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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (51737)	5/25/2006 1:16:52 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 116555

I am long Aussie Dollars. Unless I was visiting New Zealand, I wouldn't know what to do with a NZ Dollar. Because Australian banks own all New Zealand banks, the New Zealand Dollar is like owning a financial derivative. It contains all of the risk exposure of the Australian Dollar, along with additional risk. Does the New Zealand Dollar go up or down? It depends largely upon the current needs of the Australian banking system. While there is little reason for the New Zealand and Australian economy to be out of sync, New Zealand interest rates are usually slightly higher than in Australia. I have met some in Australia who believe they have become pretty good at predicting whether their banks will push the New Zealand dollar up or down, relative to the Aussie Dollar. But these people are not unusually rich. I suspect its somewhat like being a clever mouse in a room full of elephants. You may be very good at predicting the elephants' moves, but in the end, one wrong move and you're toast. .