Why the Australian dollar again looks like the Pacific peso

So why has the Australian dollar once again begun to look more like the Pacific peso of the Keating era, rather than the success story of a decade ago? Is it structural or cyclical? The short-term reasons for Australian dollar weakness are well covered, including increasing pessimism around China. Despite this, key commodity prices for now are still around decade averages and nearly everyone expects them to fall. A longer-term economic explanation may lie in the flip side of a current account surplus. That is, a capital account deficit. There is also the recent US fiscal stimulus that is strengthening…