What's your prediction on the Australian Dollar?

[Foreigner]

As an exporter those were good days when usd500k fetched aud1m.

 

[marki]

I experienced the US at sub 0.50 so stop thinking the current exchange rate is low. It was a business trip so the ATO were helpful by covering off their share of the damage. The trade show hotel was a snip at $280 USD plus tax a night.

We forget perspective and points of view they do make a difference.

 

[ellen10]

The first time we took our 2 boys to the USA the rate was 0.50.
That hurt when we had to times everything by 4.
But we still had a great time.

 

[whatmeworry]

I experienced the US at sub 0.50 so stop thinking the current exchange rate is low. It was a business trip so the ATO were helpful by covering off their share of the damage. The trade show hotel was a snip at $280 USD plus tax a night.

I wonder if the Aussie ever gets back to 50 cents and stays there for a while, what type of manufacturing would come back to Australia (If any)?

 

[drron]

That's an easy one-none.
And that doesn't matter who wins the election.
It is a global economy.The world has an excess of workers.That is why China is trying to slowly devalue their currency as many countries now undercut them.

 

[cove]

If Shorten gets to be PM you should get fully set with forex just before that happens. Could he run a pay toilet or just Australia's deficit?

 

[CJEMNMAC]

We ( not me personally ) import from China /Thailand / Indonesia and have been through around $0.58 to $1.09 in regard to the dollar.

With domestic rates lower at present I cannot see much, if at all above 0.75 for the rate at present.

In our wholesale business, it is more about where we cost goods at the start of a season. Over the years, have not really lost with a combination of spot rate and forward contracts.

 

[whatmeworry]

That's an easy one-none.
And that doesn't matter who wins the election.
It is a global economy.The world has an excess of workers.That is why China is trying to slowly devalue their currency as many countries now undercut them.

How come we never talk about World overpopulation anymore?

If Shorten gets to be PM you should get fully set with forex just before that happens. Could he run a pay toilet or just Australia's deficit?

Their was an article the other day saying this long election campaign is not good for the economy, as it brings in uncertainty because either side could win.

I think the main issue will be the senate. Hopefully it is a responsible senate...

 

[RAM]

That's an easy one-none.
And that doesn't matter who wins the election.
It is a global economy.The world has an excess of workers.That is why China is trying to slowly devalue their currency as many countries now undercut them.

A bit more to it than that.

Chinese workers have nearly become uncompetitive (cost) compared with Vietnamese, Laos, Cambodia, Bangladesh to name but a few.

As they are such a large (and obvious) exporter they were targeted early by the US and European unions. In 2002 n admin worker in our back office, when he found out I was doing major work on China, came to see me.

A nice guy, he said that I might be interested in his family's business. So (expecting nothing of value) I stopped what I was doing and said tell me all about it. He said they had a small plastics company in China they ran from HK. His idea of small (vs China I suppose) and mine were extremely different.

He then said they were building a new factory and pulled up some photos of it from their 'web site'. It had 3 cranes in use (like we see one in use on an office in Sydney CBD).

Fast fwd to finish.

• Produced the button for air con, cruise control pretty much any dash buttons - for 2 major US and 5 European brands.
• Contracts for supply were around 1/3rd on product and 2/3rd on employee conditions
• Margins in 1990s were 20-25%, latest contract (early 2003) was 1% with no link to changing feed stock price (previously linked to cost of feedstock so 25% contract margin was pretty much guaranteed. Now hedging feed stock required (at cost) so 1% margin could go -ve very easily).
• Qn: Why bid for 1%? The business was his family's village (in China) social security. All the workers were from that one village. His grandparents and parents and his brothers (3 boys) would not let the village starve etc.
• So had made much in the 1970s to 1990s and were prepared to keep the factories going (equipment from Switzerland, Germany & US) to keep their village alive (farm land poisoned and local party officials allow dumping of toxic waste there still). Would keep going until they'd burnt through their capital.
• In 1990 6 workers per room, straw for beds, 1 naked 40w bulb. 1 toilet per 24 workers, 7 day weeks, 14-16 hour days
• In 2002 2 workers per room, innersprung mattress & base, sink, 2 overhead lights (100w) and 2 bed side reading lights, bedside table, 2 chairs and small table, colour TV and aircon. All minimum conditions required by EU contracts labor conditions.
• Ideal factory worker = single female from rural/farm aged under 27. Avoid males from urban (even rural if possible) at all cost as they are mostly "Little Emperors" from 1 child policy = parents never refused them what they wanted, never said no nor made them do anything at home.

Left that company a bit later but ran into him 4-5 years after that. Regularly contracts at -5% to -9% margin.

 

[eastwest101]

A bit more to it than that.

Chinese workers have nearly become uncompetitive (cost) compared with Vietnamese, Laos, Cambodia, Bangladesh to name but a few.

As they are such a large (and obvious) exporter they were targeted early by the US and European unions. In 2002 n admin worker in our back office, when he found out I was doing major work on China, came to see me..

Yep that's an interesting observation and one that isn't really discussed in economics, I suspect in the future that it will be. And its not unique to China or indeed Australia or any other country that when faced with producing goods at below cost (negative margins for a business) the production capacity is "sticky" in that it does not disappear instantly like the economic text books would imply.

