Aussie dollar falling

jank

$1 AUD = 0.685 and creeping up.
I would be very surprised if it did not break the .70 mark soon.

http://www.rte.ie/news/business/2014/0514/617258-ecb-policy-options/

the flananator

Dropping back down towards .67

Is further Euro weakening likely to counterbalance this?

catbear

Good question. Euro could weaken but then more bad news our of China could drop the Aus$. On the other hand more bad news out of China could strengthen the Aus$ as a safe haven for Chinese cash via 8888 visas.

A downturn in China could hasten a Euro drop as it's a major market for German goods and the Euro area.

I'll check the chicken entrails in the morning and get back to you.

sin_city

jank wrote: »

Delflation can destory an economy so if the ECB decide to act they will go in hard imo.

Like what happens in electronics products? Prices going down? Damn...I hate that. People don't wait for prices to go down, they just buy when they want something...if this wasn't true everyone would be saving instead of using credit cards.

Deflation is good for people who are struggling but bad for banks and government.

If 2% inflation is good then why is 3% inflation and 1% inflation bad?

As the people in power act in the interests of the politicians and the banks expect Europe to print to keep up with everyone else that is printing.
So in a few months I expect the AUD to pass .70 in euros and maybe go even higher.

As if this is the answer…just look at the economy of NZ…they are booming and they raised interest rates.

jank

Deflation for an economy can be deadly. Just have a read about japan and it's last two decades of no growth. Sure for the consumer short term it's great until businesses start to suffer as more and more people keep their hands in their own pocket. Once there is a deflationary mindset in an economy it is extremely hard to break it.

catbear

sin_city wrote: »

As if this is the answer…just look at the economy of NZ…they are booming and they raised interest rates.

If anything I think the RBA will drop interests in the coming year, there's a lot of unwind with mining coming off and China cooling. Personally a strong $ would suit me so I'd prefer if your forecast came through although I'm inclined to think otherwise.

sin_city

catbear wrote: »

If anything I think the RBA will drop interests in the coming year, there's a lot of unwind with mining coming off and China cooling. Personally a strong $ would suit me so I'd prefer if your forecast came through although I'm inclined to think otherwise.

You could be right but the question for us is when will Europe play their card in the race to the bottom.

If the ECB decides to print money then the euro will devalue and even if the RBA reduces I don't know if it will be enough to prevent the dollar from staying strong.

I don't think the RBA will reduce as there is a risk of a housing bubble here now and this has been acknowledged.

http://www.abc.net.au/news/2014-03-26/rba-warns-banks-not-to-fuel-real-estate-bubble/5346342

jank wrote: »

Deflation for an economy can be deadly. Just have a read about japan and it's last two decades of no growth. Sure for the consumer short term it's great until businesses start to suffer as more and more people keep their hands in their own pocket. Once there is a deflationary mindset in an economy it is extremely hard to break it.

One of the fallacies of modern day economics...Rising prices on foods(which people need not want) means people have less money to spend on luxury goods.

Once someone defines why 2% inflation is good and why 1% and 5% is bad I'll accept your point.

No one would own a mobile phone if what you were saying was true...we'd keep waiting for the price to go down....which it does.

catbear

I'll stick with sticking my finger in the air.

catbear

Aus$ strengthening again; recently read that LNG exports will support strong dollar. Will post link later. Bad for exporters and no replacement for the mining investment boom which is receding.

Edit to add: http://www.macrobusiness.com.au/2014/05/lng-to-drive-australian-dollar-back-to-parity/

SpaceTime

The one thing to be aware of though is that the Euro is a HUGE currency compared to the Aus$ or even the Japanese Yen.
A QE programme might not necessarily have as big an impact on the value of the Euro as you'd expect due to the fact that it's still a major reserve currency.

You really have to compare it to what's been going on with the US$ more than with smaller currencies.

The other issue is that the ECB's actually completely hamstrung by the body of law that set it up. It doesn't actually have a lot of scope to do QE at all. It's not as flexible as a normal central bank due to various rules put in place when it was created.

You could see the Eurozone heading for weird combination internal deflation without currency depreciation which could just seem unemployment go up, standards of living slipping and more angry voters electing extreme parties on the continent.

My big concern is that if EU politicians don't react to this mess and do something sensible for a change, they'll be facing up to a lot of very angry voters. They seem to have forgotten they're in a democracy and that people will only put up with so much before firing them.

I hope they got the message from the European and Local elections that they need to change direction.

AngryHippie

Agree 100%^

Some troubling noises in France for definite, with the LePen result.

We live in interesting times

catbear

1$aus = €.68.

I'll take that spike, thank you very much!

sin_city

JUNE 5....look out for that date and the actions of the ECB.

I think we could push through 70 cents if rates are lowered and they are expected to be lowered.

catbear

sin_city wrote: »

JUNE 5....look out for that date and the actions of the ECB.

