Will the US dollar rebound? Possible?

[Ken]

Question?

Is there the possibility of the US dollar rebounding?

A lot of US dollar based stocks have been hit hard.

Is a 90 cent plus AUS dollar sustainable?

Stocks like NWS, RMD, ALL, JHX, BLD, MIG, are all being effected by the weak US dollar.

THe question is will it happen anytime soon.

Do we just stay clear of anything that has earnings in the US currency?

THe US stocks may be rallying, but in terms of aussie currency and returns for australian investors, the profits have been erased due to exchange rates...

Where as over seas investors in australian markets may decide to take profits off the table, with the strong run of the Aussie dollar.

Is that how it works>

Currency is very important for imports/exports. where is the balance for the Aussie dollar? where should it be at? Is it too high?

 

[rederob]

Re: Will the US dollar rebound? possible?

Question?

Is there the possibility of the US dollar rebounding? yes

A lot of US dollar based stocks have been hit hard.

Is a 90 cent plus AUS dollar sustainable? yes


Stocks like NWS, RMD, ALL, JHX, BLD, MIG, are all being effected by the weak US dollar.

THe question is will it happen anytime soon. yes, but not for long~!


Do we just stay clear of anything that has earnings in the US currency? yes, if it can't turn a profit


THe US stocks may be rallying, but in terms of aussie currency and returns for australian investors, the profits have been erased due to exchange rates...

Where as over seas investors in australian markets may decide to take profits off the table, with the strong run of the Aussie dollar.

Is that how it works>
yes, and no

Currency is very important for imports/exports. where is the balance for the Aussie dollar? has not been reached yet

where should it be at? where the market "prices" it
Is it too high?

not yet

 

[ta2693]

Re: Will the US dollar rebound? possible?

This question is really very big. and beyond my intelligence to think.

If US is going to export it resource like what Russian did, the economy is going to bounce back without change the current policy.
I bet they will only export its resource when they are in real big trouble like what Russian experienced in 1990s. It is still too early to long US economy. The possibility of bounce back is very low in short term and the return on bet on bullish side is not attractive enough for me to punt.

 

[Ken]

Re: Will the US dollar rebound? possible?

The average range for the US/Aussie dollar to trade in is around 75 cents Aussie for every US dollar.

If the US goes into recession I guess this will have an effect on the aussie dollar as our inflation slows.

What a time to hold Australian Currency if your an importer.

 

[greenfs]

Re: Will the US dollar rebound? possible?

The only way the USD is likely to reverse the current trend is if the US Government were to increase interest rates. This is something that is unlikely to occur in the short-term as the government attempts to avoid recession by reducing rates as and when required.

Over time the US economy could be forced to raise rates to ensure that the economy has adequate funds to finance the ever-growing current account deficit.

It is my firm view that we are heading to USD and AUD parity and may be even beyond that if our own economy stays in a boom mode.

 

[Poker]

Re: Will the US dollar rebound? possible?

I am also under the belief that the AUD will reach parity with the USD (probably around middle of next year). USD can rebound however it doesn't seem likely under current market conditions and investor sentiment.

 

[Pommiegranite]

Re: Will the US dollar rebound? possible?

Next winter would be a great time to go to Hawaii.

 

[Stan 101]

Re: Will the US dollar rebound? possible?

When was the last time the AU had parity with the US? Menzies era?



cheers,

 

[surfingman]

Re: Will the US dollar rebound? possible?

When was the last time the AU had parity with the US? Menzies era?
cheers,

My chart only goes back to 1987 and in Dec 1998 was pretty close to .90 will be an interesting few months for the almighty US

Maybe we could see Jerry Springer put a bunch of financial managers on stage together, with some middle class people and let know know how they have been very close to screwing them over for quite some time and they have finally got around to doing it...
:jerry

 

[Ken]

Re: Will the US dollar rebound? possible?

for retail investors like myself.

the US dollar tanking is giving me an opportunity to by some US currency related stocks.

