The decline in the Aussie dollar since late January, just after comments by US Treasury Secretary Mnuchin nL8N1PJ1EG and President Trump at Davos, mirrors weakness in selective Asian currencies and looks set to continue given outflows from emerging Asian bond and stock markets.
The next shoe to drop for Asian currencies would be if US 10-year Treasury yields break 3.05%, the 2014 high, and trigger more pain for the likes of the IDR, INR and MYR.
Liquidity in certain Asian currencies is definitely an issue, particularly when offshore players all head for the exit and only have the relevant Asian central bank to provide the dollars they want.
This has been exacerbated by certain policy decisions, such as Bank Negara Malaysia banning offshore ringgit trading in NDFs Click here
While the Aussie weakness was compounded by soft retail sales data Tuesday nL3N1SE5TL, the main factor driving it is the continuing slide in Asian currencies.
That looks set to persist, driving the AUD/USD down to at least test the 61.8 Fibo of the Jan 2016 to Jan 2018 rally at 0.7329.