US dollar

How far can the Australian dollar fall?

The value of the Australian dollar (AUD) is affected by a variety of factors.  The more important of these are interest rates, commodity prices and the Chinese economy. But other factors include the RBA rhetoric, national growth numbers, consumer and business confidence, labour and housing markets, the equity and bond markets, inflation figures and of course the strength of the United States dollar (USD).  All of these are parts of a puzzle when it comes to valuing the AUD.
When one considers that most of the above factors that affect the AUD are likely to deteriorate further, a continued fall in the AUD can be expected.  Consider the monthly chart of the AUD below.  The Australian dollar has fallen significantly from its high of $1.10 against the USD but at its current value of 71 cents it is now merely at about its long term average,… Continue reading

Expect further falls in the Australian dollar

The Australian dollar (AUD) has weakened considerably in the past few months and it is likely to continue to fall. Consider the following monthly chart of the United States Dollar index. The U.S. Dollar Index is the value of the USD relative to a basket of 6 major currencies. Much has been made of the recent rapid rise of the USD index but it can be seen from the chart that the index at its current level of about 95 is merely close to its long term average and considerably below its recent high of 120 in 2001 – not to mention its historic high of 165 (not shown) which it reached in 1983. USD indexWorld events suggest that it is very likely that the USD will continue to strengthen because the US economy is now quite strong at a time when the world economy is growing very slowly, interest… Continue reading

Is continued devaluation of the US dollar likely?

The United States dollar (USD) is the international reserve currency based on the successful and stable United States economy with its abundant dollar-denominated securities and a market for United States treasuries which is both liquid and deep.

While the US dollar continues to reign as the global reserve currency recent IMF analysis shows that it has slumped to a 15-year low, raising concerns that it may lose its reserve currency status.

The value of the USD is measured by the United States dollar index which estimates the value of the United States dollar relative to a basket of 6 other major currencies of which the Euro comprises 57%.  The  monthly… Continue reading

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