By Macro and Cheese:Recently several Seeking Alpha authors, myself included, have made a fundamental bear case against the Australian dollar. As shown in the chart below, the Aussie has in fact been working its way lower (all chart sources Bloomberg):

(click on all charts to enlarge)

If you're like me and don't like to be late to the party, with the Aussie down to 1.03 from its 1.08 highs the temptation is to give the trade a pass and wait for a bounce. We may get one, but the currency is still massively overvalued on a purchasing power basis (by a full 37.4% according to the OECD), and as the charts below show, many of the negatives are outrunning the downmove we've seen so far.

The most compelling reason to sell the Aussie now is illustrated by this long-term overlay of the currency (blue and white) with the US-Australia 5-year interest rate differential.


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