BlackRock Inc. is shorting the Australian dollar on a bet the central bank will cut interest rates to as low as 0.5% to revive the struggling economy.
The Aussie will extend recent declines and probably fall as low as 65 U.S. cents next year, said Craig Vardy, head of fixed income for Australia in Sydney at BlackRock, which oversees $6.52 trillion. The Reserve Bank of Australia will keep easing as the economy cools and U.S.-China tensions weigh on global growth, he said.
BlackRock isn’t alone in expecting the RBA to keep easing. Franklin Templeton Investments and JPMorgan Chase & Co. say Aussie bonds will rally as the RBA lowers its benchmark to 0.5%. Commonwealth Bank of Australia, the nation’s biggest lender, revised its RBA forecast on Tuesday to predict two more rate cuts this year, taking the key rate to 0.75%.
I’m on that bandwagon as well. Some of my best forex trades in 2019 have been shorting the Aussie dollar and the New Zealand Kiwi. Lets go to the charts to see where the 65 cent level is relative to current price and potential unfilled buy orders.
Relative to price, a drop to 0.6500 is another 400 pips down.
However, the chart suggest price could go lower and tip its toe back into the monthly demand at 0.6000 like it did in 2009.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.