The backdrop for a falling currency is plain to see, it is the catalyst that remains elusive

James Marlay

Livewire Markets

The backdrop for a falling currency is plain to see, it is the catalyst that remains elusive. Bloomberg says,Plunging iron ore prices and growing bets the Federal Reserve will tighten monetary policy suggest Reserve Bank of Australia Governor Glenn Stevens could gain relief from his strong-currency headache. The chart below shows a deepening divergence between the Australian dollar and the slide in prices for Australia's commodity exports. Interest-rate differentials are also set to work against the dollar as expectations increase that US interest rates will start moving up in 2015. Glen Stevens says, the risk that it goes down materially at some point is being under appreciated. The weight of money chasing yield globally and the divergence illustrated in the chart below act to highlight just why so much focus in placed on the next US rate move. Related article here: (VIEW LINK)

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James Marlay
Co Founder
Livewire Markets

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