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One Australian dollar now buys more than one US dollar; Dollar tops 102 US cents, soars towards record
Topic Started: 2 Nov 2010, 07:44 PM (4,483 Views)
Strindberg
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Stevens has now completely fucked up. House prices will fall but are now irrelevant in the big picture. The rest of the world's central bankers and governments are doing everything they can to maintain their own countries competitiveness and look after their own citizens through exchange rates. Stevens the filthy rich baptist prick is taking the opposite approach and fucking his own citizens. He is obsessed with keeping inflation below 3% (does it say thou must keep low inflation in the Bible) even if it means destroying all business (except his protected banks) and creating mass unemployment. He doesn't give a fuck. He reckons it'll all be fine in the promised land if we suffer enough in this one.

Edited by Strindberg, 2 Nov 2010, 07:45 PM.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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http://www.smh.com.au/business/markets/dollar-jumps-through-parity-again-20101102-17ar8.html?autostart=1

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Dollar jumps through parity again

November 2, 2010 - 6:30PM

The Australian dollar bounded more than a cent higher today to leap through parity with the US dollar after the Reserve Bank of Australia surprised with a rate rise and signalled more were likely.

In offshore trade this evening the dollar rose to $US1.0002, close to its 28-year high of $US1.0004, hit on October 15.

Earlier, after the RBA unexpectedly raised interest rates by 25 basis points to 4.75 per cent, the Australian dollar tore higher to 99.81 US cents, from 98.85 US cents, and closed locally at 99.84 US cents

The RBA's move, predicted by only a minority in the market, caused swap rates to jump while bill and bond futures slumped. One-year swap rates climbed to 5.07 per cent, from Monday's 4.98 per cent.

The move only heightened the contrast with the Federal Reserve which is widely expected to ease policy further on Wednesday, stretching the gap between two-year yields to the widest since early 2008 at 466 basis points.

In explaining the hike, the RBA said price pressures could build up as Australia enjoys its biggest trade boom in nearly 60 years.

But after being caught off guard by the RBA's rate moves this month and last, the market seemed cautious in pricing in further rate rises for now. Many had thought the RBA would not hike on Tuesday after a benign inflation report last week.

Interbank futures showed investors saw a 30 per cent chance of rates rising to 5 per cent by February.

"The market is far too dovish," said Stephen Roberts, a Nomura economist who correctly predicted the RBA's decisions this month and last. "There would be at least one or two more 25-basis-point hikes before June 2011."

Roberts said his forecast was based on the assumption that Australian mortgage rates would continue to stay 300 basis points above the RBA's cash rate.

Mortgage rates are far higher than the RBA's target rate because commercial banks, citing rising funding costs, have been hiking more aggressively. Top mortgage lender Commonwealth Bank of Australia raised mortgage rates by 45 basis points on Tuesday.

High mortgage rates have tightened monetary conditions by more than the RBA's actions, leading some analysts to say the more commercial banks do, the less the RBA needs to do.

"The RBA has repeatedly stressed that it focuses more on lending rates rather than just the cash rate," Kieren Davies, an RBS analyst said.

He said if the three other major Australian banks also raise mortgage rates by more than 25 basis points this time, the RBA is likely to delay the next rate rise to February.

Analysts said the hawkish rate outlook meant swap and yield curves could only flatten from here. The spread between 10- and three-year swap rates narrowed to 36 basis points, while the cash yield curve flattened to 22 basis points.
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earthsta
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Strindberg
2 Nov 2010, 07:44 PM
Stevens has now completely fucked up. House prices will fall but are now irrelevant in the big picture. The rest of the world's central bankers and governments are doing everything they can to maintain their own countries competitiveness and look after their own citizens through exchange rates. Stevens the filthy rich baptist prick is taking the opposite approach and fucking his own citizens. He is obsessed with keeping inflation below 3% (does it say thou must keep low inflation in the Bible) even if it means destroying all business (except his protected banks) and creating mass unemployment. He doesn't give a fuck. He reckons it'll all be fine in the promised land if we suffer enough in this one.

