Australian dollar collapses under commodity crash

See the latest Australian dollar analysis here:

Macro Morning

Commodity prices tanked overnight on global recession fears, with the S&P GCSI off by more than 5% overnight:

The Baltic Dry Index lost nearly 3%, capesize sub-index (for iron ore and coal) is down 6%, but the big losses were reserved for energy prices: Brent crude oil lost more than 8%, taking it almost back to the start of year price:

But wait, there’s more. Copper and gold were both off more than 2%, with both metals having lost substantial ground since the start of the year:

This is all bad news for the Pacific Peso, as the Australian dollar absorbed the big rate hike from the RBA yesterday afternoon – barely moving as it was priced in – and then completely fell over last night, taking it below the 68 cent level against the USD:

Looking longer term, the Aussie is tracking commodity prices lower alongside its proxy iron ore in a terminal decline:

With the Federal Reserve likely to make a 0.75% rate hike this month, combined with growth fears as commodity prices are clearly forecasting, the Aussie will remain under pressure and unlikely to return above 70 cents against USD anytime soon.

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  1. DingwallMEMBER

    Not that long ago, some were screaming the poo would go to parity ………… I suppose it could ……… eventually.

  2. MathiasMEMBER

    China -> Commodities -> AUDUSD… Gotcha.

    > With the Federal Reserve likely to make a 0.75% rate hike this month

    Kowabunga. Time to order a seatbelt for the office chair. Time to sit down, strap in and enjoy the ride. Wheeeeeeee.

    Being the emotionally sensitive, caring and compassionate bloke I seem to be… my perceptory sensors have detected that quite a few people in the community around me seem to be confused, stressed and getting a little depressed ( lots of reflection going on ). I think that reflection is along the lines of, ” Dafuq is going on in the word? This isnt how it was supposed to be? Whats going on? “.

    Obviously, my mates are prepared for this. I did my job well ;p

    Oddy, being the most mysogynistic, narcissistic, care free guy that I am ( totally my best features ), these wierd people seem to like to talking with me. Guess its must be my cheery disposition.

    What can I say… Im great in a crisis ;p People love me. I love me. Im the best. Who can argue? Im just bloody brilliant ;p

    Crisis? Mate… what Crisis? Im lovin’ this sh-t.

    Im a Queenslander, Queenslanders are built for this. Mate ;p I’ve never had so much fun in my life.

    Bring on the crisis. This sh-ts awesome.

    What most people call ‘Crisis’, I call going fishing lol.

  3. Interest rates and inflation are all very interesting but before even the short term limits of these are reached we should resolve the question of whether the Fed is going to bail out the bad actors again this time. If not a very different landscape awaits us after the crash…………Collateral chains stressing already

    Spreads blowing out showing a move to safety

    If they are going to re-shore industry they may need to get the zombies off their back.

  4. this should have happened in 2008, 2012, 2019 and………..i wont hold my breath, the money printers, fake war mongers and poison injectors run this show. they will destroy everything before they admit fault. just human nature. long gold guns, ammo and medicine (not the poisonous covid kind)