Have a think about say car manufacturing in Australia as a related example to RAM's Chinese widget maker. Australian car manufacturing was effectively dead in the water by the 1960s/1970s with superior products coming in waves first from Japan and then Korea and soon China. But car manufacturing persisted right up to this year (but in vastly smaller scale and less economy of scale) and 'survived' the oil crisis, stagflation then inflation, American and Japanese ownership, import restrictions, increased use of robotic production lines, fixed exchange rates, removal of most of the government trade barriers, a floating exchange rate, superior competition from overseas and the Thai Free Trade agreement with the recent SUV craze among other game changing events on the way.

Think of all the money and effort expended to try to maintain this one business in a fairly insignificant small country like Australia over the decades just to provide some employment, and then think of the effort that a sole party communist state with a strongly centralized and politicized command and control economy and a massive urbanizing population will go to in the future to maintain full employment?

If you think the printing presses worldwide have been running hot since 2007 wait until you see what happens in the future! :shock:

 

[drsmithy]

If you think the printing presses worldwide have been running hot since 2007 wait until you see what happens in the future! :shock:

And because the "lower taxes forever and always" crew run the world, nothing is going to soak up and destroy all that excess money, which means it's just going to accumulate at the top.

 

[whatmeworry]

Yep that's an interesting observation and one that isn't really discussed in economics, I suspect in the future that it will be. And its not unique to China or indeed Australia or any other country that when faced with producing goods at below cost (negative margins for a business) the production capacity is "sticky" in that it does not disappear instantly like the economic text books would imply.

Have a think about say car manufacturing in Australia as a related example to RAM's Chinese widget maker. Australian car manufacturing was effectively dead in the water by the 1960s/1970s with superior products coming in waves first from Japan and then Korea and soon China. But car manufacturing persisted right up to this year (but in vastly smaller scale and less economy of scale) and 'survived' the oil crisis, stagflation then inflation, American and Japanese ownership, import restrictions, increased use of robotic production lines, fixed exchange rates, removal of most of the government trade barriers, a floating exchange rate, superior competition from overseas and the Thai Free Trade agreement with the recent SUV craze among other game changing events on the way.

Think of all the money and effort expended to try to maintain this one business in a fairly insignificant small country like Australia over the decades just to provide some employment, and then think of the effort that a sole party communist state with a strongly centralized and politicized command and control economy and a massive urbanizing population will go to in the future to maintain full employment?

If you think the printing presses worldwide have been running hot since 2007 wait until you see what happens in the future! :shock:

Some interesting observations. The problem with Free Trade deals are they not that "free" or even as our governments like to believe.

One interesting observation on the USA presidential race I read, was both Sanders and Trump are tapping into the anger of these "free trade" deals that are negatively impacting USA workers.

One mate who works in the car industry but not directly on the line was asked by another friend why are these bloody factory workers paid so much? His answer, do you realise how bloody repetitive and boring doing the same thing hundreds times a day is?

Look at Foxconn in China and how many workers have committed suicide and how the problem had got so bad, they installed nets around their employee accommodation to prevent suicide attempts.

With automation coming to many industries, workers worldwide should be worried.

 

[marki]

Some interesting observations. The problem with Free Trade deals are they not that "free" or even as our governments like to believe.

One interesting observation on the USA presidential race I read, was both Sanders and Trump are tapping into the anger of these "free trade" deals that are negatively impacting USA workers.

One mate who works in the car industry but not directly on the line was asked by another friend why are these bloody factory workers paid so much? His answer, do you realise how bloody repetitive and boring doing the same thing hundreds times a day is?

Look at Foxconn in China and how many workers have committed suicide and how the problem had got so bad, they installed nets around their employee accommodation to prevent suicide attempts.

With automation coming to many industries, workers worldwide should be worried.

No the automation needs servicing.




Our dollar up overnight in Eurozone do to ?? anybody knows why?

 

[turtlemichael]

No the automation needs servicing.




Our dollar up overnight in Eurozone do to ?? anybody knows?

Initiated by the popular interpretation of the Reserve Bank minutes that a further immediate decrease in interest rates is less likely.

 

[marki]

Initiated by the popular interpretation of the Reserve Bank minutes that a further immediate decrease in interest rates is less likely.

ah explains the uprise today



Sorry about the delay could not put the picture in off the computer only the iPhone

 

[marki]

So sorry to hear this today

 

[JohnK]

2 days ago it was fine. Now it's not. Early next week it will be fine. End of next week it won't be fine.

Too much emotion not enough common sense in the foreign exchange market. Fixed currency exchange was much better.

 

[marki]

2 days ago it was fine. Now it's not. Early next week it will be fine. End of next week it won't be fine.

Too much emotion not enough common sense in the foreign exchange market. Fixed currency exchange was much better.

Totally agree there is no real reason for the RBA to be cutting from a currency stand point. It seems to be all about the pursuit of an inflation target.
What Australia needs even more than other major economies is significant restructuring and re balancing. Price signals within the economy would already be sparking this transition. So it's not clear to me why lower interest rates would assist in that adjustment, except far as it leads to a lower exchange rate.

I am waiting for Helicopter money or what its actually suppose to achieve which is " quantitative easing for the People" The country that needs it the least right now but will probably try it first is the United States. Maybe in the next 2 years, as there is a downturn momentum they will have to do something radical more radical then before, because mere rate cuts won't be enough.

 

[Foreigner]

The greenback still has legs and expected to firm up:

World’s No. 2 Currency Trader Says Dollar Rebound Just the Start - Bloomberg

 

[Foreigner]

When the governor speaks, the markets react:

Aussie drops below 0.72 this afternoon.

http://www.smh.com.au/business/markets-live/markets-live-iron-ore-crumbles-20160523-gp24io.html