As noted earlier today, CFTC positioning on the Australian dollar remains very short:
This helps explain why, via The Australian:
One of the world’s biggest fund managers has lowered its global growth outlook, pencilling in a slump in the Australian dollar before the year’s end amid a “50-50” chance of global recession.
Aviva Investors chief economist Michael Grady, who helps guide the British wealth giant’s $619 billion of investments worldwide, said the escalating trade war would knock up to 1.25 percentage points from China’s growth rate.
…“We could easily see the dollar in the low US60c range before the end of the year, and that’s not just the China story,” he said, suggesting the local economy hadn’t adjusted since its resource boom.
“Household debt to income is highest in the world and continues to rise, and the longer-term consequence of the mining boom has been hollowing out of the manufacturing sector, a massive loss of competitiveness and pretty poor productivity performance.”
Give that man a cigar.
I still see the same forces ultimately pushing the AUD into the 0.40s.
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.