AUD

[keegan]

this is the best time to accumulate position/s keep on buying

 

[CFD]

There are dangers in telling peeps to accumulate long positions when the currency is trending in the opposite direction.

 

[keegan]

how low the aud/usd can go 0.7000?

 

[Wysiwyg]

how low the aud/usd can go 0.7000?

Your guess is as good as anyones. :iamwithst :iagree:

 

[OldFart]

AUD/CAD going crazy right now.

 

[OldFart]

AUD/CAD

heading for the high from november of last year..amazing

 

[damien275x]

If I believe the dollar will fall again, can I purchase US dollars, then purchase Australian dollars with my US when it does? Where can I go to trade currency, thanks

 

[Boggo]

If I believe the dollar will fall again,

You got that one right damien, this is the 15 minute live chart.

(click to expand)

 

[prawn_86]

So whats members thoughts on the impact on the economy of the impending parity against the USD.

eprsonally its no good for me, if we go over parity, in theory more people will import directly and have less need for our clients (wholesalers etc) meaning they wont need to purchase as much

 

[explod]

So whats members thoughts on the impact on the economy of the impending parity against the USD.

eprsonally its no good for me, if we go over parity, in theory more people will import directly and have less need for our clients (wholesalers etc) meaning they wont need to purchase as much

International fences will go up which will spell very big trouble, not just financial I feel. China thinking of it now, except they hold too many US treasuries. Bet that they are one of the big gold buyers behind the scenes.

Aussie just hit .9905, thats 1.3% in a day. What goes when the RBA do put rates up??

 

[Boggo]

Amazing stuff really, two chances to get on and I missed both.

(click to expand)

 

[zzaaxxss3401]

Interesting article in The Age today:
http://www.theage.com.au/business/will-the-rba-step-in-to-douse-the-dollar-20110421-1dq44.html

When the dollar was racing along between US70c and US90c in 2010 the RBA pretty much suggested that there was nothing they could do to control the price. There is simply so much money being traded in one day that it exceeds our total foreign reserves.

It's not that the RBA won't intervene - it's because they can't.

However, if the AUD keeps rising the way it is (because the US economy is so terrible) eventually things should slow down... when exports, tourism and petrol prices kill us... if they haven't already.

Farmers are already in trouble, due to the droughts, now floods, locusts and rise in petrol / diesel. With the AUD so strong, they're getting less for their exports - milk, milk products, meat even though prices are up in general. The same goes for our other exports - coal, LNG, iron ore.

Tourism is also struggling, due to the lower number of overseas visitors, floods everywhere and cyclones in North Queensland.

And finally, with the increase in petrol from around $1.20 to now $1.50 - a 25% increase in a large expense for freight companies - it's going to affect food prices and the cost of living in general.

The only way the RBA can affect the AUDUSD rate, is by dropping interest rates. If that happens though, retirees and savers suffer (lower annual income from interest bearing investments) and households are going to start piling on more debt while the rates are low.

So basically... in a few words... we're doomed and it's a disaster waiting to happen.

Just on that petrol price... that's one thing that's been bugging me:
July 2008 - AUDUSD $0.97, WTI (per barrel) $147, Petrol $1.70
April 2011 - AUDUSD $1.07, WTI (per barrel) $112, Petrol $1.50
The AUDUSD is 10% stronger. WTI is 24% cheaper. Based on these figures, petrol should be around $1.17.

But hangon, Australia imports 20% of it's petrol from Singapore, and the ACCC suggests that it uses the Singapore petrol price as it's benchmark:
July 2008 - AUDSGD $1.30, Singapore Petrol $1.80, Australia Petrol $1.70
April 2011 - AUDSGD $1.30, Singapore Petrol $2.07, Australia Petrol $1.50
The AUDSGD is the same. Singapore Petrol has increased by 15%. So based on these figures, petrol should be around $1.95.

This suggests that the ACCC won't be doing anything until our petrol prices rocket up to $2.00 overnight.

 

[tothemax6]

When the dollar was racing along between US70c and US90c in 2010 the RBA pretty much suggested that there was nothing they could do to control the price. There is simply so much money being traded in one day that it exceeds our total foreign reserves.
It's not that the RBA won't intervene - it's because they can't.

Actually, yes they can. To drop the value of the AUD the RBA (which is the creator of AUDs) simply sells AUD in the forex market. The RBA can create an unlimited supply of AUDs. Indeed, the RBA web site clearly states that this is one of their policy options.

So basically... in a few words... we're doomed and it's a disaster waiting to happen.