Suck it up ya pussy. Think of all the cheap imported high heel shoes you'll be able to buy and how pretty you'll look stepping out at the Sapphire Bar :hubba:
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http://www.smh.com.au/business/markets/aussie-dollar-tops-parity-again-marks-record-20101103-17com.html

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Aussie dollar tops parity again, marks record

November 3, 2010 - 7:11AM

The Australian dollar reached a post-float, 28-year high overnight, pushing above parity with the US dollar for the second time in a month.

The record high came after the Reserve Bank of Australia raised the cash rate to 4.75 per cent yesterday afternoon.

By about 6.30 eastern daylight time this morning, the local unit was trading at 99.89 US cents - but it had come back after a record-breaking performance in offshore trade, twice nudging above parity during the New York session.
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Bank of New Zealand currency strategist Mike Jones said the Australian dollar reached 100.25 US cents just after midnight following the RBA's surprise interest rate rise.

It comes ahead ahead of likely quantitative easing in the US, expected to follow the US Federal Reserve's Open Market Committee meeting.

Experts believe the US central bank will announce it will spend $500 billion between now and early next year buying up US assets. If that cash injection proceeds as expected, it will undermine for value of the US dollar and that will in turn push the Australian dollar even higher.

A strong greenback means weakness for the Aussie - and vice versa.

"The Aussie hit a 28 year post-float high overnight," Mr Jones said from Wellington.

"The RBA rate hike provided the impetuous to get the Aussie over the line.

"The first time the Aussie got above parity, it quickly erased those gains, but this time the Aussie seems to be on a much surer footing, so we'll probably see it around the parity mark for longer."

Mr Jones said the Australian dollar had been assisted by US dollar weakness.

He expected the local currency to trade around parity during the domestic session.

The local unit also hit parity with the US dollar three weeks ago. This morning, it was also buying 80.58 yen and 71.14 euro cents
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http://www.telegraph.co.uk/finance/economics/8105303/Aussie-dollar-breaks-the-buck-as-Australia-India-fight-Fed-with-quantitative-tightening.html

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Aussie dollar breaks the buck as Australia, India fight Fed with 'quantitative tightening'

Australia's dollar has blasted through parity against the US dollar after the country raised interest rates a quarter point to 4.75pc to fight inflation.

By Ambrose Evans-Pritchard
Published: 4:03PM GMT 02 Nov 2010

50 Comments
Aussie dollar breaks the buck as Australia, India fights Fed with 'quantitative tightening'.
The surging 'Aussie' captures the shift in the world's economic centre of gravity to the Pacific region. It was worth half a US dollar nine years ago. Photo: AFP

The long-awaited moment of "triple parity" seems imminent. The Swiss franc is already worth more than a greenback, and the Canadian dollar is seemingly poised to break through as well.

The surging "Aussie" - widely seen as a play on the China growth story and used by traders as a proxy for the Chinese yuan - captures the shift in the world's economic centre of gravity to the Pacific region. The currency was worth half a US dollar just nine years ago.

Australia's reserve bank said the "the economy is now subject to a large expansionary shock from the high terms of trade and has relatively modest amounts of spare capacity. The risk of inflation rising again over the medium term remains".

The move caught markets off guard. Credit growth has been cooling off over recent weeks and inflation is still just at 2.8pc - compared to 3.1pc in the UK - but the bank appears concerned about the risk of a wage spiral.

HSBC said emerging markets and commodity exporters such as Australia are opting for "quantitative tightening" to offset the liquidity effects of quantitative easing in the US, which is causing a flood of money into faster growing economies. Several states are toying with capital controls.

India's central bank has also tightened further, raising rates a quarter point to 6.25pc. It has imposed draconian housing curbs to reduce "excessive leveraging" and prick the bubble, limiting mortgages to 80pc of property values.

It may have responded with too little too late.

"Interest rates have been negative in real terms for 26 months, and heavily negative for several months," said Maya Bhandari from Lombard Street Research.

"Inflation is 9.8pc and is is going to get worse as the Fed's QE2 pushes up food prices, so a quarter point rate rise is not going to make much difference. They are relying on `administrative measures' instead of doing what they need to do," she said.

Ms Bhandari said the authorities had let rip with a "huge monetary and fiscal boost" before the elections in May 2009, leaving a legacy of overheating that is now coming back to haunt. The combined central and state budget deficit - including fuel subsidies - is nearly 11pc of GDP.

