With EUR/USD caught up in an option play and the USD/JPY stuck in a rut between 95/99, we are relying on sterling and the commodity currencies for some volatility.
The oil price has seemingly reached its nose-bleed level above $70/bbl. Reports from China say that there are dozens of huge ships full of hard commodities waiting to be unloaded but the ports simply don’t have the capacity to get the stuff off quicker. If this remains the case, China may have no alternative but to slow down its huge commodity buying binge and return to the Treasury market. All of this signals rough roads ahead for the AUD and the CAD.
As I’ve been saying for weeks, the AUD has gotten way ahead of itself. The same people who were bearish at .65 are now calling for .90. The AUD may be going up but it never happens in a straight line and if we get one major shock to the financial markets, AUD/USD will be back in the 60’s.
