Falling $AUD

[Pepscobra]

The $AUD has taken a relative battering since the RBA dropped interest rates earlier in the month.
It is now trading below US99c and looks to be steadily falling.

So, how low do you think it will go?

Are our manufacturers and exporters about to enjoy some better times?

Will eBay and online shopping decline?

[cs123]

Was having a conversation with someone about this the other day.

Be a good thing for our industries if it does drop. I suspect that a lot of people have become accustomed to a higher dollar and will take it "hard" when their OS holidays and toys from OS cost more.

[damoose]

Personally I would like to see it at about 70c . That would at least give any manufacturing we have left a fighting chance of being price competitive.

[cupic]

Originally Posted by damoose

Personally I would like to see it at about 70c . That would at least give any manufacturing we have left a fighting chance of being price competitive.

Manufacture is dead its been sold to O/S so its a dead fight
Best times where the 60's and 70's

[Pepscobra]

US70c is a bit of a stretch... I can see it dropping to about US90c though.

[damoose]

Originally Posted by Pepscobra

US70c is a bit of a stretch... I can see it dropping to about US90c though.

I could have worded this better , I dont believe it will ever get back to 70c
Maybe 90c in the short term All really depends on the strength of the Yanks economy which no Aussie government has control over..

[LG17]

Bugger - makes my parts importation dearer (and no I can't buy them here!).

I guess it has spent a lot of it's time in the high 80s so that's where it will probably end up eventually.

[Fev]

crap I'm going to the USA in July I need to buy some cash!

[comagutsa]

im spewing i have been waiting for some stuff from the US that i ordered 2 months ago as it was on back order ..was $1.05 when i ordered but they dont charge you till its sent ..spewing but still would be a hell of a lot cheaper than buying from here

[Bowser22]

If it sits in the low $0.90's maybe high $0.80's I will be happy and won't be out of a job. Aluminium smelters in this country have been doing it tough these last three years.

[Crazy Dazz]

Umm, Dollar took a hit when government came out and admitted they had ****** the economy yet again, and the surplus they promised was now a $20B blackhole. It will steady, and start to climb as the September election looms near.
AUD is a commodity based currency, as long as demand for our commodities remains high, so will the AUD.
That said, there are signs that the US & British economies may be spluttering back towards life, so you can expect the USD and GBP to also get stronger.

[Bowser22]

Originally Posted by Crazy Dazz

Umm, Dollar took a hit when government came out and admitted they had ****** the economy yet again, and the surplus they promised was now a $20B blackhole. It will steady, and start to climb as the September election looms near.
AUD is a commodity based currency, as long as demand for our commodities remains high, so will the AUD.
That said, there are signs that the US & British economies may be spluttering back towards life, so you can expect the USD and GBP to also get stronger.

I believe this will bring the $AU down sooner than commodity prices

[Yellow_Festiva]

I think the dip is temporary and the dollar will go back up a few cents above parity in a month or 2.

[buggerlugs]

Originally Posted by Yellow_Festiva

I think the dip is temporary and the dollar will go back up a few cents above parity in a month or 2.

^^^^^ This was back on the 15/05/2013...........

I am not taking your tip for the Melbourne Cup

[xisled]

This is the start of something bigger. Next will be the house boom. Everything is going to start to get tougher.

[Pepscobra]

Originally Posted by xisled

This is the start of something bigger. Next will be the house boom. Everything is going to start to get tougher.

How do you mean?

[Sprint]

Its a scam controlled by desperate governments, join the dots people.

[ryeman]

The Dow is at nominal record levels (bubble?) hence money parked in Oz is now trending back to the US stock market.

[350125GO]

Mid 80s long term would be my estimate, no idea short term. I owe $4K to the USA based engine builder that Ill be paying in the current months, looking at opening a foreign currency savings account with HSBC atm.

[Pepscobra]

Its broken US97c today, hasn't been this low for 18 months.

[mik]

http://online.wsj.com/article/BT-CO-...googlenews_wsj

Goldman Sachs Cuts Aussie Dollar, Yen Forecasts


By Jessica Mead

Goldman Sachs slashed its forecasts on the Australian dollar, citing Australia's deteriorating economic fundamentals, falling commodity prices and slower Chinese economic activity.

The bank now sees the Australian dollar trading at $0.97 against the dollar in three months compared with a previous forecast of $1.05. It now expects the Aussie dollar to trade at $0.96 against the dollar in six months, from a previous forecast of $1.03, and to trade at $0.90 in 12 months. Its previous 12-month forecast was $0.98 against the dollar.

"Our view remains predicated on Australia's deteriorating fundamentals, prospects for lower commodity prices, slower Chinese activity and the likelihood that the search for yield will decline as global growth sustainably recovers," the bank said Thursday in its monthly foreign-exchange update, distributed to media Friday.

A weaker Australian dollar is one of Goldman Sachs's top currency themes for 2013. At 0850 GMT, the Australian dollar was trading at $0.9738 against the greenback, having weakened 6% in May.

