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Currency Currents

Tue, Feb 3 2009, 14:48 GMT

Black Swan Capital

Key News
• Australia Cuts Key Rate to 45-Year-Low 3.25% as Government Boosts Spending (Bloomberg)
• Bank of Japan to Buy $11 Billion in Shares Owned by Banks to Boost Capital (Bloomberg)
• Obama Says FDA Needs 'Complete Review' After Peanut Contamination Failure (Bloomberg)
• Bank of England Took On $409 Billion of Assets in Emergency Aid to Banks (Bloomberg)

Key Reports Due (WSJ):
7:45 a.m. ICSC Chain Store Sales Index For Jan 31: Previous: -1.8%.
8:55 a.m. Redbook Retail Sales Index For Jan 31: Previous: -2.6%.
10:00 a.m. Dec Pending Home Sales: Expected: 0.0%. Previous: -4.0%.
4:30 p.m. Jan 30 API Oil Industry Report
5:00 p.m. ABC/Wash Post Consumer Conf For Jan 31: Previous: -54.

Quotable
“If fascism does come to America it will indeed take the form of ‘smiley-face fascism’ – nice fascism.”
          Jonah Goldberg

FX Trading – Reserve Bank of Australia Cuts; Plus: A New Member of Black Swan

Australia’s dollar is little changed since the overnight announcement by the Reserve Bank of Australia to slice another 100 basis points off its benchmark interest rate. Despite the negative, the Aussie is holding on to small gains this morning.

It looks as though the big move came in the days prior, expecting a big downward adjustment by the RBA. As we explained to members of our Forex & Currency Futures newsletter on Thursday, January 29:

“ ... In addition to entering the Australian dollar to play freshly sparked US dollar momentum, the Reserve Bank of New Zealand prompted ComDol exposure. A quick 45 minutes after the FOMC business rushed over the markets, the RBNZ announced a larger-than-expected interest rate cut. They brought their benchmark target rate down to 3.5% from 5%. According to reports, that’s the lowest RBNZ rates have been ... ever. Their reason for the change was simple: global recession is impacting their economy adversely and inflation will stabilize easily with comfort/target levels.

“The Reserve Bank of Australia steps up to the plate on February 3rd. At the beginning of December they slashed 100 basis points off their benchmark target rate. Sitting at 4.25% now, their economy is likely battling the same deflationary forces as New Zealand is battling. Since august, the RBA has slashed a total of 300 basis points, but the butchering probably won’t stop there. We expect a sizeable cut on Tuesday. And there’s a good chance the market starts pricing that in now.”

Based on that alert, our members were able to squeeze out a nice, quick profit in just the three days leading up to the RBA decision.

The Aussie seems to be holding ground right now as the markets weigh the other news out of Australia – the Treasury Secretary there announced a stimulus package. About a third of the money is aimed at Australian families while about two-thirds of the funds are proposed to go towards infrastructure.  We don’t believe the stimulus plan will work any better for Australia than it is here n the states.  Especially given the depressing growth we’ve seen across the Asian-bloc countries.

Clearly, traders like the Aussie today.  But if fundamentals rule, the Aussie will represent another good selling opportunity again, and maybe soon…stay tuned:

John Ross Crooks, III

Black Swan Capital LLC – New Member
February 3, 2009

It is with great pleasure I’d like to announce that David Newman has joined Black Swan Capital LLC.

David’s title will be Director of Sales and Marketing.  But his role will be to help us grow Black Swan Capital according to our mission of delivering the highest quality currency services available.  David is here to help you in any way he can. 

You can reach David directly at dnewman@blackswantrading.com .

David has been involved in the financial and newsletter industry for over 25 years and has held positions as a broker, an advisor, and an analyst.  We are absolutely thrilled to have David become part of our team. 

As Black Swan moves forward David will play a key role in helping us develop our new subscription services and better shape them according to your needs.  He will also play a key role in growing our new managed money service which is scheduled to kick off in April.

And as it concerns Currency Currents, he’s here to take your feedback so we can better deliver you what you want, when you want it ... each and every morning. 

Thank you.

Regards,

Jack Crooks
Black Swan Capital

• Black Swan Currency Currents 3 February 2009

Published on  Tue, Feb 3 2009, 14:58 GMT