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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 (4,482 Views)
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http://www.smh.com.au/business/markets/flood-fears-drive-aussie-dollar-lower-20110106-19ghf.html

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Flood fears drive Aussie dollar lower

January 6, 2011 - 7:01AM

The Australian dollar dropped for a third day against its US counterpart on concern flooding in Queensland will dent the nation’s economy and as a report showed sales of new homes fell in November.

“The impact of flooding is yet to be fully understood,” said Robert Rennie, chief currency strategist in Sydney at Westpac, the nation’s second-biggest lender. “I expect coal prices to continue to move higher and the Australian dollar to continue to soften.”

The greenback got a boost against counterparts including the Aussie as reports showed US companies almost tripled the forecast of jobs added in December and services industries grew at the fastest pace since in four years.

Australia’s currency fell 0.3 per cent to 100.18 US cents in New York, from 100.51 US cents yesterday. Early this morning, Australlian time, it had fallen to 99.93 US cents.

Companies in the US boosted payrolls last month by 297,000, exceeding the highest projection in a Bloomberg News survey, after a revised 92,000 rise in November, according to figures from ADP Employer Services. It was the largest increase since records began in 2001.

US services industries expanded in December at the fastest pace since May 2006. The Institute for Supply Management’s non-factory index, which covers about 90 percent of the economy, rose to 57.1 from 55 in November. A reading greater than 50 signals growth.

US ‘looking good’

“Economic data in the US is looking quite good, and that’s seeing the US bond yields tracking a bit higher,” said Joseph Capurso, a currency strategist at Commonwealth Bank. “That’s been supportive of the U.S. dollar and would put a little bit of downward pressure on the Aussie and kiwi.”

The extra yield investors get from buying Australia’s 10-year government bonds instead of US Treasuries narrowed to 2.09 percentage points, down from a two-year high of 2.74 percentage points on November 4.

Australia’s sales of newly built dwellings decreased 0.2 per cent in November from a month earlier, the Canberra-based Housing Industry Association said today. Sales rose a revised 6.1 per cent in October.

The Queensland government appointed a task force to lead rebuilding and recovery effort after the worst floods in 50 years.

‘Massive Task’

Queensland faces a “massive task” to rebuild homes and infrastructure damaged by the flooding, state Premier Anna Bligh said after holding an emergency Cabinet meeting. The flooding may have a “significant impact” on the nation’s economy as exports are interrupted, said Donald McGauchie, a member of the Reserve Bank of Australia’s board.

The Australian dollar will face “a short-term headwind” as the flooding harms exports and hampers first-quarter growth, according to Royal Bank of Canada.

A “conservative estimate” of lost export revenue from the flooding would be about 0.5 per cent to 0.7 per cent of annual gross domestic product, which would be only partially offset by expected increases in the price of coal and rural commodities, Sue Trinh, a Hong Kong-based senior currency strategist at RBC, wrote in a note to clients this week.
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http://www.smh.com.au/business/dollar-drops-as-floods-darken-outlook-20110112-19n9m.html

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Dollar drops as floods darken outlook

Chris Zappone

January 12, 2011 - 10:52AM

The Australian dollar has fallen to a one-month low against the US dollar as Australia's economic outlook darkens with the news of the Queensland floods.

The Aussie was trading just above 98 US cents this morning, the lowest level since December 9, as global traders fretted about the impact of closed mines and damaged infrastructure holding back Australia's exports and growth.

“From a global perspective, the perception in the market place is the holes in the armoury of the Australian economy are starting to show and as the impact of floods in Queensland continue to escalate, there's little doubt this perception of weakness in the economy will manifest in currency price action,” said Go Markets trader Christopher Gore.

The floods, which began last month in Queensland, have claimed the lives of at least 10 people. Ninety are still missing this morning. The inundation has forced the closure of dozens of mines and production facilities in Queensland.

Australia supplies about a third of the world's coal and is crucial to China's industrial production.