I think we could push through 70 cents if rates are lowered and they are expected to be lowered.

I reckon you're right although Germany still has a big sway and was probably the only country where the incumbents did well at the euro elections. Interesting times.

SpaceTime

I think you're totally overestimating what the ECB is allowed to do. It's not like the Fed or the Australian Central Bank.

The way the ECB is constructed it has only one remit : to control inflation and keep it below but close to 2% . It some role in 'safeguarding the stability of the Eurozone' but that translates to 'protecting the value of the Euro'.

It has absolutely no remit whatsoever to provide economic stimulus and any attempt to do anything even approaching that has resulted in the Germans attempting to take action in their Supreme Court (Constitutional Court).

Any QE programme in Europe will be done somehow indirectly. In fact, that's sort of what's happening already using very, very low interest rates from the ECB and there were some slight of hand type operations through the national central banks.

The Fed or other central banks could just print money and stimulate the economy, that's just not something the ECB can do, at least not directly.

The ECB is highly technocratic and really is almost blinkered and prevented from paying attention to political issues.

Whether that remains the situation or not is questionable as I think there's going to be enormous pressure put on, especially from France due to the Le Pen successes in the European elections.

Also the picture in Europe (other than France) isn't that gloomy at all :

http://uk.reuters.com/article/2014/05/28/uk-eurozone-sentiment-idUKKBN0E80WP20140528

sin_city

Only time will tell....all I know is that they keep talking about deflation which is BS in my opinion but the only way to deal with the debt is to monetize it...It's not like the economies will ever grow to pay it down to low levels in relation to GDP.

res ipsa

I'm putting money against the euro at the moment up until June 5th. That is Aud/eur. The trend is your friend. Mostly though I would buy USD.

sin_city

68.8 at the moment....I think it's a 6 month high...maybe more....I think it will pass 69 cents this week.

res ipsa

sin_city wrote: »

68.8 at the moment....I think it's a 6 month high...maybe more....I think it will pass 69 cents this week.

It just has.

colman1212

69.27 at the moment. Flying up.

catbear

colman1212 wrote: »

69.27 at the moment. Flying up.

Brilliant!

Legend100

pity i have no savings left after already sending it all back at lower rates

roll on payday next week and hopefully the rate doesn't go back down!

sin_city

I don't think it will go down, at least not in the short term.

The Aussie dollar has some momentum at the moment and once it breaks the 70 cents mark, which I expect later today or sometime this week it should stay above their for a while.

I would prefer it to consolidate between 70 cents and 75 cents for a few months and hopefully then move on again.

Have a look at the AUD VS EUR since Jan this year....nice looking graph

Harold Weiss

eagerv wrote: »

In Feb 2009 it was 1$=0.50€.

Cannot see the dollar dropping to that level again...

Could very well go back there. Look at stocks for example.
DJIA was 6626 in March 2009 and currently stands at ~17,000

DJIA Google Finance

Capital flooded Canada and Australia ca 2008/2009 due to recession in EU/US and their economies boomed. Maybe the bubble is now bursting.

sin_city

Harold Weiss wrote: »

Could very well go back there. Look at stocks for example.
DJIA was 6626 in March 2009 and currently stands at ~17,000

DJIA Google Finance

Capital flooded Canada and Australia ca 2008/2009 due to recession in EU/US and their economies boomed. Maybe the bubble is now bursting.

The Europe, the US, the UK and Japan are fcuked.

There will be a collapse of the US dollar sometime in the next few years.

What the current situation is coming down to is the interest rates:

Australia is 2.5%
ECB has moved to 0.15%

Also, the whole issue of negative interest rates is huge. Expect to get charged for having money in your bank account in Ireland in the near future....How do you think that will affect the Euro?

The stock market is in a huge bubble. If you want to see how well Europe and the US are doing have a look at the unemployment figures….and in the US I mean the real unemployment figures…Look at the labour participation rate.

The Aussie Dollar lost lots of value in the recession due to a flight to the safe haven US Dollar but the dollar is no longer a safe haven and you won’t see a repeat of that again.

res ipsa

sin_city wrote: »

I don't think it will go down, at least not in the short term.

The Aussie dollar has some momentum at the moment and once it breaks the 70 cents mark, which I expect later today or sometime this week it should stay above their for a while.

I would prefer it to consolidate between 70 cents and 75 cents for a few months and hopefully then move on again.

Have a look at the AUD VS EUR since Jan this year....nice looking graph

Looking sticky at 69.

Slideways

res ipsa wrote: »

Looking sticky at 69.

69 can be sticky alright :pac:

sin_city

Good....better to consolidate rather than shoot up like crazy.

aboysham

sin_city wrote: »

Good....better to consolidate rather than shoot up like crazy.

