Brandi sent an intelligent question tonight:
If the Australian Reserve Bank hiked rates today, then why would I be selling the pair (which I have been for a few days)?
It begs the question:
Is a rate hike really good for the AUD? Maybe it is. Maybe it SHOULD be. Perhaps in the beginning stages of a global economic slowdown (meltdown?) the Reserve Bank is worried about stagflation -- a slowing economy but higher prices. Perhaps China's demand for raw materials is enough to keep commodity prices high indefinitely. Perhaps those high prices will continue to filter down into the price of regular stuff in Australia.
But what if traders see the hike as the last in the economic up-cycle, and it's all downhill from here? What if they read the statement (click here to read it) and they think, "Holy crap, they emphasized the global economic slowdown?"
Then it's bad for the AUD.
Just my two cents. Happy Monday evening. If you live in a U.S. Super Tuesday state, then please remember to vote tomorrow.
