From Damien Cleusix:
"In our last quarterly we said that Australia could be one of the unexpected victim of the next downturn. We received plenty of questions on the subject so we have decided to write an ad hoc research on the subject which you will find attached.
The Australian Dollar is the most overvalued G20 currency and we feel that the economy is mainly dependent on the continuation of the nascent Chinese credit bubble and an increase of domestic leverage and real estate prices. The later being nearly 50% above fair value they will sooner rather than later mean-revert.
The Chinese connection makes its resources sector a good proxy to express potential negative view on China.
Shorting the AUD is tricky because of the negative carry but there will be configuration (bullish sentiment, top of channel, or move above 95...) where one could take short positions but our recommendation is to exit long-term long position at current level and put the money to work elsewhere...
Any questions/remarks/objections are welcomed and appreciated. "