Goldman Sachs cut its forecasts for the Japanese yen and now sees the dollar trading at Y105 against the yen in both three and six months' time and at Y110 in 12 months. It had previously seen the dollar at Y102, Y105 and Y105 respectively. The dollar is trading at about Y102.50.

It said that the tweak to its forecasts had been precipitated by a patch of better data from the U.S. and the rapid rise in U.S. yields, as the potential for the Federal Reserve to taper quantitative easing came into focus.

The bank also slightly lowered its expectations for the euro against the dollar, and now sees the euro trading at $1.34 in three months and at $1.37 in six months compared with previous forecasts of $1.36 and $1.40. It kept its 12-month forecast at $1.40. The euro was trading around $1.2850 in mid-morning European trade Friday.

Write to Jessica Mead at jessica.mead@dowjones.com

[Moby Vic]

I can see I picked the wrong year to visit.

[mik]

Looks that way mate, I, m hoping like a lot of others after the election (sept 14) things will be looking up.

[jpd80]

Damn, I can't get my refinancing quick enough, I had planned to get my house switch done and put $100K into Ford stock
but in the last two weeks, Ford has jumped from below $12/share to over $15 today and the Aussie dollar is receding.

I recon if things keep going , A $100K in Ford stock will see a hedge against currency and a nett increase
of 50% on investment over the next six months. I Gotta get in before Q2 figures are posted in early July....

[mr smith]

Originally Posted by jpd80

Damn, I can't get my refinancing quick enough, I had planned to get my house switch done and put $100K into Ford stock
but in the last two weeks, Ford has jumped from below $12/share to over $15 today and the Aussie dollar is receding.

I recon if things keep going , A $100K in Ford stock will see a hedge against currency and a nett increase
of 50% on investment over the next six months. I Gotta get in before Q2 figures are posted in early July....

To buy US stocks is it just a matter of a good broker?

[cheap]

The falling dollar is very related to the just announced budget deficit. This government repeatedly promised a surplus and the poof there is another deficit.

The markets have lost patience with this government and have voted with their cash, the once 'safe' haven that Australia was is not so safe - hence the market is selling the $AUD and finding somewhere else.

The market doesn't like doesn't like being told one thing and getting something different. This exactly the sort of nonsense that befell Greece, where the Greeks were lying through their teeth about their financial position, when the truth became know there was a run on their banks and now they're in deep poo.

Now I'm not saying Australia is like Greece, but I just hope the damage that this government has done doesn't permanently taint future Australian governments and the ability for Australia's to have access to cheap capital.

[Work Horse]

Originally Posted by cheap

The falling dollar is very related to the just announced budget deficit. This government repeatedly promised a surplus and the poof there is another deficit.

The markets have lost patience with this government and have voted with their cash, the once 'safe' haven that Australia was is not so safe - hence the market is selling the $AUD and finding somewhere else.

The market doesn't like doesn't like being told one thing and getting something different. This exactly the sort of nonsense that befell Greece, where the Greeks were lying through their teeth about their financial position, when the truth became know there was a run on their banks and now they're in deep poo.

Now I'm not saying Australia is like Greece, but I just hope the damage that this government has done doesn't permanently taint future Australian governments and the ability for Australia's to have access to cheap capital.

The value of the Australian Dollar and the performance of our economy are the envy of the developed world. They are so far removed from what happened in Greece it's laughable you bring them up in the same post.


It has next to nothing to do with what a few hundred elected representatives are doing in Canberra(what ever side they are from
). And everything to do with what the rest of us are doing

GET OVER IT.....

[Maka]

With thanks to the ABC -

US improvement main reason for Aussie dollar dive
By online business reporter Michael Janda
Updated Fri May 17, 2013 6:23pm AEST


Currency analysts say renewed confidence in the US economic recovery is combining with increasing worries about Australia's economic outlook to push the local currency down against the greenback.

The Australian dollar has fallen about 6 cents against the US currency in the past two weeks, with more than a cent of that fall happening over the past day.

That took the local currency to an 11-month low against the greenback of 97.36 US earlier today - a trough which it was close to matching late on Friday afternoon, at 97.48 US cents by 4:41pm (AEST).

Westpac's senior currency strategist Sean Callow says investors are expecting the US central bank to start winding back its stimulus program, pushing the greenback higher and the rapidly growing supply of US dollars slows down.

"The [rise of the] US dollar is probably the main driver of it [the fall in the Australian dollar], and particularly nerves over whether the Fed might start to reduce some of its very generous monetary policy, its money printing effectively," he told ABC News Online.

The fact that we have seen the currency decline, and if it stays at these levels, suggests that the pressure's off the Reserve Bank to cut even further in the coming months.
Citi senior economist Joshua Williamson
"But there's no doubt the Aussie is underperforming many other currencies for specific Aussie reasons."

Citi's senior economist Joshua Williamson says, aside from expectations of a reduction in US money printing later this year, the Australian dollar has finally been hit by falling commodity prices, evidenced by its fall against a wide range of other currencies.

