like that there. But they do say "bugger" a lot.

[BillyBall]

Ummm...what's that?

http://en.wikipedia.org/wiki/Yield_curve

[Turd_Ferguson]

They don't really talk like that there. But they do say "bugger" a lot.and Oy!....they say Oy! a lot too.

[mdklatt]

and Oy!....they say Oy! a lot too.

They do at the footy match.

[yermom]

Holy dooley! Ya better not look like a drongo, ya hear mate? Then ya won't have a brass razoo and you'll be drier than a nun's nasty.

that's a nice accent you've got there. New Jersey?

[M]

They don't really talk like that there. But they do say "bugger" a lot.

That's how they talk when I fantasize about Hugh Jackman saying it. :hot:

[mdklatt]

That's how they talk when I fantasize about Hugh Jackman saying it. :hot:

You fantasize about Hugh Jackman saying "drier than a nun's nasty"?

:eek:

[M]

You fantasize about Hugh Jackman saying "drier than a nun's nasty"?

:eek:

He could say "bush oyster" and it'd still sound hot. ;)

[mdklatt]

"bush oyster"

They have those at the Sydney Aquarium.

[Vaevictis]

We're giving away money here in the US, and the dollar is still dropping. What's up with that?

http://moneyterms.co.uk/interest-rate-parity/

[tommieharris91]

I wouldn't, because I expect the Fed to start raising the discount rate in October. Most think the Fed will lower the discount rate to 2.00% on Wednesday, but I wouldn't be surprised if they kept the rates the same. If they keep the interest rate at 2.25%, expect the dollar to gain against all other currencies.

Anyway, kinda what Vaevictis said but I'll try to simplify, if it's possible. You need this equation:

RUSD=RAUS+[(E expectedUSD/AUS-E)/E]

In words:

USD interest rate = AUS interest rate + [(expected USD/AUS exchange rate - current USD/AUS exchange rate)/current USD/AUS exchange rate]

[dolemitesooner]

Can someone translate what in the bajesus M said?

[mdklatt]

Can someone translate what in the bajesus M said?

Nuns have dried-up cooters.

[BillyBall]

I have always been under the impression that the only 2 investments that kind of work as a hedge for the dollar is gold or the Swiss franc. (Other than just shorting the US Dollar itself)

My question is why did you choose the AUD? Just wondering if it was arbitrary, or if it's because of the high interest rates?