One truism learnt long ago is that in a race to the bottom everything cannot go down in proportion to everything else.
Someone is pasting their ads all over social media today (for whatever commercial reason) is saying the AUD may drop to 50c US. I intensely dislike that form of spruiking.
Many observers see the AUD as a simple derivative of Chinese growth. It is also true that depending on the day of the week, AUD presents both upside and downside for simply not being the USD, the Euro, the Yuan or the Yen.
Interest rate spreads are another factor. Local lenders must follow global leads regardless of what the RBA says or does ...... so again ...... who can predict anything more than volatility and the popping of a few property bubbles? I haven't got my head around the impact of falling property markets on the AUD at this point. Popping bubbles will always reduce local consumer demand but any void caused by a short term AUD decline can be filled by export of raw materials, agriculture, education or other products.
Trade wars, trade wars? As China retaliates against Trump tariffs, sales of Australian made goods may go up a notch in both Chinese and US shelves for a while (or until the economic tsunami caused by the emerging trade wars sweep everything away (including Trump, Putin and a gaggle of other so called leaders)).
I'm interested in the views of others on this topic.
