For a year or so now MB has had three targets for the Australian dollar (having been bearish since late 2011). The first target was for 70 cents this year. The second target was for 60 cents next year. And the third target was for a cycle bottom at 45 cents when the next global bust arrives. When we first mooted these targets eyebrows were widely raised.
With commodity prices sinking and iron ore and coal set to decline further in the near term, at least one analyst is not prepared to call the bottom of the cycle and thinks the Australian dollar could weaken to as low as US50¢.
While some commentators say prices have stabilised, research from fund manager Kaizen Capital argues that, if history is any guide, they still have a way to fall.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
With commodity prices sinking and iron ore and coal set to decline further in the near term, at least one analyst is not prepared to call the bottom of the cycle and thinks the Australian dollar could weaken to as low as US50¢.
