Readers will recall that MB has a forecast for the Australian dollar to fall this year to USD 60 cents and a cycle low outlook of 45 cents. The Aussie was smashed deep into the 69s Friday night and is set up to challenge the cycle low in the high 68s sooner rather than later:
The strong US jobs report, the falling yuan, and the ongoing Mining GFC are all playing their part. But perhaps most promising for an imminent breakdown is market positioning. The last time the Aussie was at these levels markets were very short the currency. The Commitment of Trader’s report had big speculators at -70k contracts at the 2015 lows:
But today the market is barely short at all at -13.8k contracts with the Aussie only half a cent above the 2015 low. There is oodles of room for traders to drive the currency to new lows.
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