AUD Slip Slidding

no one can tell with forex, just change when you need to use the $$ for your trip. Forex market can be pretty volatile, AUD could fall further and you would then be relieved to have had a higher rate

Lol mod should merge this thread into the other thread.

I am one of the economist calling for 65c to USD rofl ;D Our GDP has been ok/stable so far though, will have to see if growth goes backward now with the tariffs gaining traction and looks like Trump/USA is going ahead with more tariffs like a cold war standoff...

 

I am calling 65 too

Merge with Australian dollar?? My thread

 

well thread started by you, I wouldnt call if yours though, everything here belongs to Simon doesnt it? haha

 

Yes.... gosh I am territorial...lol

 

Looks like inflation is up for the US, My guess is that are we going to mirror theirs as prices of imported goods and commodities will likely to jump in conjunction that our currency is on a downward trend. If we hit the inflation target, RBA are likely to consider raise the rates, that might bring about currency stabilisation.

 

Hi guys,

I caught up with a lender yesterday who made a bet that the next move in rates would be down.

I agree that the AUD is heading south, but I think to get to $0.65 there would need to be a catalyst. Perhaps this chap is right that there will be a rate cut in the next year.

Thoughts?

 

The USA bull market in equities is well holly ****...

So I would expect a serious correction in the new 1/2 years.
Sudden brutal.

Than rates down to 0/.

 

Any change that rates will go back up temporarily?? What factors would cause that to happen?

 

Looks like you made the smart choice based on todays rate (and will probably get worse this month and Dec).

 

Can't see rates going down further. That would just accelerate the downward trend on the AUD. The RBA's hands are tied. Their next move, I expect, will be up due to deterioration of our dollar.

 

Im not expecting a real slowdown until 2020 HOWEVER...... expect a fall in USA consumption in March/April/June next year when people on the east/west coast file their taxes in Feb/March and realize how badly they are being screwed with the Trump tax cuts.

Personally my wife and I are planning on reducing our exposure to USA equities about 50% in December this year but this timing is more to take advantage of the $A/$US differential when the Fed raises 0.25% in Sept and AGAIN 0.25% in December.

This said, I think you ARE right about "sudden brutal", have a read of this - 10 Years After the Financial Crisis | J.P. Morgan

Basically the theory in that over reliance on ETF and forced trading is going to result in mispriced assets (with rapid movement of those asset prices).....which = opportunity if you ask me (but hey what do I know.....my biggest exposure/loss is #INTC because a CEO couldn't keep it in his pants and I didn't think/still don't think this is really going to affect earnings....so like I said-don't listen to me).

 

If US indicators are up (inflation & interest rates), Ausbanks pushing their rates higher due to the cost of borrowing is increasing is the next movement direction down considering our growth stats last week at 3.4% exceeded the RBA's target range of 2-3%?

A lower AUD will also attract tourism (we're a cheap Pacific destination) and possibly spur some foreign investment.

 

A weak AUD is almost never a good idea. It benefits a narrow group of exporters, and hurts consumers (all of us). If a weaker currency was a good idea, Zimbabwe would be an export powerhouse, and not Germany.

 

To spur foreign investment the RBA needs to raise rates by about150- 200pts and leapfrog the US rate .
At the moment more money is flowing out to the U.S where they can get a better return.
And its probably going to get worse by christmas with emerging markets strugling , and for other countries relying on foreign currency .

 

Spot on IMO; A falling currency with imported inflation will not see rates cut by the RBA since that would further crash the dollar.

On a side note, the US's annual debt is around 1 Trillion so far and their collective debt is around 21 Trillion. So yes US might look like it's booming but this debt will catchup to them sooner rather than later...

 

That's why I can't see rates going down.

 

Here's how I see things playing out.

Property prices (in Sydney at least) plateau from here for another 18 months. I am already seeing a feeding frenzy on some of the properties I am going for for clients, but overall patchy.

In real terms, property prices will decline, but in nominal terms they will go sideways (to perhaps gently down) from here.

I have long said the property correction will be a tantrum taken out on the AUD instead of on property prices themselves - and we have already seen this playing out.

Far from being buying into a bubble, I actually think Sydney property will be a safe-haven over the next few years as protection from currency debasement.

As the currency debases, the last place you want to take refuge will be in your salary. Real estate will be much safer.

There are multiple ways a property market can crash in real terms, and central banks will choose crashing the currency almost every time.

Have a look at some charts I provided in a relevant article, below to illustrate: Sydney Property Prices Peaked in 2004 - Bridge to Bricks

As always, I could be wrong, and time will tell.

 

I agree with most of your post John, however 18 months I feel is very optimistic.

 

67 today.... its going to hit 65, another interest rste cut

 

I reckon it's a good chance of hitting 50 in the next year or two. There's just no bright light in our economy at the moment to support a dollar even at the current lowish level.