I don't know...I might be oversimplifying this thing...
But Cable has been bouncing off 2.0000 to the USD for a couple of days and that's why it has flattened out. 2.0000 is a psychological barrier. I'll bet it'll soon shoot right on through it though. And if it doesn't, it'll take a modest dive first.

(How's that for covering all the bases!)

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[quote=Linuxser;125609]
Ballard cases (chairman of RBNZ) are interesting, seems Mr Ballard thinks that with 8% rates he can control inflation meanwhile with interventions he can control the value of the currency. And we are nuts off course. [quote]

I'm actually related to him (distant cousin)...Governor of the NZ Reserve Bank, Alan Bollard.

The glaringly obvious problem is that they've traded against their own interest rate policy which was largely created to curb consumer borrowing and particularly the housing market. Now they feel that the currency is too strong and hurting exporters so now they've tried to intervene and trade against the market. I told people at the time that this wouldn't work and it hasen't. They're economists, not traders, and economists tend to be wildly inaccurate when judging markets. The other problem for them is that now they are stuck holding a huge multi-billion dollar position in the meantime.

[quote=Gramski;126975][quote=Linuxser;125609]
Ballard cases (chairman of RBNZ) are interesting, seems Mr Ballard thinks that with 8% rates he can control inflation meanwhile with interventions he can control the value of the currency. And we are nuts off course. Quite interesting answer Gramski.

It could be compared to 84/85 problem?, since my position is not so serious like was in that time.

Between the sword and the wall.
Because exporters would start to feel the high value of the currency, specially being NZ a commodities exporter in the first line.
Also, the high value of currency favor importations and that increase the problem with trade balance.
And also, inflation, because consumption increases. And I´m not talking about more food or clothes. It's about luxury things, new cars, new "non important" things, etc.
Inflation in a hidden way also increase real state values because today there is no more selective inflation, it's so hard to find a country with this type, also called structural inflation.
So, people buy a house and next year the house have a better price, so people takes a mortgage and buys a new car, another house, whatever.
The interest rate helps a little and with a high yield, some people thinks twice before do that. But they´re a few.
Most of them does not thing in that way. If all the people make some arithmetics before enter in the tunnel banks would not be banks we see everywhere.
In a short time, exporters and local companies start to touch at the politicians door claiming for a solution (seconds because its hard to compete against undervalued currencies).
So, the machine to take down the local currency value start to run and interest rate cuts begin (specially if we´re in elections time and/or unemployment starts to grow up, or trade balance becomes highly negative and you're not in the US position, capital account start to shake, etc).

Bird capital fly aways from the country. Real state values starts to fall, imported things becomes expensive, etc etc.
But people don´t see that they will pay less interest for the mortgages or loans. They see that they will have to pay to the banks a number based in old values. And does not like that.

However there is no big deal, the balance would arrive soon or later. Exportations would increase and with them the foreign capital in profits manner. With the employment, with new companies because the exchange factor, etc.
But there is a lag between the first and the second fact in which you´re close to recession. People are not happy and wants your head.
Specially all who will keep paying a mortgage or loan, for a property or thing that have lost a significant value.

Tax hikes are important like rate hikes.
However, unless you have some special laws like "repatriation act" a few but powerful people do not want this.

Cheney did his job keeping safe the report about future problems with tax cuts, rate hikes and deficit.

A Strong Push From Backstage | Cheney | washingtonpost.com

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[quote=Linuxser;126988][quote=Gramski;126975]
I doubt anyone on this forum would care the least about this, but I'm answering anyway....

There are three quite opposing forces at work for the NZ economy: Govt policy, Reserve Bank policy and the Job market.

There is a 'hidden' problem in that wages have not increased adequately with inflation over the last 15 years. In many ways this in a 'social' problem....being people tend to just accept lower wages just to 'get the job' and employers know this implicitly so the problem spirals. This in itself creates a borrowing environment.....habits of not saving get enforced and people look to borrow to create investments. The housing market has boomed largely by massive borrowing and by the public looking for ways to get ahead. In the meantime taxes have risen independently meaning workers take less in the hand thereby re-enforcing the behaviour both of consumers and employers.

The Reserve Bank and Govt policies are not in sync and each act independently. Essentially taxes are too high and interest rates are too high, all the while the social environment of low wages perpetuates. The Govt's greed vs the economy's health....the Reserve Bank's policies having an unforseen (for them) effect on exporters.

I guarantee the NZ Reserve Bank would have forecast (and wanted) the currency to be at least 10-15 handles lower at this time.

[quote=Gramski;127309][quote=Linuxser;126988]Well said Gramski.

Best bit of simplistic sense this thread has heard in about two pages rather than the blah blah nonsense of halfwit books, movies, Chinese whispers and conspiracy theories.

Archer

Aside from the dot-com bubble, we're facing the same problem in the US. Some very staunch corporate supporters of "US jobs should stay in America" are now exporting our jobs, especially tech. We've also undercut the domestic service industry (landscaping, accounting, etc) with either migrant workers or software. (charles hugh smith: writer/designer talks about this more.)

