There's a fixation in global markets that SHORTing the AUS$ is all about SHORTing an economy that is a play on the Chinese credit bubble, a play on expensive...

There's a fixation in global markets that SHORTing the AUS$ is all about SHORTing an economy that is a play on the Chinese credit bubble, a play on expensive housing and an overleveraged consumer and a play on a falling iron ore price. While we would concur with the economic growth challenges created by those structural issues, it's only half the story. As with all currency pairs there is 2 sides to the trade...... .......Going forward, the relative move in the Aussie and US unemployment rates, as widely highlighted last week, underlines the differing trajectories of the 2 economies. With those differing trajectories comes differing outlooks for domestic interest rates and as such a closing of that yield gap. In the US, the debate is when will rates first rise and how long until they normalize (NB in our view not nearly as long as people think). ...see (VIEW LINK)