Ray Dalio is bearish AUD/USD along with other emerging currencies...Why? Below are some thoughts:
1) If Ray thinks the AUD will go down along with other emerging nations, he probably believes China will go through a hard landing.
2) If China go into recession, demand for metals will go down sending the AUD/USD down.
3) China is also the 2nd country after the USA in terms of GDP, should their demand for metals go down then that should affect the currencies of other emerging countries whose exports to China would fall hence sending their currencies down; it’s a game of supply and demand.
4) EUR going into a recession might not affect the US much but China would definitely feel some pain.
5) AUD/USD is a pair that is extremely sensitive to news from China. AUD/USD is also a pair that reflects global equities health, should the pair crash then that shouldn't be too positive for global equities.
6) Technically, the AUD/USD is in a weekly distribution base. A breakdown could cause mayhem.
7) This will especially have adverse effects on steel and basic materials which is already lagging (SPY/XME).
P.S. Bridgewater is also bullish gold which is pretty obvious with all the central banks printing, he sees inflation thus buying gold as a hedge.
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