Aussie market got smashed as banks were unable to hold the market up with rising bond yield and appreciating currency. The global macro worries, currency wars and better than expected domestic data continues to put doubt on a May rate cut. We still struggle to see the index breaking above the 6000 mark without the rate cut. The market has now failed four times in two months to hit 6000 and we have been suggesting taking profit each time. We remain of the view that US Fed will aim to raise rates in Sep at a smaller pace (i.e. 10-15bps). The flow on effect of this will be…Weaker USD > Better outlook for Emerging Markets > More demand for commodities > Commodity currencies like AUD will be stronger. Since all the market are manipulated by central banks, large suppliers and large consumers, these commodity relationships will not hold for Iron Ore or Oil in the short term. But we do see this holding in other metals like Gold, Copper, Nickel, Zinc and Tin where the supply/demand elasticity is natural. (VIEW LINK)