Australian dollar


Is the worm turning for the Australian dollar?

There is a cracking story in the Wall Street Journal overnight about the Australian dollar and Caterpillar and their correlation by Stephen Bernard and Vincent Cignarella. In it they say, The 30-day correlation between Caterpillar stock and the Australian dollar-U.S. dollar exchange rate is currently 0.85, where 0 means there is absolutely no discernable pattern


Currency Wars, the book

James Rickards’ recent book, Currency Wars: The making of the next global crisis, is worth reading if you are interested in a history lesson of international monetary politics. As you can probably tell from the title, the book’s central thesis is that currency values are primarily the result of domestic and internationally coordinated policy decisions,


Philippines buys Australian dollars (and production)

From the AFR: The finance secretary of the Philippines has confirmed his central bank is buying Australian dollars, despite Reserve Bank of Australia documents released this week which said the island nation was not a buyer. “The Australian dollar is part of it and an increasing part of it,” Finance Secretary Cesar Purisima toldThe Australian


Mystery central banks buying Australian dollars

According to the AFR, the RBA is in the dark when it comes to which central banks are buying Australian dollars. From yesterday’s FOI release: Some of the buyers, including Germany and Russia, were apparently identified from media sources. …Brazil, Poland, Hong Kong and South Korea are among other central banks listed as buyers. Peru,


APRA is pushing up the Australian dollar

Whilst the RBA and politicians dance around addressing the strength of the Australian dollar, crushing many productive sectors of the economy, APRA and Mega Bank use policies that pass massive risk to the taxpayer and inflate the level of the AUD. How so? The traditional and “official” view is that if a financial institution or


23 central banks hold the Australian dollar

Missed this earlier from the SMH: The Reserve Bank of Australia says the dollar is held by as many as 23 central banks from Brasilia to Moscow, documents showed. The central banks of Brazil, Russia, Germany, Hong Kong, South Korea, Poland, Sweden, and Switzerland are among 15 economies that hold the Australian currency, according to


Time to bring down the Australian dollar

One of the more strident ideas that have put forth by Australia’s chorus of economic elites – which includes the Government, RBA and senior media commentators – is that there is nothing that we can do about the high Australian dollar. This is poppycock. Let me explain. The Australian dollar is rising once more because


HSBC: Australian dollar to tumble

From The Australian: THE soaring Australian dollar is poised to tumble as lower interest rates, an escalating US fiscal crisis, and more Federal Reserve asset purchases conspire to push the high-yielding currency significantly below parity against the greenback. That’s according to strategists at investment bank HSBC, who say the so-called Aussie may sink to as


Australian dollar to fall

There’s an institutional research report about the Australian dollar that has gained a lot of attention around the world in the past few days. It is by a boutique insto research firm called Variant Perception. Called “Australia: The unlucky country, it argues: A substantially weaker currency in Australia is inevitable given fundamental factors. Oversized banks


McKibbin: Australian dollar intervention is not heresy

Cross-posted with permission from By Alex Tarrant Australian economist Warwick McKibbin says he was surprised by the reaction to an opinion piece arguing the Reserve Bank of Australia could take upward pressure off the currency by printing Australian dollars and buying foreign exchange to offset foreign central bank purchases of the currency. Speaking to


Henry says high dollar to Hell and back

From AAP: Former treasury boss Ken Henry has told business the Australian dollar is likely to remain high for the foreseeable future. Dr Henry told the Australian Industry Group forum in Canberra it would not be prudent to bank on an early sizeable depreciation in the exchange rate. “There is no silver bullet that is


Cut rates for a lower dollar

That’s the argument made by many MB commenters and today by Westpac’s Huw Mackay (of Phat Dragon fame)  at the AFR. …the most recent balance of payments data show that gross foreign purchases of Australian assets were 42 per cent debt and 58 per cent equity. Westpac proprietary customer data shows that foreign sovereign purchases


China stamps Australian dollar with reserve currency status

Here’s something MB missed yesterday (as did the entire Australian press) and may in part have triggered the McKibbin story overnight. From Alphaville: SYDNEY-Officials within the foreign-exchange arm of China’s central bank recently met Australian regional governments to discuss buying their bonds, people familiar with the matter said. The securities – known as semi-government –


McKibbin urges RBA to force down Australian dollar

By David Llewellyn-Smith Thank heavens. Australia’s best free-thinking economist, Warwick McKibbin, has finally broken the Canberra consensus and urged the RBA to sell the dollar. From the AFR: Former Reserve Bank of Australia board member Warwick McKibbin is urging the central bank to intervene in currency markets to limit the strength of the dollar, suggesting


Central banks piling into Australian dollar

From the WSJ: Germany’s Bundesbank is expected to begin adding Australian dollar assets such as government bonds to its foreign reserve holdings before the end of September, bankers say. The decision, which follows a two-and-a-half year review by the Bundesbank, adds to a wave of central bank demand for Australian-dollar exposures that has swelled over


Czechs buy Australian dollars

In more poor news, the AFR reports that: The Czech Republic central bank is buying Australian dollars for inclusion in its foreign exchange reserves. …According to one trader, the Czech National Bank has been buying Australian dollars in the 2012 calendar year of amounts that add up to between $US500 million and $US1 billion. Let’s


Carrying the Euro

The great conundrum of FX markets over the past year or two has been the resilience of the Euro in the face of all the problems that have engulfed the Eurozone, seemingly threatening its very existence. We know that European banks have been repatriating money and we know that both legs of Chairman Bernanke’s quantitative easing


Australian dollar resilience

Find below a fascinating new note from Westpac’s Huw Mackay (Phat Dragon), who has a brain the size of a planet, on why the Australian dollar has  shown continued resilience, even though, thankfully, he does not buy into the “safe haven” tripe: We principally highlight the economy’s improved external financing position (both in terms of scale


Australian dollar squeeze underway

You might be asking the question: how can the Australian dollar be back above parity after a night where Spanish and Italian yields blew out and only a couple of days before the Greek election? Anyone who tells you that this is because the Aussie dollar is a safe haven should faded quick smart. The


Australian dollar rally and reversal

Ben Bernanke stole the punch bowl for commodities and commodity currencies last night, which had rallied on the back of the Chniese rate cut and freeing up of deposit and lending rate controls. But with his usual equanimity, the Fed Chairman simply didn’t want to play ball and add more stimulus and markets were not happy