The fundamental reasons for being short the AUD against anything are few and far between and with interest rates much higher than elsewhere, the cost of being short is substantial. Nevertheless, the AUD/USD continues to trade with a heavy tone and we are still seeing offers from real money funds when the market rallies (although these offers are now 300 pips away after the big fall on Friday). AUD/JPY remains one of the main instruments for the ‘risk trade’ and if stockmarkets continue to fall then this pair will also remain under pressure. How far the Aussie falls depends purely on worldwide sentiment for the financial markets and at the moment that is turning a very deep grey. I’m biased in that I’m short but I think there’s more to come.