February 6 FX Market Commentary AUD

Australia

The biggest story in the consumer market today is a decline in the Australian dollar which dropped sharply from Asian open by more than 1%. The reason for the drop was commentary from Australia RBA governor Lowe who said that the potential next move from the central bank could be a cut as much as it as a hike. The reason for the uncertainty of course is because of the growing trade tensions between China in the US and the bubbling housing market in Australia that’s starting to really come off the bloom.

At this point the shorts are very concerned at the fact that China may really slow down materially which is a great export market for Australia and as a result the Australian housing market could start to really crater. It already it seen steep double digit declines in two key centers Melbourne and Sydney so therefore the big thesis among the shorts is that the Australian dollar could really go down below the 70 level for now it seems to be holding bid at around 71 cents but 70 cents is the very key level traders to be watching over the next couple of weeks if that level cracks it’s very possible the Australian dollar could go down all the way down to 65 cents as the sense of gloom and doom begins to pervade over the whole economy.