Not in the slightest though - Australia will only be 'doomed' when the Chinese construction bubble bursts. A high AUD is good - Australians can afford better holidays, cheaper computers, cheaper phones, pretty much cheaper everything that we do not make ourselves. I hope the AUD goes to $1.50.

 

[Plumber1]

Australia will only be 'doomed' when the Chinese construction bubble bursts. A high AUD is good - Australians can afford better holidays, cheaper computers, cheaper phones, pretty much cheaper everything that we do not make ourselves. I hope the AUD goes to $1.50.

If AUD goes to $1.50, every manufacturer in Australia who exports their products will be bankrupted due to lack of sales to overseas customers. Even those who don't export will be priced out by foreign imports. And once our manufacturing industries are gone, they will NEVER come back.

This is what has happened to the whole Western world with all manufacturing being off-shored to China. The reason the Western world is in so much trouble is because the world trade balances are not in balance. China has $3 Trillion in surpluses and the Western world is hopelessly in debt. The Western world has floating exchange rates but China has a fixed exchange rate which is being kept artificially low. By using an artificially low exchange rate, the manufacturing industries of the Western world have been gutted and then sent offshore to China.

Foe what it is worth, I hope the AUD goes back to its normalised, long term trend price of around 80c

 

[zzaaxxss3401]

Actually, yes they can. To drop the value of the AUD the RBA (which is the creator of AUDs) simply sells AUD in the forex market. The RBA can create an unlimited supply of AUDs. Indeed, the RBA web site clearly states that this is one of their policy options.

I could see at least two issues with this.
1) To affect the AUDUSD exchange rate, they (and everyone else) would need to be buying USDs. How many billions of AUDs do you think the RBA would need to buy in order to affect the exchange rate? Then we hold USDs... now what? Do you really think the US economy is going to turn around overnight and what interest rate will we be getting for holding USDs? Zero perhaps?

2) If you're suggesting printing money (since they are the creator of AUDs), this would cause inflation to sky rocket within Australia. Petrol would go through the roof, house prices would keep rising and wages would have to increase to keep up. Not good. Interest rates would need to be hiked in order to slow down the spending on cheap imports. Do you really want to head back to the 80's with 17-18% interest rates? The stock market would crash because why risk money on shares, when you can get 15% putting it in the bank. The economy collapses because companies are now worthless and they can't raise money from shareholders (if there are any).

A high AUD is good - Australians can afford better holidays, cheaper computers, cheaper phones, pretty much cheaper everything that we do not make ourselves. I hope the AUD goes to $1.50.

Oh dear. As I said in my first post, exporters and tourism are already struggling. Where do you think your food comes from - dairy products, cereals, vegetables, meat? Do you think the farmers across Australia are all planning holidays while the AUDUSD is strong?

Perhaps your wish of $1.50, is exactly why the Government should have a Resources Tax - to even the playing field across the whole of Australia. Why should the Mining companies continue to make a 59% profit, while the rest of the country goes out of business. http://www.theage.com.au/business/p...but-a-mining-tax-is-vital-20110422-1drg1.html

Here's a thought though... If you were the only supplier of "cheaper phones" and "cheaper computers" and cars and steel and plastics in the world (aka China), wouldn't you hike the price for Australia to increase your profits and see what people are prepared to pay? Afterall you do have the monopoly and no one else can afford to compete because inflation has pushed wages and factory costs too high here in Australia.

 

[tothemax6]

If AUD goes to $1.50, every manufacturer in Australia who exports their products will be bankrupted due to lack of sales to overseas customers. Even those who don't export will be priced out by foreign imports. And once our manufacturing industries are gone, they will NEVER come back.

1) If our exporters disappeared, why would any foreign company need to buy AUDs? They wouldn't, and the AUD would plummet. This is supply and demand. I hope the demand is so high for our commodities, and so low for US goods, that AUDUSD goes to $1.50.
2) If our manufacturing industries go, they can and do return, if there is profit to be had. That's economics.

By using an artificially low exchange rate, the manufacturing industries of the Western world have been gutted and then sent offshore to China.

If the chinamen wish to subsidize our consumption, they can be my guest. At some point, they have to spend those reserves. If they don't, they are literally throwing hard-earned money in the bin.

Foe what it is worth, I hope the AUD goes back to its normalised, long term trend price of around 80c

This will only occur when the Chinese have a crash, or if the US gets its house in order. The former is not due just yet, and the latter if way off.

