Dennis [Richard Dennis’ trading firm] did not see good news in a stable Australian economy. He saw an opportunity to make a quick buck. If Australia did not put up its interest rates there was not going to be a rise in the Aussie dollar and he saw no sense keeping the hundreds of millions of dollars he had tied up in our currency.
TurtleTrader® comment: Trend followers don’t trade to make quick bucks. They follow trends. The Aussie dollar has been going down for four years. This downward trend has been a great trading opportunity. Since when did traders, who take risks with their own money, have an obligation to prop up a currency?
Selling short means betting how low the Aussie dollar will go over the next hour or day. When traders all over the world do this it drives the dollar down regardless of what its true value must be.
TurtleTrader® comment: True value? The true value of a currency or anything else for that matter is what someone is willing to pay for it. Unless this reporter has some special group who decides true value, our definition stands.
The effect has been that record lows are now being broken almost daily. Financial experts declared the fall was not justified, that the Aussie dollar was worth far more on the international market, and still it fell.
TurtleTrader® comment: What effect? The traders caused the currency to go down? Who are these financial experts? This is just nonsense.
Australia now has to spend two dollars to buy one US dollar and the likelihood of this unfair and uneven level staying for years is very real. The continued fall in the Aussie dollar was not due to bad economic news, a natural catastrophe or political instability. Nothing has changed in the fundamentals of the sound Australian economy since that first disastrous January plunge.
TurtleTrader® comment: Untrue and unfair. The Australian currency has been dropping for many years. One of the primary reasons is that Australians themselves are converting to other currencies in order to invest in other countries with better rates of return.
To put it bluntly, Australia has done everything the global economic rationalists wanted us to do, and yet these same global commodity traders now treat us like dirt.
TurtleTrader® comment: Trend followers are simply trading to make money. They put their money at risk every day. They are neither biased nor judgmental about the markets they trade. They are certainly not trading in order to treat anyone like dirt. This reporter is demonstrating her ignorance regarding basic market operations.
But the people who set the dollar rate, global traders sitting in front of glowing computer screens around the world, didn’t exactly analyze complex graphs and reports on the sound state of the Australian economy and solid prospects for the future.
TurtleTrader® comment: The trend is down. Staying short for now is the plan most traders are following.
See the Aussie dollar chart drop here.
TurtleTrader conclusion: TurtleTrader has nothing against Australia. We are commenting on an article by an inept reporter to make a point about how many people hold misconceptions about trading. We could find the same mindless financial reporting to annotate in any country on the globe, including ours.
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