Aussie $$ set to fall

[the_hawk*]

Following on from other events like the fall in interest rates, high unemployment and Australians high debt.

Rumors within the investment community believe the AU$ is about to fall.

I personally believe its about to trip over and fall on its sword.

So many will say that's just being negative, I say it will happen and it will be sooner than most think 1 to 6 months and the $$ will be falling.

The net effect of this will be that prices will rocket up as so much in now imported.

[just_me_karen]

It was varied, in major part, to reduce demand for our dollar and all the implications that holds. Of course, this wouldn't be necessary if our economy was as poorly managed as others who now suffer a close to zero interest rate. 

[monman12]

"It was varied, in major part, to reduce demand for our dollar and all the implications that holds."

Not so, the currency has traded above parity for much of the past 18 months, despite a string of seven rate cuts now totaling 2 percentage points, and the latest reduction produced a reduction to just US$1.0178 from about US$1.0240. Since then it is the RISE in the value of the USD that has relatively reduced the AUD to parity and below..

"Commonwealth Bank chief economist Michael Blythe said it appeared recent consumer price index (CPI) figures, which showed inflation remained benign, had prompted the RBA's decision to cut rates".

"Some economists said that if a run of recent negative data continued, the RBA may be forced to cut again."

ALAN KOHLER, Inside Business

Rate "down a bit on Tuesday with the cash rate cut and then all the way back up on Thursday when the unemployment rate fell. And then, crunch on Friday morning - back down almost to parity because the US dollar surged, breaking through 100 yen for the first time in four years, in turn because markets are starting to anticipate the Fed's exit from quantitative easing. "

What we learnt this week is that the Reserve Bank is powerless against foreign exchange markets and all that matters is what other currencies do, especially the US dollar and the yen.

[monman12]

A graph for you JMK, from Inside Business (ABC), It shows the USD/AUD rate  over  the week. The first fall to around 1.0175 was after the Tuesday RBA rate cut, then back up by Thursday !!!!!!. And then, crunch on Friday morning - back down almost to parity because the US dollar surged.

[the_hawk*]

John there is no point in trying to make someone who doesn't understand or more to point doesnt want to understand.

I think JMKs comments are more a case because if I say its black she will say its white and visa versa and nothing more and when I am shown to be correct then I am just copping others work.

I am sure if she believed it was so simple she would be making bucket loads of money.

I have not been involved quite as long as you John, only since 1999 and have stayed with FPOs, but as you know they say 90% of traders fail, so the fact that we are both still in the market puts us in the top 10%

And LL I will not need to jump out of any windows as my risks are managed very well thank you, I will tell you my worst day ever I lost $40,000  and that was without any leverage.

[just_me_karen]

I wish I believed the tin hats lol

[the_hawk*]

Believe what you want, it really doesn't matter to me.

What will be interesting is as the $ falls which many think is a great thing, that will be until the $s move away from the banks and into the markets and not just the Australian share markets and to invest into bonds from other countries it will make it harder and more expensive for banks to get money to loan out and that will again increase interest rates and make borrowing harder.

That along with a huge price hike of all goods, this will negate any mortgage saving and further reduce people disposable income further reducing spending.

[lakeland27]

if it makes manufacturing and agriculture/dairy worthwhile again it will be worth it. a lower dollar is the best way to boost employment and local competitiveness. it mightn't be good for some, but thats the gamble 😉

[the_hawk*]

Sorry LL it wont bring back manufacturing to this country,

its gone now and no one will bring it back without a huge financial incentive from the government and that wont happen in Oz because it would require a long term plan and we haven't had a government that's interested in more than what happens in their immediate term of office and whats in it for them for a very long time.

[lakeland27]

with a low dollar that could change very quickly.  besides , governments don't regulate who can make what and where, business does it if conditions are favourable.. if goods can be made in australia and profits made again, business will return.

[just_me_karen]

The govt already made a huge financial contribution to keep Holden here.