The AUD dropped harder and faster than other Asian currencies on Friday reinforcing its position as a liquid and flexible proxy for the Asia region, explained Greg Gibbs, founder, Analyst, & PM, amplifying Global FX Capital Pty Ltd an Australian financial services company in an article in The Wire.
"Right now," he continues, "the Australian economy is performing at its best in years which should be good news for the AUD, but the currency is sending a foreboding signal that winter is coming."
"But before we pile into a short AUD position let’s first acknowledge that Australia has not yet been much affected by the trade dispute."
"In fact, the price of Australia's main exports have gone up; coal, natural gas and iron ore. "
"Australia's trade balance is in a relatively strong surplus, mining sector profits are up significantly over the last year, Government revenue is stronger, and mining companies are even talking about new capital investment.
This illustrates that the fall in the AUD in recent weeks has a lot to do with the risks of global fallout from this trade dispute rather than a fallout due to actual damaging tariffs or lower commodity prices for Australia."
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