Australian dollar?... That's like what...

[No Boss]

Oh...

At 7am, the Australian dollar was trading at $US0.9006/09, up from yesterday's close of 0.8945/50.

Overnight, it traded between a low of $US0.8914 and a high of 0.9006.

On Monday, the Aussie topped out $US0.9033 - its strongest level since June 4, 1984, when it closed at 0.9050, but lost steam yesterday to close at 0.8945/50.

But the Aussie found support again overnight as the US dollar was sold off after a leaked IMF report showed the growth outlook for the US had soured.

ICAP senior economist Matthew Johnson said the US dollar rallied briefly following the release of the minutes from Federal Open Market Committee's (FOMC) September 18 meeting.

He said there was some demand for the US dollar after the FOMC minutes suggested the Fed was not too concerned about fallout from the credit crunch, while a growing view that further interest rate cuts in the US were unlikely also lent support to the Greenback.

But he said the rally did not last amid a poor growth outlook for the US economy and no chance of a rise in interest rates.

Conversely, the outlook for the Australian economy remains robust while there are also growing expectations of further interest rate rises in the near-term, making the Australian dollar more attractive to investors.

Higher interest rates can strengthen a currency by giving investors higher returns on investments denominated in that currency.

"The thing is, there is no risk of a rise in interest rates in the US ... The risk is all one way.

"The US has the worst growth story of any country ... which means (the US dollar) is always going to struggle to make gains.

"Some world growth estimates from the IMF were leaked overnight and the US copped the largest downgrade - they were off 0.9 per cent to 1.9 per cent year-on-year."

"Our currency is in demand but there is also a general move against the Greenback."

The big news not too long ago was the Canadian dollar equaling the US dollar. Next was the news that the Mexican Peso, of all things, was starting to gain against the dollar. Those last two weren't so much a case of the dollar falling as those two currency's rising. But today we have the Australian dollar becoming equal to roughly $.90US.

It's good and obviously bad all at the same time. The lower the dollar goes the easier it becomes for other countries to buy our products. More of our products get bought, more money gets poured into our economy, and the dollar rises again. Cycle continues.

Unfortunately with so many companies building production plants in the US it's almost as if the US is becoming a second world country. Ok... maybe not a second world country, but things are starting to mirror similar events that lead to, for example, the crash of 1987. There was no definite cause for that crash, but several economic experts pegged increasing oil prices, insecurity regarding the government, rising inflation rates, and the printing of more money to be very important factors.

Damn, I just opened a huge can of worms with that one. See! You god damn Aussies got started.

[Necx0]

World economics is going to be crazy soon. China is growing more and more powerful. U.S is about to change governments (Bush is in his last term no?), India will overtake China soon as the worlds most populace place etc. etc.

[eddysdaman]

Aussies FTW!!!

Actually, it depends on your point of view, if your a business man or a farmer ... its good news bad news really. Exports get more expensive so we make less money and then all of a sudden imports get cheap. Bad for local business really. It's always been like that .... Stupid catch 22

[HondaF1]

They said on Nine news last night that the dollar should hit $US1 by Feb next year.

[Hidden_Hunter]

Shame we still pay twice the price for stuff compared to the US

[eddysdaman]

thats taxes ... not dollar strength ..... *damn government*

[teeb]

Originally Posted by No Boss

The big news not too long ago was the Canadian dollar equaling the US dollar. Next was the news that the Mexican Peso, of all things, was starting to gain against the dollar. Those last two weren't so much a case of the dollar falling as those two currency's rising. But today we have the Australian dollar becoming equal to roughly $.90US.

It's good and obviously bad all at the same time. The lower the dollar goes the easier it becomes for other countries to buy our products. More of our products get bought, more money gets poured into our economy, and the dollar rises again. Cycle continues.

Unfortunately with so many companies building production plants in the US it's almost as if the US is becoming a second world country. Ok... maybe not a second world country, but things are starting to mirror similar events that lead to, for example, the crash of 1987. There was no definite cause for that crash, but several economic experts pegged increasing oil prices, insecurity regarding the government, rising inflation rates, and the printing of more money to be very important factors.

Damn, I just opened a huge can of worms with that one. See! You god damn Aussies got started.

I thought the term 'second-world country' tends to refer to Communist countries (hence why the term has fallen out of use; as very few Communist places remain).

It is quite interesting that the US dollar is so weak at the moment. It is obviously fantastic for anyone buying things from the US but it is not so good for others...

Generally I find this amusing because I was always told (by Aussies) that the Aus dollar was pretty much worthless...

[Red_Bull]

^ It wasn't so long ago we were trading at just over half of the US dollar value.

[watto]

We're still total crap against the Sterling!

[Hidden_Hunter]

Originally Posted by eddysdaman

thats taxes ... not dollar strength ..... *damn government*

not all of it, infact some stuff our taxes are relatively low etc

[No Boss]

Originally Posted by Necx0

World economics is going to be crazy soon. China is growing more and more powerful. U.S is about to change governments (Bush is in his last term no?), India will overtake China soon as the worlds most populace place etc. etc.

And China's government is constantly intervening to keep their currency low. They are exporting so much and have such a huge economy, their yuan should be absolutely daunting. But, if it was that high importing countries would find it too hard to buy their items. Ergo, the government steps in to keep it low so everyone can keep pouring money into China. Bush went over there to talk to them about it, and even several economic figures, but they don't seem to want to change at all.

Originally Posted by eddysdaman

Aussies FTW!!!

Actually, it depends on your point of view, if your a business man or a farmer ... its good news bad news really. Exports get more expensive so we make less money and then all of a sudden imports get cheap. Bad for local business really. It's always been like that .... Stupid catch 22

Yeah your right. In the US the agricultural industry is heavily subsidised but the government. Farmers grow and harvest what they can, and any left overs are exported to countries "on the cheap". Local farmers in those countries can't compete with the low prices of our imports and they go under. World economics is such a balancing act that is never balanced.

Originally Posted by teeb

I thought the term 'second-world country' tends to refer to Communist countries (hence why the term has fallen out of use; as very few Communist places remain).

Yes, I think you maybe right. I guess I was thinking of the "3rd,2nd,1st world" scale as a "good, better, best" type of thing. Calling us a 3rd world, I thought would be too harsh.