Aussie dollar falling

thinking of moving home in 12 months, whats the consensus on what I should do with my savings, send home now or hold off till next year?

Also take into account that interest rates will probably drop soon in Oz. It is normally the first thing to happen when an economy starts to creak. So unless you have a long time frame you would want to be cautious about keeping your money there.

Tigerandahalf wrote: »

Also take into account that interest rates will probably drop soon in Oz. It is normally the first thing to happen when an economy starts to creak. So unless you have a long time frame you would want to be cautious about keeping your money there.

I doubt interest rates will drop, personally. The lowering interest rates to boost business investment idea looks very dubious these days given the complete failure of the principle since 2009. Australia doesn't really need business investment to boost economic activity. The problems are entirely global and external. There might be an argument to lower interest rates to devalue the A$ but that has well and truly been taken care of and the RBA might well be actually hoping it doesn't go any lower at this point.

Then there is Australia's superannuation landscape. Many retirees depend on returns from investments for their income. Lowering interest rates any further would significantly affect this group. Already the stock market has seen a huge influx of capital seeking high dividend return equities. This has inflated the equity market significantly, though thankfully not as much as has happened in the US. If I was on the RBA board, I would not want to be lowering interest rates and inflating equity prices any more than has already happened because it could well be setting up a lot of retirees for financial Armageddon and permanent loss of independent income should there be another 2009 scale stock market crash and they panic.

Australia needs there to be a range of investments yielding returns that make self-funded retirement incomes viable. Forcing an all eggs in one basket situation would be utterly stupid.

There is already a bit of a problem with Australia's housing market being overvalued in global terms, particularly in Sydney where the median house price recently topped an insane $1 Million. It wouldn't be a stretch to assume that a lot of the recent heat in the housing market has been due to interest rates being lowered to 2%. Go lower and it will likely exacerbate the problem immensely, just as it looks like it might be stabilising a bit.

lg123 wrote: »

taking 3% off today's rate is about 0.615, which is a typical pre-GFC rate.
considering their has been about a 10% adjustment since early may, the resource demand is over and the Yuan is only going in one direction, and my 3% interest isn't guaranteed to last, I think I should start looking for a term deposit at home.

It's now back up to 0.64138. Things are way too volatile at the moment to be coming to long term conclusions I think. I have seen predictions the A$ is going to keep on going down till the end of the year but I have also seen predictions Iron Ore would go to $20 a Ton and Gold was headed for $750 or lower. Just after those predictions both turned around and went back up.

Ireland's debt is bad no doubt but Australia could follow very quickly if they don't take corrective action.
As for the dollar's value it probably needs to weaken considerably in order to attract tourists to Oz again, even to keep Aussies holidaying at home. The problem then though is that there would be a flight of money putting the banks under serious pressure. I saw an article the other day that said the big 4 Aussie banks have assets (loans) worth 200% of GDP whereas the big 4 in America before Lehmans bust were only 50% of American GDP. So these banks could fold. Deposits could be snatched as the state may not be able to step in.

Ozzie has tipped a critical technical support of 70 against the greenback. Good chance we will see new lows until the Fed raises rates.

catbear wrote: »

Aus$ back around €.64. Might get more upside next week.

its on quite a push, isn't it. what's driving it?

have some cash sitting idle in CF. thinking of buying some USD and EUR next week but not sure what split. any thoughts?

but is there much left in the cat?

res ipsa wrote: »

Rise in commodity prices mostly iron ore.
Turnbull effect.

Also wouldn't buy euro. More QE to come. GBP, USD & YEN are the safer havens although you cant buy yen on CurrencyFair.

catbear wrote: »

I doubt Turnbull has anything to do with it, it's all about the commodities which in turn support the entire economy.
The Aus$ depreciation cushioned the Chinese slowdown to the point where even the smallest increase in Chinese demand will give skippy a good bounce. I can't see the recent Aus$ strengthening being the start of a trend but if it were I'd be happy as I'm still pulling money back from oz.

Well a lot of markets is emotion because people are markets, & fear and greed drive currency & stock markets. We have a new prime minister who is a self made millionaire, compared to Pommy Tony who knighted Prince Philip & Chuckle brother Joe Hockey who told us poor people didn't drive.
When a leader is changed there is normally a honeymoon period & this is it so while we are at .73 against the green back when it should be .7 I think there is a Turnbull effect.

Undertow wrote: »

One would think so.

I transferred everything I had back to euro when it was 62.5 as the advice I got was that the only way the dollar is going is down! Now its bounced back up! Truth be told no one really has a clue what way its going to go. Its so volatile!

The trouble is that almost all such public discussions about the AU$ exchange rate are in reference to the US$. What just happened wasn't so much the AU$ bouncing as it was the € sinking on announcement of more quantitative easing.

Unless there is a miracle in China or the EU, I would say a further decrease in the AU$ vs the US$ is a distinct possibility.

The "experts" / fund managers are hoping for a devaluation of the aus$ in December as they anticipate that the US fed will increase interest rates which will increase the US$ and devalue the Aus$ in comparison. Hope they are wrong!

Its funny how one piece of good news has such a positive effect. Here in WA there were a significant number of jobs lost in the last few months and many more to go soon with Roy Hill, Gorgon, Wheatstone in their final phases. House prices especially the 700K+ ones are in dropping in price rapidly. Always a great economic indicator IMHO. WA kept the country afloat during the GFC and provides huge tax revenues to other states. The mining boom is now over but i hope that the Oil and Gas tax revenues will negate some of these losses in the future and keep the economy relatively stable.

lg123 wrote: »

forgive my ignorance, CDO?

Collateralized Debt Obligation. I doubt WA carried OZ through the GFC. There are 9 million ppl between Sydney & Melbourne out of a population of 23million. The resources boom definitely helped but that is not limited to WA.