Here's the bad news: In effort to curb its explosive growth, China has imposed higher reserve ratios on its banks. And the good news? China is experiencing explosive growth.
The "bad" news from China sent the Aussie down against its major trading counterparts as short-term traders opted to focus on profit taking. But the big picture, suggested by China's latest move, is clear: China's economy is booming. And a booming Chinese economy is a boon for Australia's economy and its currency. So once the dust has settled and the last of the Aussie's willing sellers has stepped back, I would expect the Aussie to resume its stellar ascent. The markets have a terribly short memory. They were willing and able to make Greece and Dubai a distant memory as they continued to advance forward. Chances are, this lasted news from China will be faded by the markets, and maybe even re-interpreted in the future as a positive. For the time being, we will continue to look for opportunities to long the Aussie, especially against the Yen.
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