Monday, February 01, 2010
This is a cross that I have been watching for a few weeks now with interest because it hasn't moved much off the recent low. I decided to pull the trigger on it tonight after the Aussie central bank unexpectedly changed their rate posture and this cross broke out. The recent bearishness in the Aussie dollar now makes a lot of sense in the context of an easier central bank policy. As it turns out, I am not the only one who likes this trade. I saw a report today that none other than Goldman Sachs recommended clients make this $EURAUD trade a few weeks ago, although they just recommended closing it for a small gain. So in other words, I am buying Euros and selling Aussie dollars for a long term trade here.
Disclosure: I own Euros and am short Aussie dollars (using FX).