Once again the Australian economy is proving resilient with an extra 1800 jobs being created in February, though many of these are part-time as opposed to full-time and therefore the increase in the unemployment rate. When compared to the US, UK, Europe and Japan, Australia is winning the economic ugly contest hands down.
Add in to the mix the fact that the Australian government is in the position of being able to spend savings for its stimulus packages, as opposed to printing paper as most other countries are doing, and the AUD starts to look more attractive. With interest rates still at ‘normal’ levels, the RBA also has room to move.
Based on this backdrop, I feel that the AUD is horribly oversold especially against the European currencies and while it can often take months for these fundamental factors to work themselves into exchange rates, a major AUD revival is inevitable. (And yes, I am talking my book!).
