Tag: ASX:YANK

Comments included in the RBA minutes about the level of the Aussie Dollar were the catalyst for the 1.0% drop in the AUD/USD overnight.

The central bank doubled-down on their concerns that the recent rise in the currency has hindered exports and been felt in domestic consumption data.

Internal momentum indicators are pointing lower as the price support level at .7825 was broken in late NY trade.

Investors looking to profit from the AUD/USD trading lower can look to buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse ETF, which means the unit price increases as the price of the AUD/USD decreases.

YANK also has a 2.5% weighting, which means a 1% change in the AUD/USD will correspond to a 2.5% move in the unit price.

The current price of YANK is $13.05. We calculate that when the AUD/USD trades back to the January low near .7300, the unit price will trade at $16.75.

BetaShare

The Aussie Dollar posted a high on July 27th against the US Dollar at .8065.

It tested that level again just before the RBA announcement last Tuesday but failed to advance and slipped briefly below .7900 going into the weekend.

Comments in the RBA statement about the strength of the AUD/USD combined with a weaker Trade Balance report on Thursday pressured the pair lower.

A break of the .7875 level will confirm that a formidable top is in place, and will likely spur another cent correction lower to the next support price of .7780.

Investors looking to profit from the AUD/USD trading lower can look to buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse ETF, which means the unit price increases as the price of the AUD/USD decreases. YANK also has a 2.5% weighting, which means a 1% change in the AUD/USD will correspond to a 2.5% move in the unit price.

The current price of YANK is $12.60. We calculate that when the AUD/USD trades back to the January low near .7300, the unit price will trade at $16.75.

BetaShare ETF: YANK

The AUD/USD reached a 2.5 year high of .8065 last week.

Comments from RBA chief, Philip Lowe, that the central bank is not compelled to follow the USA’s higher interest rate policy only had a temporary effect on the Aussie.

This week’s data calendar has several potentially market moving reports.

The RBA is not expected to adjust interest rates on Tuesday.  However, if the board re-affirms their neutral-to-easing bias, the AUD/USD could retreat from recent highs.

Wednesday’s building approval data is usually a second-tier report but will be closely watched this month.

Thursday’s trade balance numbers are expected to remain in surplus, but the $1.77 billion consensus number is half of last month’s amount. This release would not have included the recent rally in the AUD, which would have a dampening effect on exports.

Friday’s Retail Sales data will have more impact on ASX stocks than the AUD. The forecast is an increase of .2%, which will keep the yearly sales pace barely in positive territory.

On balance, we expect the RBA and trade balance numbers to weigh on the AUD/USD,  and potentially turn the trend back to the downside.

Investors looking to profit from the AUD/USD trading lower can look to buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse ETF, which means the unit price increases as the price of the AUD/USD decreases. YANK also has a 2.5% weighting, which means a 1% change in the AUD/USD will correspond to a 2.5% move in the unit price.

The current price of YANK is $12.60. We calculate that when the AUD/USD trades back to the January low near .7300, the unit price will trade at $16.75.

BetaShare ETF: YANK

The AUD/USD traded higher everyday last week as the  currency traded to a 15-month high versus the USD at .7833.

General weakness in the USD combined with stronger Chinese import data gave the AUD/USD the momentum to break above the .7825 level last traded in April last year.

It’s worth noting that over the last 15 months, the AUD/USD has traded over .7750 four times. On each of these occasions, within a month, the AUD/USD had dropped by 4%, or more.

More precisely, after trading up to .7825 on April 21st, 2016, the AUD/USD lost over 8.5% to trade at .7150 on May 24th.

With both the RBA minutes and the monthly employment data set for release this week, we could hear some comments from the RBA regarding the impact of a higher currency on Aussie exports and the economy.

Investors looking to profit from a lower AUD/USD can look to buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse ETF, which means the unit price increases as thew AUD/USD trades lower.

YANK has a 2.5% weighting, which means a 1% move in the AUD/USD translates to a 2.5% move in the unit price.  The unit price is currently $13.50, we calculate that when the AUD/USD falls back to .7300, the unit price of YANK will be over $16.00.

BetaShare ETF: YANK

AUD/USD Spot price.

In the lead-up to the long July 4th holiday, the FX market is usually pretty quiet; this was not the case this week.

In an unprecedented development on Tuesday, officials from the ECB, Bank of England, Bank of Canada and the US FED delivered speeches that outlined higher domestic interest rates and removal of stimulus sooner than the market had expected.

Since the US FED is the only central bank currently with a tightening bias, the news that other G-7  rates could all rise in unison was negative for the Greenback.

The USD Index lost over 2% for the week including a 1.6% loss to the Aussie Dollar. The AUD/USD tested the March high of .7730 before falling back to .7680 at the New York close.

The Aussie also got a lift this week as former RBA board member John Edwards expressed his view that the RBA will likely initiate eight 25-basis point rate increases over 2018 and 2019. Considering the pressure this would put on the local mortgage market, we don’t agree with Mr Edwards’ forecast.

The central bank will meet next Tuesday and we expect RBA chief Phillip Lowe to walk back on those comments and maintain the stance that any strength in the AUD/USD is a headwind to domestic growth and exports.

In the bigger picture, it’s likely that the narrowing yield differentials between US and Aussie rates will continue to favor the USD over the AUD.

Investors looking to profit from a lower AUD/USD can look to buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse ETF with a market weighting of 2.5%. This means that a 1% move in the AUD/USD will translate into a 2.5% move in the unit price of YANK.

With a current unit price of $13.85, we consider YANK to be a reasonable addition to client portfolios. We estimate that when the AUD/USD trades back to the January low of .7160, the unit price will be around the $16.50 level.

BetaShare ETF: YANK

At the FOMC meeting this Thursday, the US Federal Reserve is widely expected to raise the Fed Funds target by 25 basis points to 1.25%.

This would be the third increase in the FED’s target band since November and further underscore the fact that the FED is the only G-10 central bank which has an upward interest rate trajectory.

With the RBA maintaining overnight rates at 1.50%, the spread between US and Australian benchmark rates will narrow to a 11-year low of just 25 basis points.

This further narrowing of the carry premium between the AUD and USD will likely put more downward pressure on the AUD/USD.

Investors looking to profit from a lower AUD/USD can buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse ETF, which means the price of YANK increases as the AUD/USD trades lower. It also has a weighting of 2.5%, which means the unit price will fluctuate  by 2.5% for every 1% change in the AUD/USD exchange rate.

With a current price of $14.70, we calculate that the price of YANK will be near $16.50 as the AUD/USD returns to the January low of .7160.

BetaShare ETF: YANK