The bullish story for the AUD over the last few years has been a perfect storm in many ways; an almost insatiable demand for commodities, by China in particular, has driven the boom and with worldwide interest rates at 0% and Australian rates at close to 5%, it’s been a no brainer to be long AUD against almost any other currency (as long as you get your timing right of course). Since topping out above 1.10, this strong fundamental picture has looked a bit shakier; commodity demand is definitely easing, China’s near 10% growth can no more be taken for granted, and Australian rates look set to ease lower. This may not be a strong enough case for shorting the AUD, but it is a strong case for not getting overly bullish near the top.

As I’ve written many times in the last few months, plenty of big macro traders who’ve been long since 75 cents, have been booking profits above 1.0500 and this still seems like a sensible play. The AUD/USD traditionally trades in a 2000 pip yearly range and we may not even see that this year, with .94/1.11 already posted. Long-term I still like the buy-big-dip play but over the next few months, selling rallies above 1.0500 looks like a sensible strategy for medium term players.