Credit Suisse: Australian dollar short covering at 0.73

Credit Suisse making some goods points on the shortness of the market for the Australian dollar:

AUD,NZD,CAD–AUD is too low on crosses in my view–whether that is AUDJPY@suppression being prone to a recovery in energy prices/reflation trade, the notion of a retail sales beat tonight domestically, or the market’s short and well-in-the-money AUDNZD trade that will snap-back fast when the wind turns–ideally within the next week. For AUDUSD I think 0.7300/25 marks the band through which the market turns from rally-selling to covering.

We can expect volatility with any market that is this short:

Within the energy crisis, coal is the key input to the terms of trade that influences the currency. Gas and oil more or less offset one another.

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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.