One year chart of AUD (yellow) vs Iron Ore (green) and thermal...

One year chart of AUD (yellow) vs Iron Ore (green) and thermal coal (red).



Would not expect a 100% correlation but the combination of falling commodity prices, rising unemployment and an easing bias from RBA makes me wonder if the markets have it wrong and AUD could be set for a big fall? Alternatively its possible that the strong currency is foretelling a rise in commodity prices on the back of stimulus, but if so the lag is a long one.

Some scary economic implications if that stimulus doesn't deliver the needed boost. Today we can add Caltex refinery to the growing pile of AUD victims e.g. Norsk Hydro, XStrata's Isa smelter, Bluescope Port Kembla, Onesteel, KZL, TZN, AWC Pt Henry on life support, BHP Norwich Park etc. Seems like the Australian economy is quietly being gutted, while the AUD is inflated by stimulus hopes which may disappoint.

I'm amazed that Glenn Steven isn't more concerned about this. It won't be so simple to switch these facilities and industries back on if an AUD correction eventuates. We've fallen way behind in competitiveness and there's been no investment in anything other than resources for years (sorry for ranting).