Aussie Dollar is a proxy for inflation. Japanese yen is a proxy for deflation. The weekly ratio chart is rolling over, back down to an ugly looking neckline, below which a 25% fall in the ratio is possible. What are the causes for deflation…a number of things including global recession, combined with sovereign and private debt defaults. The global debt is currently $US 30,000 for every person on the planet, using total global debt divided by the population. 7.6 billion x $30,000 = $230 trillion. Most of this will default, as nature has its way. Unless the global central banks try another QE, which will only delay the inevitable.
We are in for one heck of a ride over the next 12 months. Australia is in deep trouble going forward, as they are leveraged with debt, in particular the housing market. As AUD drops, local interest rates will be forced by the market to go higher, whether the Govt likes it or not. A waterfall decline in their housing market is therefore possible in 2019.