Australian Dollar 2018

Down to 73.85c today. Another week to go before trade war breaks out in earnest. .

 

I'm not too sure about this trade war yet... IMO ,based on how Trump does things, he goes all in and then backs down so ...

 

Hi PaulF,

I agree. All negotiations start with friction before they are resolved, and we are in the friction stage now. It doesn't mean there is a problem. One way Trump has been successful in negotiating has been that he uses the stick and the carrot, but he uses the stick first.

So I don't' think this is Smoot Hawley of the 1930's. Trump also makes some compelling cases that hitherto, free trade has been quite asymmetric with "free trade" being a unilateral process where other countries can trade freely in USA, but not the other way around. I am a free trade guy, but there are significant imbalances and asymmetries in the current system that do need to be fixed.

We will see where we land.

 

Yeah I thought so too until the steel tariffs started and some excluded allies like EU became included.

For the upcoming July tariffs, I am expecting them to come into effect, at least until China gives up and USA gets what they want.

Or China doesn't give up, causing their economy to crash and USA ends up winning again.

 

Good point and who knows with Trump in charge...
It's a lose-lose situation as both China and the US will be losers in an all out trade war. Lots of industries in the US will be negatively affected by the tariffs like automotive, industrials(Boing is a big one), farmers and chemicals....

Major forces at play here and it seems like the end result will either dictate the continuation of US hegemony or it's end.

Either way, seems like OZ will be going through some rough turbulent times in the near future and as usual some will lose and some will win.

 

Yeah I thought so too until the steel tariffs started and some excluded allies like EU became included.

So for the upcoming July tariffs, I am expecting an escalation, at least until China gives up and USA gets what they want.

Or China doesn't give up and their economy finally crashes down.

Yes it will be lose lose, though Trump knows China has much more to lose as half of Chinese exports go to USA, whereas China only makes up 15%plus of USA exports.

USA is just trying to level the playing field since earlier free trade agreements have not worked out well. The respect of IP rights is a big thing, a lot of potential revenue and profits are lost to 'copycat' products. Besides almost every other significant big economy like Japan and Europe have IP laws, it's not really such a big ask.

USA and the petrol dollar will be the major power for a while yet I reckon. And besides they still have the best aircraft carrier fleet with drones to boot I can bet u every nation would love to have some American drone technology.

Oz will definitely have to prepare for some headwinds. China's not too happy with our anti influence laws against Chinese investment

 

Alot of the world drone technology comes from Israel.

It used to be one of the leaders in Drone tech. Not sure if it still is.

 

AUD going in the right direction for me

 

Not for me

All our client will be paying more for their goods this Christmas .

 

Right, Not good for everyone

 

Always a push pull.
I can relate to you as we hold us currency as well

 

Yes, Its great bringing money back to oz or having money in US fir holidaying

 

What Goldman has to say

Terms of Service Violation

 

Goldman is not saying much, 72c is pretty close to the 73c reached recently.

I am calling 70c at least if not lower. China's export numbers for last month just went negative, this will eventually filter down to our numbers as there will be less demand for raw materials.

Go trade war go...

 

Tariffs playing havoc

AUD hit 73 now back to 74, trending south.... next 6 months should be interesting

 

Foreign buyers don't see Australia as a cheap place to buy now that the minimum capital gains tax is now 41c in the dollar.

The ATO killed and cooked that goose.

 

Trump just said he is planning to increase the tariffs to cover 500 billions of Chinese imports. Wow. It's game on.

70c looks even more likely now.

 

For those interested in how it works, I thought this was a good read.

The Aussie dollar rollercoaster (explained for economic amateurs)

 

Australian dollar falls to an 18-month low as Turkish tensions rise

 

I would not be surprised if we see the dollar fall in the 60's.....

Interesting times

this is the take away for me

Mr Oliver sees the Australian dollar moving down to around US70c. "Friday's fall in the Australian dollar also reminds that being short Australian dollar and long US dollar or Japanese yen is a good hedge against threats to the global growth and share market outlook," he noted.