Economists are already predicting the floods will cut between 0.2 of a percentage point to 0.5 off the nation's annual GDP growth.

And Reserve Bank board member Warwick McKibbin believes it could be as high as 1 per cent - or the equivalent of $13 billion.

Westpac economics has estimated Australia's economy will lose 0.3 per cent in annual GDP.

“The timing of the hit and recovery means we could see first-quarter GDP ... drop by as much as 1 per cent before the recovery boost growth in the following quarters,” said Westpac.

The Australian economy grew by 0.2 per cent in the third quarter, or 2.7 per cent year on year.

Fears of a weaker economy have lowered expectations for Australia's interest rates, as well, with Credit Suisse debt markets pricing in only one rise in the cash rate by 2012.

Currency analysts believe that unless tomorrow's unemployment figures come in stronger than the 5.1 per cent expected – notching down from its current level 5.2 per cent - the Reserve Bank may hold rates flat at least until June.

“The RBA may not tighten rates in the first half of the year at all, as the exogenous shock of the floods dampens GDP growth considerably more than consensus expectations,” said Boris Schlossberg director of currency research at New York-based GFT.

Currency values are closely linked to the interest rates associated with them.

Australia's 4.75 per cent official interest rate is among the highest in the world, in effect turbo-charging investor interest.

Global investors have also piled into the Aussie dollar in recent months as a way to benefit from Asia's growth. Australian exports of coking coal represent about 64 per cent of total global exports of the key commodity used in steel production, with Queensland holding the majority of those deposits, according to Westpac.

With three in four Queensland mines shut and not expected to return to normal output for at least a week, the disruptions to coal exports are substantial. Disruptions to transport networks also mean rail movements of coal and other commodities to ports have been hampered.

The state also produces about a quarter of the nation's fruit and vegetables.

"The grain harvest had mostly been completed and livestock moved to higher ground," said Roland Randall of TD Securities.

"Only those crops not ready for harvest or that cannot reach markets - such as sugar cane and some fruit and vegetables - have been lost."

However, melons, pineapples, grapes, citrus fruit and some vegetables could be hit, analysts said.

“There's not expected to be any impact on fruit prices on the short term arising from the flood,” a spokesman for Woolworths said, largely because those vegetables had already been cultivated and more crops were currently being harvested from the unaffected southern states.

However, yesterday Wesfarmers-owned Coles supermarket warned that supply shortages would drive up the prices on tomatoes, capsicum, lettuce and other salad vegetables.

czappone@fairfax.com.au
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http://www.smh.com.au/business/markets/dollar-tops-parity-as-currency-gains-strength-20110119-19vml.html

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Dollar tops parity as currency gains strength

January 19, 2011 - 1:46PM

The Australian dollar was higher today as investors waited on key Chinese economic data to be released tomorrow, topping one-for-one with its US counterpart again.

The local unit was recently trading at 99.89 US cents, up from 99.39 US cents at noon eastern daylight time but at 1.35pm, it briefly touched 100.36 US cents.

RBC senior economist Su-Lin Ong said the local currency traded in a very narrow range today in the absence of major economic data being released.

‘‘It was a little softer post the (Westpac) consumer confidence data at 1030 this morning - that’s when it hit its lows for the morning,’’ Ms Ong said.

The Westpac-Melbourne Institute Index of Consumer Sentiment fell 5.7 per cent in January to 104.6, from 111.0 in December. The survey covered the period of January 10 to 16 and coincided with some of the worst days of the floods.

Ms Ong said the data was in line with market expectations.

‘‘Obviously the focus on the floods has hit confidence a little and the currency is off a little on that,’’ she said.

A raft of Chinese economic data due out on Thursday, including gross domestic product figures for the last quarter of 2010 and December retail sales data, may provide short term direction for the Australian dollar, Ms Ong said.

