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To parity and beyond

Well, so much for newspapers screaming that the days of parity were long gone.

I think this example presents somewhat of a salutory lesson about trading within a crisis and is and isnt a good idea.

It is clear that the AUD broke down into its trading range on the back of events in Japan. However, this took place against the backdrop of a terrible event that quickly faded from the front of the 24 hour news cycle. It seems that once this occurred the prevailing sentiment behind the AUD and the long term weakness of the USD as evidenced by the USD Index would reassert itself.

Within trading environments the long term trend will always reassert its dominance over short term price shocks. Granted, the short term price shocks can be destabilising to traders but that is what trading plans are for.

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