The Aussie dollar is back below 91 cents this morning sitting at 0.9066 to the US dollar.
Some of its weakness is about Australia. Equally some of the weakness at the moment, according to FX strategists such as Greg Gibbs at RBS in Singapore, is that the Aussie is being used as a proxy for Asia as tensions rise between China and Japan over the disputed islands.
Whatever the reason, Glenn Stevens, the RBA, and Australia’s exporting and import competing industries are all cheering – but how low can the Aussie Dollar go?
Just a few short months ago most forecasters thought the mid-80 region was where the Aussie was headed in time and while the strength we saw till the recent verbal intervention from the RBA Governor saw a lot of forecast revisions around the market, with the exception of only one or two forecasters, most pundits just moved the expectation of the mid-80’s from mid next year to late 2014 or early 2015.
But the technical analysts out there reckon that the recent low under 89 cents is the most likely first stop for the Aussie and then we’ll see where it goes from there.
If you are interested in the Head and Shoulders pattern, you can find the pic here.
Greg McKenna is an active currency trader and is currently long the Aussie dollar.