The US dollar is king of its domain once again as the obvious divergence between its resurgent growth and the faltering growth in Europe, Japan and even Australia is seeing the buyers come for it once again with heavy selling of the majors.
But while the yen, euro and sterling have all been under pressure recently, the Aussie dollar has remained steadfastly supported and within its six-month trading range.
Overnight the sellers came for the Aussie dollar and it traded down to a low of 0.9185, more than a cent off the days’ high of 0.9288, and at 0.9205 this morning is both at the bottom of the range and closing on its weakest levels in six months.
This could be the start of something big as the Aussie is vulnerable from a strong US dollar and the fact that is is currently a crowded trade.
Last night, Bank of America Merrill Lynch issued a forecast saying that the euro could head to 1.18. If that is the case and with the US dollar once again in the ascendancy in currency markets, it will be almost impossible for the Aussie dollar to stay above 90 cents.
Glenn Stevens may be about to get the mid-80s he craves and the economy needs.