She expected the local unit to trade within its tight range for the rest of the day.
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Catweasel
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Catweasel say a media should do the explain about how much a AUD movement is a speculation and how a much is a relate to exchange a good and a service. Then media can show a risk of what a happen to a AUD in GFC (and the will happen again some a time in a future).
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http://www.smh.com.au/business/markets/dollar-tops-parity-on-growth-optimism-20110201-1abgi.html

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Dollar tops parity on growth optimism

February 1, 2011 - 5:24PM

The Australian dollar climbed past parity today as optimism on global growth lifted commodity prices, a trend highlighted by the Reserve Bank as it played down the impact of floods on the domestic economy.

The Australian dollar bounced above parity to a session high of $US1.0039, from 99.63 US cents in early trade. Its recovery from a low of 98.66 US cents on Monday caught many speculators short and forced them to buy back the dollar.

It closed locally at $US1.0031, having broken several key resistance levels and was now targeting the January 19 high at $US1.0077.
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The RBA kept its key cash rate unchanged at 4.75 per cent after its monthly policy meeting, a decision that was widely expected. The central bank said it would look beyond the impact of Queensland's floods and remained upbeat on growth in the medium term.

"We think today's statement was on the hawkish side," said Paul Bloxham, chief Australia economist at HSBC. "We continue to expect the next rate rise to be in May or June."

Since the flooding first hit, financial markets had all but priced out any chance of a rate increase this side of June and only one rise to 5.0 per cent by year-end.

Analysts are generally more bullish, with most surveyed in a Reuters poll seeing a hike some time in the second quarter and rates up at 5.25 per cent by the end of the year.

The Australian dollar also proved resilient to a closely-watched Chinese manufacturing index which came in below expectations at 52.9 in January . In contrast a separate PMI from HSBC showed a small rise to 54.5, while measures from India and Russia were also strong.

Overnight, a measure of Chicago manufacturing had blown away all expectations while U.S. consumer spending augured well for continued economic growth there .

All of which fuelled further gains in commodity prices. Copper hit a record high , Brent oil prices topped $100 a barrel and the CRB index jumped to a three-year peak.

A key index of Australian commodity prices compiled by the RBA surged 4.5 percent for all of January to touch a record high, boding well for export earnings.

So far, the market has paid little attention to a powerful cyclone heading for Queensland's coast, threatening to destroy up to a third of the state's sugar crane crop.

Tracking U.S. Treasuries, Australian bond futures eased, with the three-year contract down 0.02 points to 94.93 and the 10-year contract off 0.015 points at 94.455.
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Maveri
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In the past 12 months we have made gains against the USD and the Euro.

NZ seems to be pegged to us - we have not really got ahead of the NZD much over the last 12 months.

The Brazilian Real has virtually maintained it's value against the AUD in the past 12 months - so as well as shipping coal etc they also have technologies etc that they sell around the globe - they at least are not a one trick pony
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http://www.smh.com.au/business/dollar-shines-despite-global-jitters-20110303-1bfsx.html

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Dollar shines despite global jitters

Chris Zappone

March 3, 2011 - 2:12PM

The Australian dollar's latest surge against the greenback despite jitters in the global economy has experts pondering whether the currency may have entered an extended period of strength.

The dollar has long had a reputation as a risk currency - an asset bought in times of economic optimism and sold during times of fear.

But since November, the dollar has traded at or near parity with the greenback despite a steady stream of uncertainty in global and local markets.

In the past three months, China has lifted interest rates, potentially choking growth in Australia's biggest trading partner. The Middle East, meanwhile, continues to convulse with revolutions that are spiking oil prices and raising concerns about inflation and the strength of the recovery in the global economy.

And at home, the local economy has been battered by massive floods in much of the country, while cyclones have hit Queensland, Western Australia and Northern Territory. Some analysts think the economy may generate little or no growth this quarter as a result.

“Historically, you would expect the Aussie to be taking it on the chin,” said RBC Capital Markets economist Michael Turner. “The Aussie seems to have lost that risk proxy function to a degree.”

