The EURAUD chart is interesting... During the period from May 18, 2012 until today, the EUR sold off from 1.3029 to 1.2170. The pair is revisiting the area where it traded earlier this year in February. The 14 day RSI is currently oversold at around 25. We are inclined to take a minor long position in the EUR versus the AUD around current levels.
The economy of Australia has been vibrant over the past several years, supplying commodities to China and the booming Far East markets. However, there are some who think the Chinese boom is over, perhaps due for a hard landing, as their export markets contract.
This will hurt the Australians, and they are imposing self-inflicted economic wounds with their new taxes.
Effective July 1st, Australia has imposed a mineral resources rent tax (MRRT) and a new carbon tax. The MRRT will impose a 30% tax on iron ore and coal profits exceeding A$ 50M per year. This is on top of the existing taxes and royalties already paid. In 2010/11 the industry paid A$20B.
The Australians have also imposed a A$23/t carbon tax. When running for election in 2010, PM Julia Gillard vowed she would never sign a carbon tax law. She did and the new tax is steep. The Minerals Council of Australia estimates the carbon tax will generate A$77.3M per week. This compares to the European carbon scheme which generates A$23M per week for the entire 30 countries.
Granted the impact on the economy and the currency is longer term, but meanwhile solicitors are thriving and politicians are trying to better their situation in the run-up to next year's federal elections... no change there then.
I have no positions in any stocks or currencies mentioned, and no plans to initiate any positions within the next 72 hours.
The economy of Australia has been vibrant over the past several years, supplying commodities to China and the booming Far East markets. However, there are some who think the Chinese boom is over, perhaps due for a hard landing, as their export markets contract.
This will hurt the Australians, and they are imposing self-inflicted economic wounds with their new taxes.
Effective July 1st, Australia has imposed a mineral resources rent tax (MRRT) and a new carbon tax. The MRRT will impose a 30% tax on iron ore and coal profits exceeding A$ 50M per year. This is on top of the existing taxes and royalties already paid. In 2010/11 the industry paid A$20B.
The Australians have also imposed a A$23/t carbon tax. When running for election in 2010, PM Julia Gillard vowed she would never sign a carbon tax law. She did and the new tax is steep. The Minerals Council of Australia estimates the carbon tax will generate A$77.3M per week. This compares to the European carbon scheme which generates A$23M per week for the entire 30 countries.
Granted the impact on the economy and the currency is longer term, but meanwhile solicitors are thriving and politicians are trying to better their situation in the run-up to next year's federal elections... no change there then.
I have no positions in any stocks or currencies mentioned, and no plans to initiate any positions within the next 72 hours.
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