From Alan Kohler today:
For Australia, falling commodity prices and any delay to the Fed’s ‘lift off’ would be a double whammy for the currency and would undoubtedly send it deep into the 60s.
Not that this would be bad news. The Productivity Commission reported last week that productivity improved quite solidly last year, so if the currency fell as well, Australia’s businesses would get quite a decent margin expansion.
What’s more, it should also mean that the Reserve Bank wouldn’t have to cut rates any further and risk another burst of house price inflation in Sydney and Melbourne.
Jeez:
- delaying Fed hikes will put upwards pressure on the battler;
- 0.4 multi factor productivity is terrible, below half the historic average, and
- the dollar is falling in part because it is discounting more rate hikes.
