For the first time in 20 years, Australian yields have fallen through Canada’s. In addition, the AUDCAD cross is at its lowest level since the crisis. I expect these trends to persist, which can be expressed as short AUDCAD.
Australia and Canada had a better crisis than most. Both countries had stronger financial sectors than other advanced economies and, as commodities exporters, rode China’s debt reflation. At the same time neither countries could insulate from major central banks easing, which supported growth but saw their real estate prices and household leverage move to the top of global leagues (chart 1)
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