I am of the view that the AUD has been trampled on too much and at the current level of 0.9525, could be an opportunity to place an option strategy.
The lows in the AUD: –
1 June 2013 – 0.9708
3 Oct 2012 – 0.9525
7 June 2010 – 0.8102
October 2008 – 0.6674
The above lows is to give us all a ‘feel’ the AUD.
I do not believe that the Aussie economy is worse off than back in 2008 to 2010.
From Black October, the AUD has powered from 0.6674 all the way up to 1.1075 in July 2011. During the crisis in both the United States and in Europe, the AUD has always been trading between 1.03 and 1.05 despite the declining economic health in China.
Yes, Australia is paying for it today by being to resources export dependent and to China. Today, Australia has a structural and fiscal problem, if appropriately fixed, the AUD should be well back above the parity level.
Currently, the weak AUD is helping the economy, making exports more competitive. What is comforting is that consumption is still healthy and housing is stable.
A few more months below parity and the benefits of the weaker AUD will filter into the economy. I do not believe there’s a need for RBA to further cut rates.
I am considering buying a call option when the volatility is lower.
The Panthenon Investment Group 