When the US dollar reaches parity...we may see newscorps down trend flatten out....


The major stock i will be concentrating on is Newscorp. They are being smashed but producing great results and the business is operating well they would be $30 if the currency was favourable for them.

as a long term buy i think if newscorp gets under $20 they are a turn around stock to watch.

along with other companies like CSL, BXB.

US currency effected companies runing well.

THe key signals for buying newscorp will be. Interest rate Cuts in Australia, and Interest rate rises in the US.

Untill this happens, I suspect let US stocks go through to the keeper.

 

[Pommiegranite]

Re: Will the US dollar rebound? possible?

for retail investors like myself.

the US dollar tanking is giving me an opportunity to by some US currency related stocks.

When the US dollar reaches parity...we may see newscorps down trend flatten out....


The major stock i will be concentrating on is Newscorp. They are being smashed but producing great results and the business is operating well they would be $30 if the currency was favourable for them.

as a long term buy i think if newscorp gets under $20 they are a turn around stock to watch.

along with other companies like CSL, BXB.

US currency effected companies runing well.

THe key signals for buying newscorp will be. Interest rate Cuts in Australia, and Interest rate rises in the US.

Untill this happens, I suspect let US stocks go through to the keeper.

This is why I am glued to my TZL holding. They are looking at delisting from ASX and relisting on NASDAQ in Q2 2008. Hopefully, the USD will begin turning by then to add an extra dimension to any profit taking after then.

 

[sjp2]

Re: Will the US dollar rebound? possible?

supposed to be a cheap seafood christmas this year,because exports are slowing down due to the high $ etc etc check out this opinion http://truecontrarian.com/

 

[drillinto]

Re: Will the US dollar rebound? possible?

Question?

Is there the possibility of the US dollar rebounding?

A lot of US dollar based stocks have been hit hard.

Is a 90 cent plus AUS dollar sustainable?

Stocks like NWS, RMD, ALL, JHX, BLD, MIG, are all being effected by the weak US dollar.

THe question is will it happen anytime soon.

Do we just stay clear of anything that has earnings in the US currency?

THe US stocks may be rallying, but in terms of aussie currency and returns for australian investors, the profits have been erased due to exchange rates...

Where as over seas investors in australian markets may decide to take profits off the table, with the strong run of the Aussie dollar.

Is that how it works>

Currency is very important for imports/exports. where is the balance for the Aussie dollar? where should it be at? Is it too high?

:::::::::::::::::::

I trust this information will be of some help to you and other ASF members:

Gavekal’s four scenarios for what lies ahead
by Gwen Robinson, Financial Times, 15 Nov 2007

The markets right now are facing an unusually high level of uncertainty, whether it be about future growth, the nature of banks’ balance sheets, the ultimate impact of the housing slowdown, the ability of banks to extend future loans…and, of course, how the new Fed chairman will react to all of this.

In their client newsletter, the pundits at Gavekal, the Hong Kong-based independent research and investment house, have neatly outlined four possible scenarios for the financial environment ahead.

Scenario 1: The Fed sticks to its assertion that the risks for inflation and growth are now in balance, does not cut rates any further and the US economy grows past its credit crunch. If this happens, it would be massively bullish for the dollar, massively bearish for gold and potentially bearish for HK and Chinese equities (which are now anticipating more rate cuts). It would also be very bearish for US Treasuries and government bonds around the world. Additionally, we would most likely see a rotation within the stock markets away from commodity producers and deep cyclicals (which have been leading the market higher for years) towards the more traditional “growth” sectors, such as technology, health care, consumer goods, and maybe even Japanese equities.

Scenario 2: The Fed sticks to its guns, does not cut rates, and the US economy really tanks under the weight of the credit crunch. In essence, the US would move into a Japanese-style “deflationary bust”. In this scenario, equities around the world, commodities, and the dollar would collapse, while government bonds would go through the roof.

