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Aussie AUD to 85 within a year ?


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samatm



 

Investing.com
- The Australian dollar continued its bearish ways against its U.S. rival
during Tuesday’s Asian session following less-than-encouraging comments from
Goldman Sachs.


In Asian trading Tuesday, AUD/USD plunged 0.61% to 0.9407 and
earlier traded as low as 0.9382. The pair was likely to find support at 0.9390,
the low of October 4, 2011 and resistance at 0.9574, the high of June 7.


The Aussie came under added pressure after Goldman Sachs pared its 2013 and
2014 GDP growth forecasts for the world’s 12th-largest economy. Goldman Sachs,
the largest Wall Street investment bank, said it believes Australia’s economy
will grow 2% this year, well below the previous forecast of 2.4% growth.

Goldman said the Australian economy will grow 1.9% next year, well below the
bank’s original estimate of growth of 2.7%.

Specific to the Aussie, Goldman said it sees AUD/USD trading to 0.8500 within a
year. That is down from the bank’s previous forecast of 0.9000 though Goldman
has previously said an extreme scenario is AUD/USD at 0.8000.

Falling export prices coupled with the strong Aussie and reduced corporate and
public spending are among the reasons cited by Goldman for its growth cuts. The
bank said there is a 20% chance of recession for Australia, a country that has

avoided  such a scenario for 21 years.


The Aussie was pounded Monday after official data showed on Sunday that China's
consumer price inflation ticked down to an annualized rate of 2.1% last month,
from 2.4% in April, confounding expectations for a rise to 2.5%.


A separate report showed that industrial production in China rose by an
annualized rate of 9.2% in May, disappointing expectations for a 9.4% increase,
after a 9.3% rise the previous month. China is Australia's biggest export
partner.

Elsewhere, AUD/JPY slumped 0.47% to 93.03 while AUD/NZD dropped 0.12% to
1.1963.



 

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It's real value is only around .80 and it may well get there within 12 months.  But the terrible economic vandalism committed by the current economic illiterates in charge will take many years to repair and it will get worse before it gets better.  So it may continue to drop and drop past .70  Australia is becoming a welfare state.  Supposedly it has low unemployment but then if you look at the number of people on disability pension (higher payment than the dole), you find it has gone up dramatically in the last 8 years.  It has become increasingly easy to become "disabled" with regard to getting on the free money gravy train and I suspect many have taken advantage of this.

 

"Oh I find working so stressful!  I don't think I can take it anymore!"...."There there dear, we have a psychological syndrome just for you and you can use it to claim a disability pension."

 

I wouldn't be at all surprised if the Aussie didn't drop below .60 at some stage in the next few years.  The place has become way too anti business with wage costs souring into the stratosphere.  An average aussie uneducated mine worker can expect to earn over $100k per year.  The absolute minimum wage you are allowed to pay someone in any occupation is now over $30k.  Carbon tax, mining tax, red tape, green tape.... I can't imagine why any company would want to setup in Australia.  Ford is leaving and I suspect they will be followed by many others.

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