The Australian Dollar ($A) has maintained its assault on the 80c level which MM believe will be scaled in the coming months, the question we continue to hear is when will it top out? The answer is similar and as tricky as with stocks, there’s plenty of medium-term resistance in the 80-81c area but the trends up and surprises happen with the trend, last week the $A tested its 2018 highs even while the $US was relatively quiet i.e. similar theory to rising bond yields MM is very cautious buying companies with significant $US revenue.
Importantly we believe inflation will raise its head moving forward which is fundamentally bullish the local currency hence our view is similar to stocks, stay long and monitor carefully.
Not surprisingly as the market continues to unfold in line with MM’s expectations our plans & stance haven’t changed a great deal but as we touched on earlier we believe there will continue to be some quality switching opportunities beneath the hood, even if the index remains fairly stable.
