The AUD is already looking over-sold

Just about everyone thinks the dollar is headed lower, but don't be too sure. On the economics alone, it's already looking cheap.

Peak to trough, the Australian dollar is down about 10 per cent over the past year or so, the bulk of that fall occurring over the second half of September. Now as everyone is aware, the RBA, Treasury and a variety of economists have been gunning for a weaker currency for about three years. I don’t think it’s unreasonable to state that the RBA has effectively had an exchange rate target over that period. Unfortunately I think they’ve bungled it though and consequently I’ve had to revise my view that the Aussie would head toward 85 cents, on a sustained basis, over the medium term.

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