Banana-chomping primates are not indigenous to Australia. But that has not stopped strategists from shoehorning references to China’s upcoming year of the monkey into comments on the Australian dollar — and the reasons for its weakness. Tuesday’s neutral-to-soft statement from the Reserve Bank of Australia seems unlikely to change their tone. Perhaps it is best to think of the Aussie’s recent rally as a dead monkey bounce.
In choppy markets, selling the Aussie dollar has proved to be one of the few sure-fire, long-term winning bets, and that trend is not set to fade any time soon. Over the past four years, the Aussie has fallen from $1.1020 against the dollar to January’s six-year low of $0.6864. On Tuesday, it hovered at $0.7070 after the RBA held interest rates steady, as expected.
In its statement, the central bank stuck to a Fed-like script. It noted volatility but pointed out that the economy, bar mining investment, is in fact picking up. Credit is rising, unemployment is falling and business conditions, surveys say, are above average. A housing boom — the biggest risk to the RBA’s stance — has moderated, too.