What's your prediction on the Australian Dollar?

[robd]

Arghhhh… I put through a TT for USD this morning based on all the media reports of a rate cut today - should've waited. All easy in hindsight.

I think I'll lock in a few FEC's tomorrow.

 

[footy99]

It's not quite that simple, it's more the inflationary impact in the drop of the dollar that erodes the savings, and whilst it may have an effect on inflation, and therefore the real value on people's savings, there is not a 1:1 correlation between the AUD:USD exchange rate and amount of inflation. Unless of course you are planning on a move to the US or anywhere with currency pegged to the US, and want to take your savings with you.

Well all AUD cash, property and stocks have dropped 25% x whatever % you intend to spend/invest outside Australia, before inflation.

Had a good chat with a Chinese investor on the weekend which brought home the impact. He sees the Aussie housing market as a goldmine right now. Every house that has just held its price over the last 2 years has actually dropped 25% to anyone outside Aus and seems to be on sale. Even the shock/horror 20% rises in certain areas are actually price drops to international investors. Same goes for stocks and anything else in Aus - while it is all becoming more expensive for Aussies, at the same time it is actually getting cheaper for everyone else due to the exchange rate plunge. The further the AUD drops, the more that trend spirals.

 

[Foreigner]

The Kiwi trumps in other ways too:

http://www.smh.com.au/business/12-r...reeping-up-on-the-aussie-20150407-1mfqf7.html

 

[burmans]

And that's before rugby even gets mentioned!

 

[Isochronous]

NZ is doing very well economically. They are lucky that they are not lumbered with an excessive welfare state like Australia

 

[whatmeworry]

NZ is doing very well economically. They are lucky that they are not lumbered with an excessive welfare state like Australia

Yeah we can thank Howard/Costello for middle class welfare.

 

[drsmithy]

NZ is doing very well economically. They are lucky that they are not lumbered with an excessive welfare state like Australia

NZ's social expenditure is higher than Australia's as a %age of GDP.

 

[cove]

When Rudd, Gillard and Swan ran up hundreds of billions in deficits they told us it wasn't a problem. I guess they meant it wasn't a problem for them to fix. Now it looks like it might take 50 years to fix as the post war baby boomers shuffle off to retirement. This has become a structural problem.
Our currency is just holding at 76 cents against the US dollar and mining and oil jobs are getting trashed thick and fast.
We have to move faster away from the age of entitlement to an age of contribution.

 

[TiredOldFlyer]

[QUOTE
Our currency is just holding at 76 cents against the US dollar and mining and oil jobs are getting trashed thick and fast.
We have to move faster away from the age of entitlement to an age of contribution.[/QUOTE]

How can it help when we earn AUD and spend in Yuan ?

 

[Cool Cat Phil]

When Rudd, Gillard and Swan ran up hundreds of billions in deficits they told us it wasn't a problem. I guess they meant it wasn't a problem for them to fix. Now it looks like it might take 50 years to fix as the post war baby boomers shuffle off to retirement. This has become a structural problem.
Our currency is just holding at 76 cents against the US dollar and mining and oil jobs are getting trashed thick and fast.
We have to move faster away from the age of entitlement to an age of contribution.

Precisely!

Also worth noting is The Aussie dollar is currently lower against the NZD than during the period around 2003-2005 ( when the AUD v NZD hovered around $1.07 for quite a while) whilst at the same time the Aussie dollar hit below 60 US cents.

The Kiwi Economy has turned a corner, whilst our own economy is looking rather shaky.

 

[drsmithy]

When Rudd, Gillard and Swan ran up hundreds of billions in deficits they told us it wasn't a problem. I guess they meant it wasn't a problem for them to fix. Now it looks like it might take 50 years to fix as the post war baby boomers shuffle off to retirement. This has become a structural problem.

Become ? Howard & Costello made it a structural problem.

We have to move faster away from the age of entitlement tso an age of contribution.

Not going to happen until the baby boomers shuffle off.

 

[drsmithy]

Precisely!

Also worth noting is The Aussie dollar is currently lower against the NZD than during the period around 2003-2005 ( when the AUD v NZD hovered around $1.07 for quite a while) whilst at the same time the Aussie dollar hit below 60 US cents.

