No interest rate hike till next year

[likewow]

According to the RBA, due to housing price falls no interest rates rises required till next year.

http://www.theaustralian.news.com.au/common/story_page/0,5744,11327995%5E601,00.html


And the following might be of interest to someone:

http://www.newstext.com.au/re/

 

[Lilith]

any chance that the mighty AUD may come down below 65 cents sometimes next year?

 

[quiggles]

Our dollar plummet? Not for a while. The US fundamentals are lousy and have the currency traders scared. Only the Chinese and other Asian economies are supporting the US spending binge really. The Euro has rocketed up against the US$ as well. Even the yen is strong.

For the $A to come down, either our economy would have to crash or our interest rates would need to go down (making it less attractive to invest cash here, lowering the demand for dollars). Neither is likely, given the RBA's pronouncements - it wants a rate rise, although not yet, in order to have room to move when the economy does soften. The IMF gave our economy a glowing bill of health, although be aware that our government provides a lot of the glowing reports that lead to the IMF's conclusions. ;-)

Of course, I can find you an economist to argue the complete opposite.

Bob

 

[Lilith]

I am of the school of thought that USD may very like revisit the 1971 scenario again. But there are other certainties that I'd like to sort out, for example, which currency will be a better haven? Euro or the commodity-based currencies like AUD and CAD?

I am under the impression that Australia is having a similar structural problem as US - currenc account deficit, large national debt, housing bubble (in certain areas)...So at 75 cents, I am not sure if AUD has fully reflected the train-wreck value of USD or can still accommodate more upside.

 

[quiggles]

The two main differences are that Australia does not have the twin deficits of the US - it has a current account deficit, but the Budgetary deficit is only in place because the bond market went to the Treasurer on bended knees and said "if you pay it all off the bond market will be dead" Which would have problematic issues for general financing. Hence his direction of looking at the Government's unfunded superannuation liaibility.

Seocndly, our resources based economy is a blessing because the developing economies are supporting us, much the way that Chinese demand was partly to blame for the recent oil price rises. The US has more manufacturing (which is even less competitive than ours) and an accent on services which don't export that well.

And also, they aren't doing anything about it, which is the major worry. As for certainties in currency markets, it's the same as anything - if you know tomorrow's price today one of two things is true - you'll be in clover, or you'll be in jail.

 

[Aceyducey]

Lillith,

You're still rolling out that 'housing bubble' chestnut

Australia hardly has the structural issues of the US.

Personally I reckon the best currency is Yen.

Cheers,

Aceyducey

 

[Lilith]

Aceyducey,

Well, I put a qualifier after the word housing bubble (some areas) . But that didn't stop me from buying my first real estate in Australia just a couple of months ago.

Another concern I have with Yen and AUD is, both seem to be too dependent on the boom in China, Japan is the biggest machine tool and critical component supplier to China and Oz is the main supplier for raw materials. What if China comes to a crash landing?

In that sense, Euro seems to be a bit more insulated from the China factor. US and China are too intertwined with each other, it is hard for me to imagine that China can stay afloat for long if US slides into a painful recession.

Just my 2 cents.

 

[XBenX]

Of course, I can find you an economist to argue the complete opposite.

Bob

There is a quote that I cant help but love =)