What's your prediction on the Australian Dollar?

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marki said:
What no way that is seriously abnormal
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Not really, when there are market discontinuities then most products have a clause that allows transactions to be delayed or stopped completely.

Remember the unlisted property trusts? Some people are still to receive their final payment dating from 1990.

All unlisted trusts or equivalent have that.
The travel cards did not really exist in any volume back on 2007/08 for example but now they can represent some substantial amounts.

Imagine the following scenario:

  • Somebody is worried about their GBP over in London (from Australia) so they went to the ATM to transfer their GBP8,000 to USD right at the worst rate. They then saw that the GBP was rebounding and decided to reverse their transaction. They then go onto social media saying how bad CBA was to let them do it when the GBP/USD rate was maniacal?

It happened many times (pre-social media) in 1987, 1990, 1994, 1997, 1999, 2000 etc in Australia with property trusts, equity trusts, balanced funds etc.

In Oct 1987 one erstwhile fund manager's portfolio contained more than 20% in Tasmanian second board stocks that did not trade until nearly 30 June 1988 - so redemptions were suspended. the business was subsequently sold.
 
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UK exits and AUD gets hammered too? :confused:

And I must not have been following the JPY. Why is so low at 75? Wasn't it nearly 90 only a few moths back?
 
Just remember Australia has a trade deficit,current account deficit and low commodity prices. When we add a Senate that may block fixing the current account deficit you can see Australia needs some reform. Every time our currency gets above 0.74 it is getting pulled back by more sellers than buyers at the moment.
 
Cove I don't have to like it but what you write is the truth.
 
cove said:
Just remember Australia has a trade deficit,current account deficit and low commodity prices. When we add a Senate that may block fixing the current account deficit you can see Australia needs some reform. Every time our currency gets above 0.74 it is getting pulled back by more sellers than buyers at the moment.
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And of course the RBA wants to keep it low so every time it heads towards 77+ they cut interest rates.
 
JohnK said:
UK exits and AUD gets hammered too? :confused:

And I must not have been following the JPY. Why is so low at 75? Wasn't it nearly 90 only a few moths back?
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About 12 months ago the JPY was good, but AUD losing value and the Yen strengthened.
 
While we still maintain some semblance of higher interest rates relative to peers and China doesn't blow up our currency will get some support. I do believe the RBA wants it lower than where it is today.
 
Global risk markets are looking bullish, and with the USD falling and bonds rising, the key driver is clearly expectation of continuing easy money policies from central banks. This is all bullish for the Aussie dollar, and the post-Brexit price action has been impressive.
 
Getting a Senate that is controlled by minorities would be a problem for our Australian budget and currency. We really need a bit of a majority to get the country running better. I think Australia will lose the triple A status if we get a hung parliament and then our currency will be vulnerable.
 
cove said:
Getting a Senate that is controlled by minorities would be a problem for our Australian budget and currency. We really need a bit of a majority to get the country running better. I think Australia will lose the triple A status if we get a hung parliament and then our currency will be vulnerable.
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The "AAA" rating is quite interesting as it is supposed to be a relative measure.

With the rapidly dwindling number of "AAA" rated countries or companies it will soon result in a re-jigging of what it means.

Already there are many companies' who's head office country has a lower rating then they do.

Think about it - how can you have a higher credit rating in your domestic currency than the domestic currency (aka Federal Govt/Central bank etc) has? That company's value is implicitly tied to the actions of the Govt (in extreme cases being nationalised).

I put this question to all the major ratings agencies when they would turn up to try and get us (as a fund mgr) to purchase their 'additional' services thorough to 2000.

Following their attempts at answering I would then provide three live (dead) examples that had happened since 1985 where the country rating proved far more correct in identifying the multinational's true credit risk.

Needless to say there were never any subscriptions to their services despite being a top ten fund mgmt house. Purely coincidentally I never suffered a credit default either.
 
We bought USD twice last week as a just in case position. I am not sure what will happen next week as it may be a week or three before we know the true election outcome.
 
The AUD has opened around .7440 to .7450 this morning after the election we had to have. The next 3 years in politics may have the elected ones earn their pay.
 

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