Fed danger for our dollar

Even the more dovish forecasts for US rate rises explain why the Australian dollar's status as a high yielding currency is coming to an end.

Suddenly everything is going against the Australian dollar. The so-called yield game that underpinned our currency is turning full circle and depressing the currency while prices of both agricultural and mineral commodities are falling.

In theory it still make sense to borrow at token rates overseas and invest in higher Australian yields, but debt markets run on forecasts and the current forecasts show Australia is set to move from a high yield currency to a low yield currency.


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