Australian dollar break down

Tuesday 9 September 2014

It’s not exactly raging risk off but the Australian dollar has broken down anyway. Last night it breached the 92 cent level that’s been its base for six months:

The proximate cause is a rampaging US dollar as a little taper tantrum creeps in

However the yield spreads have, if anything gotten wider:

There may finally be a little iron ore relief in this, with the Aussie falling against others in the commodity currency basket (at least for one night):

And spanked against developed market currencies (at least for one night):

Forex is more art than a science but I still expect the Aussie to weaken as the economy does.

About the author

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.