Since I predicted China would go to a floating index 4 years prior to the event and I predict that Yuan will be floating within a year (high likelihood 3-6 months) we'll see if I'm crazy or not. If I were betting on fundamentals, I'd invest in electric trains to Mexico and Mexican manufacturing. But what do I know? I predicted the dot com crash within a month, 6 months ahead of time. (In April I bet Oct.) Doesn't mean I know what I'm talking about, but I do like to write stuff down and discuss it.

I'm not big on Conspiracy Theories, but I remember my friend Sean telling me Clinton would commit an act of war to avoid bad publicity. (About a year later Iraq was attacked the day after Monica Lewinsky hit the mainstream news.) I have an inherent distrust for official media. I've timed the manufactured story vs news on the street to 30-45 minutes for national events, 2-4 hours for local events. I hope you study the situation on your own and come up with your own opinion, but mine is based on a lot of study. I have become fringe, but only after looking at the horse's mouth. I don't assign credibility to arguments by default. I wouldn't believe me, I would need to study on my own before I would believe me.

Blind Freddy and at least anybody with an ounce of financial sense, barring the dear 'mom and dad' investors whom always get in at the very top of booms saw the tech stock demise coming a mile away. That shamble was a surprise to no person, only a monumental crushing blow to those who didn't know better and foolishly bet their life savings on one or two pipe dreams.

Present situation is exactly the same. Housing will implode and the cracks already began manifesting over 12 months ago. It's a termite ridden structure built on nothing but over bloated prices many barely maintained in funding by insanely high subprime mortgages that were given to folk whom 7 years ago would never have got a 'look in' for a loan one fifth the size.

China - Nothing new, what was there to forecast? Domestic production heading offshore - Begs the question... to which country? It's always been the same, man will go where it's cheaper to build. Today it's China, 15-20 yrs back it was Taiwan and there are still a whole host of other countries where you can get the locals to work for 3 cents a day. Yes, it sucks but they do it to remain competitive and in the end it ruins our economy. That's idiot government and dufus policy for not promoting local business and employment. Geez you could go on about how it all stems from the cheap crap they allow imported from overseas and that's why it all gets too hard to compete in the first place. It's no big secret and all terribly simple.

Media? Hell yes, if you sit and believe local TV you must have rocks in your head but plenty do and it's not surprising since these are the same morons that figure Springer and Oprah have some sort of answer to life's ailments.

Government? Well you know what they say about religion and politics. Steer clear unless you want to get in a big bru-ha-ha. They're pretty much all crook and sadly the few that hope to make a difference are drowned out by the corrupt majority and will likely never succeed. Politics is about nothing but getting into power, feathering your nest, scratching other peoples backs and hoping to make it through the next election. In order to accomplish this, they will beg, borrow, steal, start wars, bed with corrupt business and take bribes. Meanwhile, it's just a big magic show where you have the left hand doing one thing that SHOULD be horrendously obvious to public, but the politicians with aid of media (and all else) perform sleight of hand with other and distract the eye to mesmerize and leave the greater majority bedazzled.
Again.....blatantly obvious and nothing new if you decide to walk around with your eyes open.

No need to act like Nostradamus.

Archer

wow....this is an interesting thread, this is worth re-reading.

So, in the very simple terms, how is it going to affect our trading ?

Will USD be weaker in coming weeks ? will JPY be stronger ?

What are the keywords when we read economic analysis, so we can focus more on that part ?

once again, you guys are terrific.

Mason

The answer to your query could be pages long and still not be satisfied as it is as non-cromulent as the question "how long is a piece of string?"

People USUALLY trade either on fundamentals or by tech analysis. If you utilize fundamentals and look to geopolitical and financial market shaking events as your instruments to determine currency direction then it is important to not get caught up in a swathe of information, otherwise you end up so confused and overwhelmed, you have neither the idea or inclination of which way to go. This being said, you should always know 'a little of everything'.

Like many on this forum, you have asked some very specific questions expecting that there be some equally down to earth pin-point answers. Unfortunately, like trading by use of tech analysis, whilst you must have a mechanical system, much of the final determination is left to trader experience and general 'feel' of what you know to be statistically true. Tech analysis should not be crowded by use of many indicators either, otherwise it leads to the same affect of confusion and overall indecisiveness.

I'm sorry this answer is probably not what you are looking for but I guess what I am saying is that no matter whether you use fundamentals or charting based tech analysis, it requires great experience, strong beliefs and educated knowledge of how the 'world works'.

I can give you my opinion on where JPY is going over the next week (even that is pushing it, since in forex a week is a LONG time) but that's based on my experience and knowledge. There are many economic indicators that all traders should sit up and pay attention to even if they trade using tech analysis alone and these can cause massive shifts in currency price.

It's like everything, over time you will gather this knowledge and see how it best fits into your toolbox.

Archer

from tech anal ...GBP in 4h since it's broke 2.0015 .then GBP still heading up

UPTREND formation still can be seen in daily ,4h and 1h

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