Given the pounding the Australian dollar has taken over the past two day’s data, it is holding up pretty well against the US dollar. But a closer look suggests that the Battler is swooning a little more than appearances.
I am pleased to observe that against many of the crosses the currency is weakening consistently. Though this helps us steal their production, it is not all that useful because we rely so heavily on the US dollar pricing of commodities.
The crosses seem to be gesturing at a growing realisation that the Australian economy is not quite as miraculous as first thought and, with any luck, that dawning truth will start to wear on the US dollar cross as well (not that I think our weakening economy is good fortune).
After all, what do you do with a nation that is crushing interest rates, as well as wrestling with a housing bubble and a current deficit at 6%+?
Sell its currency.