Why the Aussie won't go down

Discussion in 'Currencies' started by Dogmatix, Oct 31, 2012.

  1. Dogmatix

    Dogmatix Active Member

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    An interesting article from FNArena about the AUD - worth reading IMO.

    From: http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=004A72E9-DE86-E6FE-B57D7CFCA0FDAC35

     
  2. Clawhammer

    Clawhammer Well-Known Member Silver Stacker

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    ...is it just me..or the beer.... did the last half of the article drift off into gobble-dee-gook ?
     
  3. Dogmatix

    Dogmatix Active Member

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    The beer ;)
     
  4. Eruaran

    Eruaran Member

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    The RBA is now trying to push the AUD down.
     
  5. bordsilver

    bordsilver Well-Known Member Silver Stacker

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    Aah. Good old X-M = S-I with the exchange rate acting to clear the markets. Simple really. One of the fun things is that movements in the real exchange rate are changes in our terms of trade (i.e. export a different amount of our stuff to trade for their stuff - where "stuff" excludes money trades).
     
  6. Naphthalene Man

    Naphthalene Man Active Member Silver Stacker

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    Aahh, thans bord. Now it is all clear.
    :p
     
  7. Lovey80

    Lovey80 Well-Known Member

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    My analysis of the AUD is the opposite of Mr Peel.

    The governments attempt at returning to surplus (as a big of a joke as that is) would mean that even though there is demand for government bonds, the actual availability of those bonds will not be changing. If a coalition get in it will be the same (the public has had enough of the credit card being racked up). So while the demand may be there, if the net debt is not increasing, the AUD has no where to really go as more bonds will not be entering circulation. The yield may certainly drop on the current ones in circulation/rotation forcing down the interest rate which is good for Australia.

    The other part of the analysis above suggests the commodity prices and account deficits..... Does anyone here really think our commodity prices are heading north and our account surplus will do the same (Bullish on the AUD) or is it more likely commodity prices continue to ease and the account deficit grows back to long term norms now we don't manufacture anything (bearish on the AUD)?

    I am going with sub 95c sooner rather than later.
     
  8. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    You got an approximate time frame there lovey? No pressure, just curious.

    Of course, if commodity prices continue to fall, then it's good bye to 21 years of growth, that's gonna hurt. And the word out of The Senate today (from the Lips of a Liberal, disgusting thought really :p ) is that the Government will get the theasaurus out and start prepping us for a budget deficit. Chanbge a few words here, insert some synonyms, don't mention the "s" word ever again, (that's "surplus" for you slower types ;) ) and Hey Presto!!!!!!! We've justified the necessity to return a budget deficit. :)

    You could always call it a "Comparative Surplus" swannie. You know? Compared to Greece we're, compared to Portugal we're......
     
  9. Lovey80

    Lovey80 Well-Known Member

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    I do have a time frame in mind but I will keep it to myself as always. I am actually surprised looking at just our figures that the Aussie is still so high, it's a joke really... Then I have a look at who we are being compared to and give myself an uppercut for being surprised in the first place. Then next wayne swan is just around the corner *cough* I mean black swan and that should give us a very good shake up.

    Labor may actually return us to surplus, but you can bet your ass they will get called out by the coalition and every person that can count to 10 that looks at the figures for cooking the books like they always do. Giving a national budget to the Labor party is akin to giving the keys of a small business petty cash tin to a junkie. Sure the receipts may add up after some threats of sacking for shortfalls, but you can guarantee the receipts are there just for show.
     
  10. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    Today's Forex Daily Outlook was interesting:

    Just putting on my de Bono Purple Hat (The paranoid one with eyes stuck to the back of it), do you think it possible at all the US would pressure Central Banks in countries that are its Allies to not pursue QE or ZIRPs? This of course does not include Britain, but nearly every move the US has made on the world stage since WWII has had the full support and involvement of Britain in it's planning stages.
     
  11. hiho

    hiho Active Member Silver Stacker

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    There is an increasing number of australian bond sellers entering the market with the appetite increasing in australia, traditionally not a bond buying community
     
  12. Dogmatix

    Dogmatix Active Member

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    Yes, definitely, and particularly Australia.

    Maybe not so much in larger economies.

    Whether it is coercive, our just misleading economic theory, I think it is very possible. Look what we did with the stimulus, cash for clunkers, etc. 52nd state much?
     
  13. errol43

    errol43 New Member Silver Stacker

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    You don't want a bono purple hat these day..What you need is a tartan coloured hat like a wee Highlander. :)

    Regards Errol 43
     
  14. Auspm

    Auspm New Member

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    I think a lot of what happens here is determined internationally.

