What's your prediction on the Australian Dollar?

[JohnK]

Within two generations, three at the most, literally 1/2 to 3/4 of the population will be unemployed and unemployable because there's nothing they can do a robot can't do quicker, cheaper and faster. The machines will take over what offshoring and hordes of immigrants have been doing for the last couple of decades. What remains to be seen is whether we end up as Star Trek or Elysium.

And there you have the Rise of the machines.

 

[drron]

Though Tokyo land prices,the Nikkei and interst rates all fell from 1989-91.And debt/GDP started really rising then.They had their GFC.
Demography didn't really start kicking in until 2005.
https://populationpyramid.net/japan/2015/
https://populationpyramid.net/japan/2005/
https://populationpyramid.net/japan/2000/
https://populationpyramid.net/japan/1990/.

 

[ncraigm]

There goes the RBA admitting that inflation is terrible and income is going nowhere. Just in time for Glenn Stevens to sail off into the sunset.

Luckily Australians don't have a massive amount of debt to service and our main industries are built on a sustainable employment outlook /sarc.

74 handle quickly smoked - here comes a number starting with a 6 by Christmas...

 

[Tortuga]

Good to see fundamentals are finally starting to drive AUD closer to it's fundamental value. Speculators made their money pumping it up and now they will run to the exits. The Australian economy is struggling just as much as everyone else and we are far away from getting any inflation.

 

[Doctore1003]

The RBA is amplifying a move lower by the AUD that would have happened anyway this week, as the USD is bouncing against all ‘risk’ and ‘commodity’ currencies.

The USD is at an interesting place. It’s been heavily sold off in recent months as the markets have come to expect no further increase in the interest rate for a while. Then we got a failed technical breakdown last week, which is technically bullish and now the weak shorts are being shaken out.

But unless we get a really strong jobs report tonight, where is the catalyst for the USD to continue to strengthen in the coming weeks?

The US Federal Reserve has been very mindful of international issues in its recent decisions. Right now, equity markets look vulnerable, the yen has been surging, and the next US interest rate decision is just days before the Brexit vote. None of this is USD-positive.

Unless we get some US data surprising to the upside (especially inflation and consumption data) I think the USD downtrend will resume.

 

[Tortuga]

The RBA is amplifying a move lower by the AUD that would have happened anyway this week, as the USD is bouncing against all ‘risk’ and ‘commodity’ currencies.

The USD is at an interesting place. It’s been heavily sold off in recent months as the markets have come to expect no further increase in the interest rate for a while. Then we got a failed technical breakdown last week, which is technically bullish and now the weak shorts are being shaken out.

But unless we get a really strong jobs report tonight, where is the catalyst for the USD to continue to strengthen in the coming weeks?

The US Federal Reserve has been very mindful of international issues in its recent decisions. Right now, equity markets look vulnerable, the yen has been surging, and the next US interest rate decision is just days before the Brexit vote. None of this is USD-positive.

Unless we get some US data surprising to the upside (especially inflation and consumption data) I think the USD downtrend will resume.

It's a very interesting time.

The Fed wants the USD to depreciate to assist GDP, trade balance and stock markets (people feeling wealthy and spending).

The reality however is the US is in a better position than many of the currencies it is measured against. Japan is a ticking time bomb and I cannot name one other country in the world with a large effect on markets that is even thinking of raising rates except the US. So I think if the market were a reflection of the real situation the USD should appreciate however speculators and the interests of many want it to depreciate. In cases like this those who fight the speculative herd usually end up getting trampled - even if their logic is correct. Everyone knows there will not be a rate rise in June - Janet is scared of setting off a stock market crash and will keep feeding the market with what will likely be more stimulus further down the line. The ECB, China, Japan are all still throwing money at everything that moves to try stimulate growth - the US has passed that stage for now and is on a tight rope to see if the engine is going to get running or stall again. My own thoughts are that stock market valuations are completely out of touch with reality. Oil companies are nearly trading back where they were when oil was $100 USD - it is a joke.

 

[juddles]

I am between a rock and a hard place AND without a paddle. Lower USD value hurts me at work, but it makes all my travel cheaper. Never sure whether to laugh or cry.....

 

[andy2015]

I am between a rock and a hard place AND without a paddle. Lower USD value hurts me at work, but it makes all my travel cheaper. Never sure whether to laugh or cry.....

Same situation but I make more than I spend on travel so a lower AUD is much preferred by me.

 

[whatmeworry]

Reading somewhere overseas speculators are shorting our big banks. Heaven help the dollar and our economy if housing crashes.

 

[Awesom Andy]

Speculators made their money pumping it up and now they will run to the exits.

Speculators also make their money driving it down. As long as there is movement, they can derive something from it. They hit trouble when something is nice and stable and doesn't move very much.

I am between a rock and a hard place AND without a paddle. Lower USD value hurts me at work, but it makes all my travel cheaper. Never sure whether to laugh or cry.....

