In case you missed it, the Aussie $ got trashed during Monday’s dollar rally and carry trade unwinding. It was off about 4% on the day – ouch!
I personally had to scale back some other positions in order to stay liquid through it. Was something I’ve been meaning to do anyway – needed to scale back the leverage overall.
After dropping below the 0.88 mark on Monday, the Aussie has rallied nicely and it close to 0.90 as I write this. Here are comments on the situation from my favorite currency guy, Chuck Butler of the Daily Pfennig:
“The Reserve Bank of Australia will find it hard to get out of the rate hiking game as inflation has really jumped over their 2-3% target hitting 3.25%… Knowing the Reserve Bank as I do… I expect them to take the view point that they have more work to do, with regard to interest rates… And that thought alone could help Aussie get back on track toward the high 90’s!”
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