"It has probably been overvalued, certainly against commodity prices, and currencies like the euro and the yen had been much weaker to start with, so its probably an easier play when we start seeing that trend decline in the Aussie dollar for investors to actually jump on board and continue to drive it lower against a whole basket of currencies," he said.

'Follow that momentum'
Sean Callow agrees that an element of herd mentality has helped push the Australian dollar lower over the past couple of weeks, particularly after rumours surfaced of large currency speculators, such as George Soros, making bets against the Aussie.

"Once you start to get to some of the lowest levels we've seen since the middle of last year, then people do just follow that momentum," he said.

"So some people don't necessarily need any fresh news, they just need to see the Aussie is not bouncing."

Mr Callow expects to see a bounce in the Australian dollar over the next month or two as investors and corporations take advantage of the low Australian dollar to buy the local currency.

The last time the dollar dipped to these levels, many businesses took the chance to covert some of their foreign currency holdings into Australian dollars, or lock in currency hedges at the lower exchange rate.

While the fall in the dollar is excellent news for trade-exposed business in one sense, economists say it is also likely to take the pressure off the Reserve Bank to cut interest rates again in the near term.

"They have previously said that one of the reasons why they've taken rates so low is to partly offset for the contractionary effect of the currency," Mr Williamson told ABC News Online.

"The fact that we have seen the currency decline, and if it stays at these levels, suggests that the pressure's off the Reserve Bank to cut even further in the coming months."

cheers, Maka

[chamb0]

Cheap, maybe you need to take it up with Standard & Poor's, Moody's and market investors; they aren't seeing it that way:

http://www.businessspectator.com.au/...-trading-floor

The best guide to the strength, veracity and appropriateness of the budget lies not what in you or I might think about it, but rather, how the financial markets have reacted to it.

Financial markets have a habit of going for the jugular when an economy is on its knees or when fiscal policy is inept, broken or unsustainable.

Poor or misguided economic policy, bad economic news or heightened risks of government financial troubles will be met with heavy bond selling, the risk of a stock market rout and even a move on currency markets.

Now that the markets have had 12 full hours to examine Australia’s government finances, plus a lot of extra time in the days and weeks past as a lot of information has seeped out into the public domain, how have they reacted?

To the bond market first. During trade yesterday, the 3-year government bond was trading around 2.57 per cent, plus or minus a few one-hundredths of a percentage point. The 10-year government yield was trading around 3.24 per cent, give or take a little.

In overnight futures trading, the 3-year yield has risen to 2.61 per cent while the 10-year yield is 3.28 per cent. In other words, bond yields are around 4 basis points higher. This rise in yields has matched the sell-off in the US, no more or less, which is a sure sign that the local bond market is agnostic when it comes to assessments about the budget. The concerns about a budget “in chaos”, the government “losing control of fiscal policy” and all the other emotive analysis is not reflected in the bond market.

The bond market reaction was undoubtedly helped by the announcement of Moody’s ratings agency to affirm Australia’s triple-A credit rating after it saw the budget and the profile for the budget to move to surplus and confirmation that net government debt will remain at wafer-thin levels at 11.4 per cent of GDP.

Standard and Poor’s also maintained the triple-A credit rating noting that “the government continues to demonstrate a commitment to prudent fiscal policy over the medium term”.

In terms of stocks, the ASX200 had yet another solid day yesterday, rising 0.4 per cent to 5221 points, a fresh five-year high and up some 30 per cent since the middle of last year. Overnight, in the wake of the budget news and, of course, more importantly, a positive lead from US stock trading, the futures market is 25 points stronger again.

No sign of investors wanting to take their money out of the Aussie stock market because the budget is in “tatters”.

For the currency market, the Australian dollar continued its move lower, and is currently trading just off the low point at 98.90 US cents. It must be said that the US dollar was stronger against the euro and British pound, for example. But those reading the Treasury budget papers closely would have noted analysis that suggested the Australian dollar is overvalued relative to the terms of trade which may have continued the market’s reassessment that the Aussie dollar was well overdue for a correction.

The Australian dollar decline has occurred even though there are no obvious signs of selling from global investors wanting to sell other Australian assets. In other words, the traders and investors are looking at issues outside the budget and fiscal policy for guidance.

The market has seen the budget, witnessed the evolution of the various spending and revenue measures and its verdict from a trading perspective is obviously neutral.

The bottom line is that Australia’s budget and fiscal settings are in sound shape. There are small budget deficits forecast for the next two years and there is a return to surplus after that. At the same time, the level of net government debt will peak at 11.4 per cent of GDP – a figure that would not see any ratings agency or international investor blink an eye.

With the budget out of the way, it is back on to inflation, global economy and monetary policy watch.

And this is even coming from a News Ltd owned enterprise!

[wrongwaynorris]

" Cheap, maybe you need to take it up with Standard & Poor's, Moody's and market investors; they aren't seeing it that way: "

This would be the same Moodys and Standard and Poors who , along with Fitchs , knowingly gave totally worthless CDO's AAA ratings and were complicit in destroying the American and ultimately the world economy .