It's called hedging. More immune from currency risks.

 

[drsmithy]

Reading somewhere overseas speculators are shorting our big banks. Heaven help the dollar and our economy if housing crashes.

No worries. Median house price at something like 10x median income. Couples in their twenties earning barely $100k buying million dollar shoeboxes with parents as guarantors. What could possibly go wrong ?

 

[cove]

We have been out of the Australian market for housing for about 10 years. The problem with over priced homes is you start receiving rates bills from hell and they keep rising. Back around 1969 you could buy a home for under 4 times your family income. Now Sydney and Melbourne have gone nuts and parents have to assist. The problem for parents is they think they will get paid back by their children when the parents retire but often that is not possible.
Kids borrowing large sums of money to buy houses at the current levels is getting pretty risky unless the block can be sub divided to pay off a chunk of the borrowing.
I do hope you bought a bit of currency if you needed it in the last couple of weeks.

 

[Awesom Andy]

The problem for parents is they think they will get paid back by their children when the parents retire but often that is not possible.
Kids borrowing large sums of money to buy houses at the current levels is getting pretty risky unless the block can be sub divided to pay off a chunk of the borrowing.

Given the size of the mortgage the kids are taking up, parents would have to be pretty delusional to expect any money to flow back to them. In the past decade, some have done well to purchase a larger block of land, pull the house down, and rebuild a duplex. Construction costs were more reasonable back then, and reduced their own mortgage substantially. It's a lot harder now, as any suitable land would have a cost premium attached to it during sales as everyone has wised up to that idea.

 

[wandering_fred]

Given the size of the mortgage the kids are taking up, parents would have to be pretty delusional to expect any money to flow back to them. In the past decade, some have done well to purchase a larger block of land, pull the house down, and rebuild a duplex. Construction costs were more reasonable back then, and reduced their own mortgage substantially. It's a lot harder now, as any suitable land would have a cost premium attached to it during sales as everyone has wised up to that idea.

OTOH, with the assumption that the kids actually continue to make the mortgage payments, a loan guarantee doesn't cost any $$ and in many cases would eliminate the need (and cost of) mortgage insurance.

And remember the kids (and nephews/nieces) will be the ones that bring goodies to the old age accommodation.

Happy wandering

Fred

PS When you collect pension based in US$ you worry more about an over-valued AU$ than an undervalued one.

 

[JohnK]

I am between a rock and a hard place AND without a paddle. Lower USD value hurts me at work, but it makes all my travel cheaper. Never sure whether to laugh or cry.....

I am getting close to retirement and looking to buy overseas. I am crying.

 

[drsmithy]

We have been out of the Australian market for housing for about 10 years. The problem with over priced homes is you start receiving rates bills from hell and they keep rising. Back around 1969 you could buy a home for under 4 times your family income.

Yeah, and the other really important thing to remember that most people ignore, is that in 1969 your "family income" was essentially a single full-time wage - the man's.

Now the "family income" is typically two full time wages, and adjusted for inflation those wages are quite a bit higher.

In real terms housing is at least 4-5x as expensive as it was forty-odd years ago (and the number of people who think this is a good thing is staggering, though I'm sure they've made out like bandits without having to do anything).

 

[drron]

There goes the RBA admitting that inflation is terrible and income is going nowhere. Just in time for Glenn Stevens to sail off into the sunset.

Luckily Australians don't have a massive amount of debt to service and our main industries are built on a sustainable employment outlook /sarc.

74 handle quickly smoked - here comes a number starting with a 6 by Christmas...

Australians do have a massive amount of debt.The Government doesn't.

https://www.theguardian.com/busines...seholds-became-the-most-indebted-in-the-world

Household debt/GDP Australia now leads the world.This means if there is a crash in house prices there is going to be much pain for many Australians.

 

[Doctore1003]

Australians do have a massive amount of debt.The Government doesn't.

https://www.theguardian.com/busines...seholds-became-the-most-indebted-in-the-world

Household debt/GDP Australia now leads the world.This means if there is a crash in house prices there is going to be much pain for many Australians.

This is true. It's so irritating to hear conservatives constantly drone on about how government debt is a problem, when the real vulnerability lies with households and banks. It's obviously impossible to predict if Australia will have a mortgage debt crisis, but if we do and the government has to step in to prop up the banks (like some European countries had to do a few years ago), then the government's situation will actually become a problem. But who will deserve the blame?

 

[whatmeworry]

Aussie dollar down about 3-4 cents this week.

RBA flagging more cuts this year.

Last couple governments wasting money on bribing the community, when more should been spent on infrastructure which would have now helped with mining slow down.

 

[ncraigm]

Australians do have a massive amount of debt.The Government doesn't.

Kind of what I was suggesting, hence the '/sarc(asm)' tag at the end.

We've borrowed like madmen and haven't provided for the rainy day. With the end of the mining boom paying the piper will be especially hard. It won't be inflated away like in the past.