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
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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):
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And spanked against developed market currencies (at least for one night):
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Forex is more art than a science but I still expect the Aussie to weaken as the economy does.