The US Fed’s decision in June to lift the US central bank’s cash rate to 1.75%-2%,while flagging the possibility of two more rate hikes in 2019, increased pressure on an already stressed Australian dollar. At current price levels of 0.728, the exchange rate is approaching its two-year low (0.718 in December 2016). We would not be surprised if, following the immediate “relief rally” in the currency following Scott Morrison replacing Malcolm Turn bull as Liberal Party leader and Prime Minister, the domestic currency weakens below the December 2016 low. While the24-hour news cycle leads to much attention over short-term drivers of foreign exchange rates, the bigger picture is that nothing drives FX rates over the medium term other than yield differentials via the different rates central banks offer on cash and debt. If we accept that, inter alia, local employment,CPI, housing, and industrial growth data will be insufficiently strong to allow Australia’s Reserve Bank to lift rates until well until 2019, then its yield differential with the U.S. dollar will widen further. In other words, holding Australian dollars, or AUD denominated debt will be increasingly unattractive to institutional investors versus high-yielding US money market and longer-dated date assets, with lower demand equaling a lower Aussie dollar. Consider that the global bond market is on most estimates more than double the size of the global stock market and you can see how demand for currencies is greatly influenced by different rates on debt and cash. This scenario suggests businesses leveraged to stronger U.S. growth and a weaker Australian dollar may do well. Relative to IRESS consensus target prices and FY19E dividend yields,our portfolio of (non-mining) A$-leveraged plays sees the most upside in Janus Henderson (ASX:JHG), Sims Metals (ASX:SGM), and QBE Insurance (ASX:QBE). See table and graph below.