Bloody Aussie humour.

Timistry

I have a term amount that is about to mature. Do you reckon I should take a portion of it and send it home now or roll the whole lot over and use the approx 2% interest rate as a sort of hedge against any Xchange rate fluctuations?

commited

Timistry wrote: »

I have a term amount that is about to mature. Do you reckon I should take a portion of it and send it home now or roll the whole lot over and use the approx 2% interest rate as a sort of hedge against any Xchange rate fluctuations?

Not going to recommend whether to keep it in or leave it, but if you do keep it in Australia, open a UBank account and enjoy 4.37% interest, not 2%

the flananator

Taken a bit of a tumble today.

catbear

Tumble after Glenn Stevens said Aus$ was overvalued and that another rate drop was possible. Strong employment figures out of the US too.

sin_city

catbear wrote: »

Tumble after Glenn Stevens said Aus$ was overvalued and that another rate drop was possible. Strong employment figures out of the US too.

Yeah I read his BS. He said there’s too much risky lending…Well, raise rates and end that…On the US strong employment numbers..Almost 523,000 full time jobs were lost and 800,000 part time jobs were created. Their labour participation rate went down and is at the lowest rate in 35 years.

Total propaganda, The Aussie dollar should really be higher. Sometimes you get the feeling that people are pulling strings to tell the western central bankers to say certain things to protect the US Dollar because the rest of the world is starting to ignore the US Dollar.

I still expect the Australian dollar to move back above 69 cents..It has been sliding up again today.

catbear

I'm inclined to agree sin-city, the aus$ is an extension of China now. The Australian domestic economy could tank but the currency would stay strong giving no relief.

sin_city

Back above 69 cents despite that nonsense from Glenn Stevens last week.

I expect Europe's central bank to start increasing the money printing in the next few months which will weaken it.

Incidentally, all of this is going to end badly, the main concern for those in power is to kick the can down the road so that it doesn’t end badly on their watch.

At least the Liberal party here and doing something to address budget issues.

sin_city

The dollar is really pushing up again...It still hasn't broken through 70 cents but it looks like it's only going in one direction.

Batgurl

Just tipped 70c on xe.com

catbear

Batgurl wrote: »

Just tipped 70c on xe.com

I hope this trend continues until I cash out my super!

FernandoTorres

Decent article here on the various factors that influence the $AUD.

https://au.pfinance.yahoo.com/our-experts/david-taylor/article/-/24682071/aussie-dollar-just-how-low-can-it-go-against-the-greenback/

sin_city

FernandoTorres wrote: »

Decent article here on the various factors that influence the $AUD.

https://au.pfinance.yahoo.com/our-experts/david-taylor/article/-/24682071/aussie-dollar-just-how-low-can-it-go-against-the-greenback/

Can't believe people think the US will increase its interest rates....The game is over for them.

The average interest payment on US debt is 2.4% on the debt of about $17 trillion which is about $222 billion.

This is low due to zero percent interest rates...what do you think will happen if the interest rate goes to 1% or even 2%?

Their economy is not growing....the debt is only expanding(ponzi scheme) and if the interest rates increase it's all up.

Interest rates were around 20% in 1980 btw.


So, take all that into account and lose the propaganda from the US and Europe(which is also in bad shape)...Australia is doing fine...Once they get through the next few years with the Liberals fixing the economy and as long as the rest of the world doesn't pull Oz into recession, the AUD should go higher.....It has been going higher today and is approaching 69.5 against the euro....

I expect Europe to print money before end of year.

catbear

So Sincity, no more rate cuts from the RBA?

sin_city

I' not sure. I believe western central bankers collude with each other to protect the US dollar.

Australia does not want to drive a housing bubble so I would say it will stay at 2.5%

I'd love to see an increase like in NZ where it has moved to 3.5%

Regardless, Europe will print money in the future which will weaken the currency there.

res ipsa

Got over 70 on currency fair last night.

sin_city

Draghi more or less said he will be printing money at central bankers conference.

It should go higher in the next few months

statina

Transferred a good sum last night with it going up to 70 with currency fair. Hopefully it will keep rising!

EskimoJack

71c now and rising

cnocbui

Should have gone to Specsavers.

Legend100

EU inflation figures out tomorrow......have a bit sitting in currencyfair as wanted to send home when it is above 0.70

Do I wait until tomorrow and take the risk? anyone have a crystal ball by any chance???

sin_city

Legend100 wrote: »

EU inflation figures out tomorrow......have a bit sitting in currencyfair as wanted to send home when it is above 0.70

Do I wait until tomorrow and take the risk? anyone have a crystal ball by any chance???

I could be wrong but I'd say wait...The inflation will be lower than the bankers want(not the people who don't want it) and then Draghi will hint about money printing.

Hopefully we're on the way to 75 cents