People wonder why I have been harping on AUD investment flows for the past few months… well here it is.
The FT’s Alphaville crushes it with this post on the Australian dollar.
First, someone tracked down the RBA’s estimates on foreign central bank ownership of AUD with a Freedom of Information request released last week. It shows The RBA believes central bank purchases haven’t been a major AUD driver.
So what has driven AUD so high?
Everything points to foreign investment. The good news, is that the investment pipeline is stuffed for the next 12-18 months, so the money will keep flowing in.
The takeaway is that those dollars are coming, no matter what the RBA does, or the Australian economic data shows.
The Aussie will tend to be relatively invariant to short-term swings in the newsflow, and domestic monetary policy expectations, says Yetsenga
To take it a step farther, foreign investors may even be using negative AUD news to buy (so maybe you should too).
The bad news, in 12-18 months, the investment pipeline goes dry and it will mark the end of an 11-year AUD bull market.
