Bitcoin and Australian dollar go toe to toe

See the latest Australian dollar analysis here:

Macro Morning

We’re getting to the end of the trading year and performance comparisons of different asset classes since January 1st are being pumped out left right and center. The resounding message of central bank liquidity and record low interest rates creating a tide that lifts all boats can sometimes be lost when comparing currency values.

For instance, while gold priced in USD is up just over 19%, priced in AUD the rise has been a more modest 11%:

The same is almost true for Bitcoin, which started the year at just over $7100USD or $9500AUD, and is currently trading just above $23000USD or $31000AUD. The currency adjusted returns are quite similar (and stellar) – 224% in USD vs 226% in AUD.

Of course Bitcoin is outpacing everything as this relative performance chart from Grafa clearly shows:

For shares, the local ASX200 is down 2% for the year (not including dividends) while the S&P500 is up over 11% (in USD terms) or just under 6% in AUD terms.

The Australian dollar itself is up over 7% since the start of the year, with a little roundtrip in the middle that broke through the 2009 lows at 62 cents, then had a stonking 30% rally from its nadir at 55 cents or so, now trying to get back to a two year high:

The “high” Aussie dollar may negate any outsized external stock performance going into 2021, so always take into consideration the effects of currency exchange on your portfolio construction. Particularly since next year maybe even more of a repeat of 2020!

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  1. Eventually, when the AUD rise is over & it begins to fall as DXY lifts….. What will the US Stock & Bond markets do?