In the past year, the Australian dollar has risen almost 18 per cent against the US dollar, the strongest result among the 17 major currencies tracked by Bloomberg. It's risen almost as much against the euro, at about 16 percent, more than 10 per cent against the yen.

Aussie appeal

Australia's close and growing ties with China, the world's fastest growing major economy, have underpinned the resilience of the local dollar.

China emerged relatively unscathed from the global financial crisis, with concerns now focused on the risks of excessive growth and resulting inflation. Some, though, see Chinese inflation as potentially a benefit for the country, particularly if it reduces the need for a major revaluation in the country's currency, the yuan.

Australia's relatively high official interest rates also add to the appeal of the Aussie dollar. The Reserve Bank this week kept interest rates at 4.75 per cent, while rates remain near zero in the US and Japan, and 1 per cent in euro-zone nations.

Those lures have so far outweighed most of the jolts resulting from soaring oil prices, helping to shore up demand for the dollar.

“We've thrown Libya, we've thrown Egypt, the earthquake in New Zealand,” said Westpac chief currency strategist Robert Rennie. “There are a lot of big one-off events, there's a lot of global contagion and the Aussie is doing very very well.”

Even so, Mr Rennie hasn't ruled out volatility, predicting the dollar will trade between 96 to 103 US cents for the rest of the year.

CMC chief market strategist Michael McCarthy said despite the Aussie's newfound resilience, a pullback in commodities prices would likely drag the dollar lower.

If we were to see “swingeing measures from authorities” in China or India to head off potential inflation outbreaks in those economies, “that would have immediate effects on commodity markets and weigh on the Australian dollar.”
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http://www.smh.com.au/business/markets/dollar-tops-102-us-cents-soars-towards-record-20110325-1c8xc.html

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Dollar tops 102 US cents, soars towards record

March 25, 2011 - 7:02AM

The Australian dollar soared overnight to levels last seen at New Year, touching a high of 102.29 US cents after starting on a steep upward trajectory yesterday evening.

The currency was edging towards the record 102.56 US cents recorded early in the morning of New Year's Day.

The latest jump comes after a tumultuous few weeks in foreign exchange markets, with volatility driven by the Bank of Japan and the Group of Seven industrial nations' moves to keep the yen in check after it rose dramatically in the wake of the Japan earthquake, tsunami and nuclear fears.

A strong yen is seen as a threat to economic recovery in the wake of the disaster, and the market intervention has had a huge impact around the world.

Just before 6.30am eastern daylight time, the dollar peaked at 102.29 US cents. Twenty-four hours earlier, it was buying less than 101.4 US cents. Just days ago, on March 17, the dollar was as low as 97.08 US cents.

It also rose against the yen, to 82.765, levels last seen on March 14.

The currency moves came as gold reached a record $US1447.82 an ounce in London trade as investors bought the precious metals as a safe haven amid growing concerns over the Middle East and Portugal.
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Glenn Stevens
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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.

Well, I'm prepared to admit we probably took rates too far in November 2010, although one has to bear in mind we then held the OCR steady at 4.75% for a full 12 months before we decided it was prudent to commence a cutting cycle in November 2011. The mining investment boom peaked a little earlier and a little lower than many people — myself included — expected and we have to date managed that event.

As for what the commenter describes as my "obsession" with keeping inflation below 3%. The Treasurer and I have agreed that the appropriate target for monetary policy in Australia is to achieve an inflation rate of 2–3 per cent, on average, over the cycle. This is a rate of inflation sufficiently low that it does not materially distort economic decisions in the community. This approach allows a role for monetary policy in dampening the fluctuations in output over the course of the cycle. When aggregate demand in the economy is weak, for example, inflationary pressures are likely to be diminishing and monetary policy can be eased, which will give a short-term stimulus to economic activity.

I think if the commenter would like review the data (four years after making those comments) he might see that we've been successful in meeting our targets.
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