I could see at least two issues with this.
1) To affect the AUDUSD exchange rate, they (and everyone else) would need to be buying USDs. How many billions of AUDs do you think the RBA would need to buy in order to affect the exchange rate? Then we hold USDs... now what? Do you really think the US economy is going to turn around overnight and what interest rate will we be getting for holding USDs? Zero perhaps?

To lower the price of AUD, the RBA bids the price down by selling fresh AUDs. Only to increase the price of AUD, does the RBA need foreign reserves to sell on the market. I am not saying the RBA should do this, only that it can.

2) If you're suggesting printing money (since they are the creator of AUDs), this would cause inflation to sky rocket within Australia. Petrol would go through the roof, house prices would keep rising and wages would have to increase to keep up. Not good. Interest rates would need to be hiked in order to slow down the spending on cheap imports. Do you really want to head back to the 80's with 17-18% interest rates? The stock market would crash because why risk money on shares, when you can get 15% putting it in the bank. The economy collapses because companies are now worthless and they can't raise money from shareholders (if there are any).

I'm sorry, I think you need to do some research. First, 1) is the same as 2). Currency intervention involves 'printing' new AUDs (which are sold on the forex market). Second, yes it is inflationary, but as japan has proven, it can take a very long time for the printing to show up in inflation. Third, you cannot have money printing and also 'hike' interest rates. The RBA increases interest rates by withdrawing AUDs from circulation, and decreases interest rates by increasing (printing) AUDs in circulation.

Oh dear. As I said in my first post, exporters and tourism are already struggling. Where do you think your food comes from - dairy products, cereals, vegetables, meat? Do you think the farmers across Australia are all planning holidays while the AUDUSD is strong?

Whoever the cheapest seller of food is. Australia does not -need- farmers if they cannot produce food economically.

Perhaps your wish of $1.50, is exactly why the Government should have a Resources Tax - to even the playing field across the whole of Australia. Why should the Mining companies continue to make a 59% profit, while the rest of the country goes out of business.

Why would the rest of the country go out of business? Those profits need to be spent somewhere. It is a good thing that our miners are so profitable. And we should have less tax, not more.

Here's a thought though... If you were the only supplier of "cheaper phones" and "cheaper computers" and cars and steel and plastics in the world (aka China), wouldn't you hike the price for Australia to increase your profits and see what people are prepared to pay? Afterall you do have the monopoly and no one else can afford to compete because inflation has pushed wages and factory costs too high here in Australia.

This is an illogical statement. If they hike the prices, the computers and phones are no longer the cheapest, no? And Australia has never had much in the way of value-added industries like electronics. We are not a nation of brains, but of brawn.

 

[boofhead]

Some of China's consumption is based on contruction. For anyone that watched Dateline a month or so ago will have noticed the story of China building cities. Problem is at the moment those cities sit empty. The story featured a city designed for 6 million. The retail area had as much life as the Titanic gets now. One job has a good day when someone actually buys something.

 

[tothemax6]

Some of China's consumption is based on contruction. For anyone that watched Dateline a month or so ago will have noticed the story of China building cities. Problem is at the moment those cities sit empty. The story featured a city designed for 6 million. The retail area had as much life as the Titanic gets now. One job has a good day when someone actually buys something.

Its not going to end well, boofhead. Things will recover after China crashes, but the transition will really hurt. Every Aussie should be heavily accumulating savings.

 

[Wysiwyg]

Its not going to end well, boofhead. Things will recover after China crashes, but the transition will really hurt. Every Aussie should be heavily accumulating savings.

Gee bloke you should let go of the newspapers and television for awhile. For the first 25 years of my life I had no interest in finances and did not read the front pages of a newspaper and missed the nightly news.

During wars, oil price spikes, interest rate fluctuations and government changes I cannot recall noticing at any time a change in the lifestyles of people in general.

Talking to someone before about how the GFC affected them and they did not know much about the GFC. Again not a newspaper reader or television news watcher.

 

[tothemax6]

Gee bloke you should let go of the newspapers and television for awhile. For the first 25 years of my life I had no interest in finances and did not read the front pages of a newspaper and missed the nightly news.

Well that's fair enough, we all have different interests. Once upon a time I had no interest in economics whatsoever either. That was 2008. If you'd asked me back then what a government bond was, I'd have looked at you funny and said 'a what?'.

But I think there is much to be said for having a rough idea of the global economy. Whilst you or the people you know may not have been affected much by various economic calamities (the GFC made no difference to my lifestyle whatsoever also), I know people who's lives were very severely effected by the GFC. Sometimes it pays to forgo some of that 'ignorant bliss'.