I would be more than happy to see the AUD/USD back towards 1.00. It would greatly increase my spending power. I just don’t think this is likely to happen in the next few months or even years.
Many of the more mature AUD/USD traders who’ve been trading it for donkey’s years will tell you that “fair value” for the Aussie is somewhere around .75 USD. Now the concept of “fair value” is one we all have a bit of trouble with but in this case the value has been assigned by the marketplace over the last 25 years. The AUD fell below .50 at the height of the ridiculous dot-com bubble and it rose to almost 1.00 at the height of the equally ridiculous credit excesses of the last few years. (I cannot buy into the argument that the AUD/USD traded as high as .9850 on its own merits. You just have to look at the ferocity and steepness of the fall from .98 to .60 to realise that much of the rise was down to purely speculative, high-leverage buying). In the main, the AUD/USD has been fairly steady between .60/.85 over the last 25 years. Now think that we have seen both edges of this range in the last 8 months.
I don’t think the AUD/USD is ready to go up a lot or down a low over the next year but based on past price history, the risk is for a move back towards the historical median, around .73, or even back towards .60 if the volatility keeps up. Whether it tops out at .83 or .87 I don’t know, but whatever way I look at it, the AUD/USD is simply out of synch and must fall back.
