AUD Underperformance and the RSPT

That the Australian dollar should underperform the euro is not entirely surprising, given that AUD typically suffers from the global risk aversion trade, along with commodities and other assets that are perceived as risky. What is harder to explain is AUD’s underperformance against the New Zealand dollar, given that NZD is typically viewed as being even riskier than AUD. A CTA I spoke to earlier in the week said that the message from the broker dealers is that foreign capital is exiting Australia because of the proposed RSPT. Australian equity markets underperformed the Nikkei and Hang Seng yesterday.