And the winner for the Best Dive of 2013 goes to… the Australian dollar! Take a look at the factors that pushed this currency down under for almost the entire year.
The Aussie was already off to a weak start for the year, as the RBA hinted at potential rate cuts ahead. It didn’t help that China, Australia’s largest trading buddy, showed signs of a slowdown in manufacturing and demand during the first few months of 2013.
News of George Soros’ large short Aussie position was enough to trigger a break below the key 1.0200 level and increased speculations of an interest rate cut AND a potential government budget cut drove AUD/USD below the .9000 mark. Overall risk appetite waned when a chemical attack took place in Syria, but the tides soon turned for the Aussie when China showed signs of a rebound.
However, AUD/USD’s rallies were cut short as the odds of a Fed taper in December increased. The pair had a tough time bouncing back, as RBA Governor Stevens continued to jawbone and say that the Aussie is trading at “uncomfortably high” levels.
Some say that further weakness could be in the cards for the Aussie in 2014, especially if economic growth remains feeble and if the government’s budget troubles worsen. Do you think AUD/USD will keep going down under next year?