Scenario 3: The Fed ultimately cut rates, but this fails to rejuvenate the system and get growth going again. This would likely mean stagflation. As such, gold and other commodities would do well, while stocks and the US$ would struggle. Excluding bonds, this is increasingly what the market is pricing in today.

Scenario 4: The Fed ultimately cuts rates, and succeeds in reining in the economy. This would be good news for equity markets, commodity markets, and the dollar, but of course, terrible news for bonds.

The market is still adamantly betting on Scenario 3, and thus one has to be concerned that the Fed’s hand could once again be forced by the market to cut. However, having learned from past experience, Bernanke should now work harder to rein in expectations, particularly as the data continues to point toward a resilient US economy.
And with the weak dollar and continued growth around the world, rising exports should help counter any slack in domestic consumption (which has not yet fallen off a cliff) and the US housing slowdown (which should have a fairly limited impact on the overall economy).
Additionally, the steepening yield curve should begin to help banks rebuild their balance sheets, and thus the Fed may actually feel that it has already done its part in resolving this crisis. Given the above, Gavekal concludes that it is quite likely the market will be surprised to see Scenario 1 unfold.

 

[tayser]

Re: Will the US dollar rebound? possible?

AUDUSD was last at parity in 1982. Floated in 1983.

 

[Temjin]

Re: Will the US dollar rebound? possible?

The market is still adamantly betting on Scenario 3, and thus one has to be concerned that the Fed’s hand could once again be forced by the market to cut. However, having learned from past experience, Bernanke should now work harder to rein in expectations, particularly as the data continues to point toward a resilient US economy.
And with the weak dollar and continued growth around the world, rising exports should help counter any slack in domestic consumption (which has not yet fallen off a cliff) and the US housing slowdown (which should have a fairly limited impact on the overall economy).
Additionally, the steepening yield curve should begin to help banks rebuild their balance sheets, and thus the Fed may actually feel that it has already done its part in resolving this crisis. Given the above, Gavekal concludes that it is quite likely the market will be surprised to see Scenario 1 unfold.

Nice article, pretty much summarise what are the scenarios that alot of people are aware of and expecting to fold out one or the other.

But learning from past experiences, government date cannot be trusted. Those recent data pointing to a resilient US economy is by all mean, seem to be manipulated in the way they are calculated. There are quite a number of articles out there that explains why the reported job growth is not exactly true and that the last quarter's inflation rate is the LOWEST of all history is absolutely unbelievable in the midst of a credit crisis.

However, contratrian thinking teaches us that the expectation of the mass are always wrong. That they all believe gold prices will rise and the scernario may turned out they will drop because of scenario 1.

I'm more incline to trust the actual actions of others than listening to economists. When the Chinese government and Oil tycoons decided to drop the US dollars and when investors like Buffet and Jim Rogers also does the same, it is rather hard to have faith and be against them. (i.e. bullish on US dollars, bearish on gold/silver, other commondities)

It's a tough one to crack, maybe they are all wrong?

 

[aleckara]

Re: Will the US dollar rebound? possible?

In answer to a previous poster's assertion that an increase in the US interest rate will help.

My opinion is as follows:

An increase in interest rates may boost the US dollar in the short term as cap flows come into the US boosting demand for dollars however in the long term the higher interest rate would lead to a decay in the US dollar due to higher mortgage repayments and more foreign dollars chasing for the higher returns of these. Since US savings have consistency been lower than US investment in the past few years the difference must be funded by borrowings, so a higher interest rate in my opinion would lead to higher interest payments to outside US financers. Doesn't look good for the long term outlook for the dollar if this continues to be the case.

Also with the dollar falling and asset values falling many investors may want to bail out pulling capital flows out of the US further.

I don't like the outlook for the dollar. At best I think it will hold its position.

 

[Buffettology]

Re: Will the US dollar rebound? possible?

One of the leading economic and investment forecasting men in the world whom I met the other day, beleives it will not rebound in the short-term much, but that in 4 years the AUD will be all the way back down towards 65-70 US cents.

He is the creator of IBISworld.