The mix of the Fed commentary yesterday with dovish RBA comments are sending the Aussie Dollar to fresh multi-year lows and a view of the 10yr support. The ultimate commodity currency must address the realities of weaker policy and embrace what the market is doing for it.
Selling the Aussie (FXA, quote) and other core commodity currencies since the summer of ’13 has proven to be just like shorting the homebuilders during the 2008 bubble: The trade downward or to the short side seems(ed) too obvious yet has not happened as fast as it was clear there were problems. Now it’s happening.
Copper, Ore, Fed, RBNZ, all weighing on the Aussie in last few days.
0.75/USD is the level to hold but overshooting looks possible and systemic risk takes you to Asian crisis times where the currency went to .50c buck. Russia may be setting us up for that, but right now continue to be short FXA, FXC until we see a turn in the macro.