HSBC's currency team said the Australian dollar may be nearing its peak. "One concern relates to the deflating of the property bubble in China. This could happen gently but, if not, the Aussie will not avoid the fall-out. A sharp fall in Chinese property prices may very well lead to a deep examination of Australia's property bubble, and Australian banks," they wrote in a client note.

The report said Australia's lenders rely heavily on funding from abroad to finance the country's internal boom, creating a risky mismatch in liabilities. "Rationally or irrationally, this could turn very sour. The Aussie party looks set to come to an end soon," it said.
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http://www.smh.com.au/business/markets/us-central-bank-boost-propels-a-to-record-20101104-17ebg.html

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US central bank boost propels $A to record
November 4, 2010 - 7:45AM

The Australian dollar hit another record this morning and was trading above parity with its US counterpart after the US central bank announced a controversial plan to pump money into the economy in a bid to stimulate growth.

About 5am eastern daylight time, the US Federal Reserve announced it would spend $US600 billion buying bonds over the next few months, injecting cash into the world's largest economy at a greater rate than the pundits had predicted.

That caused the greenback to slip and in turn propelled the Aussie dollar to a new high of 100.0036 US cents - a little over $US1 and a third of a cent - in the minutes after the Fed's announcement.
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About two hours later, the dollar hit $US100.6 and looked set to stay above the one-for-one mark.

The Fed had been hinting for some time that it would launch a new so-called quantitative easing program but most market watchers had anticipated a program worth $US500 billion.

The Fed's aim is to drive interest rates lower in an effort to spark spending and lending amid mixed signals on the economic front. Recent data out of the US has been patchy and overnight came the release of employment and services sector data.

If US interest rates are lower, that makes Australian options more attractive to foreign investors because they can command a better return here - that ups demand for Australian dollars.

The Australian dollar has been trading close to parity with the greenback for some time, with markets pricing in the expectation of a Fed stimulus move. The Australian dollar has also been boosted by higher local interest rates - much of the developed world has interest rates close to zero - and local economic strength.
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http://www.smh.com.au/business/markets/traders-send-aussie-dollar-to-almost-us102-20101105-17g3s.html

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Traders send Aussie dollar to almost $US1.02

November 5, 2010 - 6:39AM

Bullish investors took control of major stock markets around the world, bolstered by the US Federal Reserve's $600 billion asset purchase plan.

The Australian dollar has soared to another record, reaching almost $US1.02 in overseas trade as investors absorbed the implications of a massive asset buy-up by the US central bank.

Shortly before 8am eastern-daylight time, the Australian dollar hit a high of $US1.0176 - one dollar and about one and three-quarters of a cent - as the greenback's weakness continued to bolster alternative investments.

That came as Wall Street marked strong gains as a result of retail sales data as well as the US Federal Reserve's announcement it would start a six-month, $US600 billion process of buying up government bonds as it moves to keep the world's largest economy chugging along.
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Many are predicting the Aussie dollar will remain above parity for some time, with fundamentals including commodity prices, with which the Australian dollar is closely linked, also rising sharply overnight.

A key index of commodity prices jumped 2.37 per cent, the oil price hit a six-month high and gold marked a record.

On Wall Street, the Dow Jones industrial average closed 1.96 per cent higher, marking territory not seen since the onset of the global financial crisis triggered by the Lehman Brothers' Collapse. The broader Standard & Poor's 500 Index was up 1.93 per cent.

The strong rise confounded expectations of a sell-off in the US.

That signals a strong day for Australian stocks, with the futures market - essentially a prediction of where traders see the local market headed - up about 1.5 per cent.
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Shadow
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Wow, $1.02... where will it stop?
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Frosty
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Shadow
5 Nov 2010, 09:42 AM
Wow, $1.02... where will it stop?
It's all hot air and nonsense, back down to 70 cents when people wake up to the fact that China won't boom and buy our crap forever.
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Shadow
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Nobody is talking about forever. Even I have said that there is a reasonable chance of a house price correction in 4-5 years time.

But for the next few years, things are looking pretty good.
Edited by Shadow, 5 Nov 2010, 02:18 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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