Basically the RBA decision (left rates at 3.75%) caught the whole market with the dicks hanging out, cept for a few (yeah including me shorting/put options on the AUD). The Australia dollar is over priced especially when every country still wants to debase their currencies, China is stuck in a bubble/growth paradox it's liquidity tightening may come in somewhat more dramatic (market wise) than anywhere else. Obama (
as expected) will attempt to flood the US ecomomy with more liquidity (and increase deficits). In my opinion the markets will read that as risk averse rather than buying frenzy of assets (stocks). So the more government spend the more the market will react adversely against it; 2009 passed with liquidity rallies 2010 is going be the beginning of debt trouble.
Basically the central banks and goverments will not know what to do when bonds become unappealing (factor another bank problem note:UBS breaking up) as and capital raising sinks (small/mid cap companies), banks tighten and credit spreads widen - and the global ecomomy sinks (attached inflation) with in a 2-5 year decay of public finances. So it's kinda fucked up. So safe assets should come into the play like the YEN, USD (relative to risk aversion) and Gold.
The AUD collapsed from 0.89 to 0.87 in less than 5hrs (02/02/2010)
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