The Kiwi Economy has turned a corner, whilst our own economy is looking rather shaky.

Well given we basically setup our whole economy to sell dirt to China and swap houses with each other at absurd prices using money borrowed from foreigners, that shouldn't have come as a big surprise to anyone.

NZ isn't that far off, either, with a huge reliance on dairy exports to China and a similarly massive property bubble.

 

[Cruiser Elite]

NZ isn't that far off, either, with a huge reliance on dairy exports to China

Ridiculous comparison - cows produce milk every day which the Chinese babies consume every day - and that'll prolly go on for a while yet - absolutely impossible for NZ or Aus or whoever to produce sufficient quantities of milk going forward to satisfy the ever increasing Chinese demand. My lordy I take a suitcase full of baby formula to China each month for 2 diff babies - I could take a container load each month if permitted.

 

[drsmithy]

Ridiculous comparison - cows produce milk every day which the Chinese babies consume every day - and that'll prolly go on for a while yet - absolutely impossible for NZ or Aus or whoever to produce sufficient quantities of milk going forward to satisfy the ever increasing Chinese demand. My lordy I take a suitcase full of baby formula to China each month for 2 diff babies - I could take a container load each month if permitted.

It was more a comment about dependencies on a very small number of exports and customers.

 

[dajop]

Well all AUD cash, property and stocks have dropped 25% x whatever % you intend to spend/invest outside Australia, before inflation.

Whatever % you intend to invest in USD and USD pegged currencies. If you are investing in some other markets (such as Europe or Canada) the impact is far less significant.

Also, if you already have foreign investments in USD assets, in AUD terms that part has definitely increased in value.

I stand by my assertion that a 25% drop in the value of AUD doesn't mean that 25% has been wiped off the savings of most Australians.

 

[drsmithy]

I stand by my assertion that a 25% drop in the value of AUD doesn't mean that 25% has been wiped off the savings of most Australians.

Indeed. The vast majority of Australians have most of their savings in AUD bank accounts and local stocks (and their houses, if you believe that's a form of saving).

Given we import pretty much everything we consume, however, that AUD drop is going to start biting soon - though the massive markup on most retail products here would suggest there's plenty of cream in the supply chain to start eating into before visible prices start going up.

 

[Cruiser Elite]

Indeed. The vast majority of Australians have most of their savings in AUD bank accounts and local stocks (and their houses, if you believe that's a form of saving)

And you are about the only person on this planet who does not consider this to be the case.

Given we import pretty much everything we consume, however, that AUD drop is going to start biting soon - though the massive markup on most retail products here would suggest there's plenty of cream in the supply chain to start eating into before visible prices start going up.

Yep they're all fat cats them people in business - they all deserve a haircut.

You are certainly on a roll today mate - so when exactly are you going to give both Joe Hockey and Glenn Stephens the boot so you can take over the reins?

 

[drsmithy]

Yep they're all fat cats them people in business - they all deserve a haircut.

Before the recent AUD crash - for *years* - it was not uncommon for retail goods in Australia to cost twice as much or more as they do overseas - and that's overseas retail prices, not even wholesale.

Someone in that equation made a lot of money, and it wasn't checkout chicks on minimum wage.

"Them fat cats" have been making out like bandits for decades. You just need to look at the changes in capital and labour share of GDP to see that. "Entitlement" writ large.

But keep up the dog-whistling. That'll really help to fix the problems.

 

[JohnK]

Left BKK airport a couple of days ago. The AUD was 22.68 which is the lowest I have seen in 12 years visiting Thailand. What's more disturbing is both the NZD and SGD were higher. Makes no sense.

Speaking with an expat in Chiang Mai and he mentioned that Thailand is hurting with the THB pegged to an overly high USD and may break away. Some saving grace.

 

[Cruiser Elite]

Speaking with an expat in Chiang Mai and he mentioned that Thailand is hurting with the THB pegged to an overly high USD and may break away. Some saving grace.

Yanks are starting to feel the pain also - high USD starting to slow their exports - it's a vicious circle.