    There's no other reason that in a country which is supposed to be one of the wealthiest western economies in existence, weathering the calamity of the 2008 flash crash well and kept bouyant by being a resource 'boom' should have gone from 20 billion in public surplus to around 250 billion in the red 4 years later.

    Party politics shouldn't even come into it.

    We might have the best view of the world on the global shit sandwich, but it's still a shit sandwich at the end of the day and I think people are very forgetful of that fact.

    We still operate under a multispeed economy with a strongly slowing retail sector, increasing layoffs & business bankruptcies and a dwindling domestic manufacturing base.

    The central bank here are moving towards a cheap credit policy to bail out the debtors, knowing that cheap money will simply lead us down the path of international economics - albiet somewhat slower.

    How can anyone who's even remotely awake still believe 'it's different here' and that we're immune to what's coming in the international markets?

    About the only thing Australia might have an edge on is just how full of shit our political leaders are and how willingly out stupid populace buys the story they're being told.

    Juliar slapped on one of the most enslaving taxes on any nation in the breathing tax (after swearing she wouldn't) and the idiot population here are actually considering voting for her next year... the 'lesser' of two evils over big ears?

    When the international ship goes down, we go down with it - end of story.

    People need to take off the blinkers and start facing objective reality before it bitchslaps you back to the dole queue.
     
  15. Clawhammer

    Clawhammer Well-Known Member Silver Stacker

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    Equity investors will be wearing brown undies....
     
  16. renovator

    renovator Well-Known Member

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    If anyone gets "bitchslapped " back to the dole queue is there anything they can do about it ?

    You live in such a doom & gloom world .
     
  17. Auspm

    Auspm New Member

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    It's not a question of Doom & Gloom as much as being realistic about the situation.

    How could anybody in their right mind trust the assurances of our politicians or head of the RBA who are on record for being pathological liars?

    I'm just saying that this country has a severe case of irrational exuberance and judging by what has pulled down this country's economy in the past, I'm lamenting the fact that this time anyone thinks it might be different.

    We ride the coat tails of the industrial world. If they go down, we go down along with them.

    Or doesn't anyone remember the all out panic in this country back in 2008?

    Government of the day blew our entire surplus in a panic and now look where we sit.

    Where's our manufacturing base gone?
    Where's the future influx of trade coming from to reignite our flagging economy?
    WHO is going to even be able to pay for it?

    We have 20% of the populating moving from net tax payers to next tax takers in the next 5 years and absolutely nothing in our economy upcoming that will be able to account for this loss of public income (except maybe further propped up house prices?)

    Meanwhile, we have politicians throwing cash at the most ridiculous public works programs whilst our core industries and infrastructure rot with the ONLY 'solution' on the table being more taxation!

    Doesn't sound like a very secure economy to me at all... which is why so many international management funds are starting to short this country and it's banks I think.

    I'd rather think for myself, regardless of what people might call me Reno and everything I've seen without the rose coloured glasses on tells me we might be very well living in a fantasy in this country, whilst some very serious storm clouds gather on the horizon.

    Everytime someone comes out and proclaims 'it's different here' I seriously want to cringe...
     
  18. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    Agree.

    But why won't the AUD go down as many here have predicted over the past 12 months?

    It is different enough to keep the AUD at or above parity for for much of the past two years. 18 months ago I would've thought the AUD would be in the 90-95cUSD range, but we're not, mostly due to the USD Fed's manipulations. I was hoping the AUD would devalue, for some personal reasons and also because our economy is in dire straits and needs a weaker $ because that's the only game in town now. The only way I see the AUD tanking is when the USD finally collapses, and then it won't matter.

    @lovey or anyone else, re: bonds. Can you please explain this chart to me in normal language and any impact it has on the AUD/USD? I understand the blue line to be turnover, and the bars to be turnover ratio, turnover has been rising for a number of years, the turnover ratio has been fairly static. What does it all mean and has this got anything to do with a high AUD?

    [imgz=http://forums.silverstackers.com/uploads/753_treasury_bond_maturity_9nov.jpg][​IMG][/imgz]
     
  19. Dogmatix

    Dogmatix Active Member

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    ^ totally agree with you, except for the bust part

    I think if there is an event that causes our banks and industry to suffer (pop the property bubble, etc), then there will be a panic rush out if the AUD.

    Although it may also be dependent on China.

    A US financial collapse would do it too.

    Basically any economic event that would cause a panic out of the AUD. Once the panic builds momentum, how can we bring the AUD up again?
     
  20. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    Which bit are you referring to doggie?

    Edit to add: Nah, I understand, you're saying that there are more ways for the AUD to tank than just the one I'm referring to.
     

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