30th September 2008

TUESDAY 30^TH SEPTEMBER 2008

Weekly Ranges:

AUD/USD:   0.8345/0.7925
NZD/USD:   0.6885/0.6640
AUD/NZD:   0.8240/0.8407

Last Week:
As suggested in last week’s report, all of the activity in the markets this past week were led by developments (or not) in the construction of a U.S. financial markets rescue package.

As of this morning the package has fallen through, with house Republicans rejecting the rescue packaged proposed by Treasury Secretary Henry Paulson.

Politics has taken over events, and the fallout has involved a large sell off in the Dow, and elsewhere around the world.

Weak economic data out of the USA has been slightly overlooked, as has a stronger than expected quarterly GDP number out of the NZ.

What we did:

In these markets, it’s wise to keep things tidy as best you can.

We managed to keep our heads above water and protect some profits that we incurred ahead of this fall out.
Short AUD/USD and hedged against our option positions has served us well so far this month.

Next Week:

There is a fair chance that a rescue package, of sorts, will be passed in the U.S. before the end of the week. (Late Thursday probably).

This will likely produce a spike in the AUD/USD , NZD/USD and AUD/NZD at announcement, but we believe that a slowdown in the global economy and predictably lower interest rates in both Australia and New Zealand will lead to both a lower AUD/USD and NZD/USD.

Risk aversion will likely lead to a still lower AUD/NZD.

What we will do:

We are already positioned for the above moves, and expect them to play out accordingly. We will continue to keep our risk tight and look to make value trades in the options market as they arise.

Monday 29^th Sept
US
CORE PCE, AUG (1230)
PERSONAL INCOME, AUG (1230)
PERSONAL SPENDING, AUG (1230)
NZ
TRADE BALANCE, AUG (2145, SUN)

Tuesday 30^th Sept
AUS
RETAIL SALES, AUG (0130)
BUILDING APPROVALS, AUG (0130)
PRIVATE SECTOR CREDIT, AUG
US
CONSUMER CONFIDENCE, SEP
NZ
BUILDING PERMITS, AUG (2145, MON)
NBNZ BUSINESS CONFIDENCE, SEP