Fixed income investment management company, Pacific Investment Management Co. (PIMCO), has told investors that it is short the Australian dollar, citing falling commodity prices and interest rates. From Bloomberg:
“Our highest conviction views are in the currency markets, and we remain short the yen and the Australian dollar against a long U.S. dollar position”…
According to FX Live, some of the factors underpinning PIMCO’s view are:
- Slowing growth in China.
- The fragile domestic rebalance away from mining-led growth.
- Declining terms of trade from lower bulk commodity prices.
- Sub-trend growth in domestic demand and weak national income growth.
- Falling Australian interest rates.
They are correct on all counts, in my view.