Desk Note - the case for holding US$ exposure - targeting A$ dropping to ~65c

Wentworth Securities

It may be timely to enter the US$ trade. The A$ has been propped up by the Chinese stimulus from early 2016, which has seen an explosive recovery in commodity prices. Chinese growth is forecast to slow.If you look through the half yearly reports, the major producers have expressed concerns about the prices sustaining these levels. The rises in bulks have more than offset the tightening in the US, as the FED has increased rates, albeit slowly. If you step through the recent upwards drivers, and then take a view on rates in AUS and the US, it might be as good as it gets in the medium term for the A$. We look at the drivers here and how to hold US$ exposure simply via an ETF (VIEW LINK)


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