Westpac is out with its latest Forex Focus report, trying to explain what is going on with the Australian dollar which fell to a two year low against the all-powerful USD after the “huge” 50bps rate hike by the RBA last week.
Some highlights (full report at the bottom):
The longer term technical picture of the US Dollar Index (DXY) shows where the USD is likely to go. The Euro is heading towards parity as the ECB remains in negative rate mode (although this is likely to change very soon):
While Westpac contend that the Australian dollar’s “resilience” is because of this chart, the record trade surplus recorded in May on the back of a near 10% export jump in LNG and coal tells the real story:
Has the Ukrainian invasion saved the Australian dollar’s bacon? At the expense of making domestic electricity the most expensive in the world?
The long term picture for the Pacific Peso was a downward track before COVID and the rationalising of rates and the subsequent energy crisis – I wouldn’t call this resilience:
