What's your prediction on the Australian Dollar?

[clazman]

Falling dollar helps the miners .......

 

[leadman]

Falling dollar helps the miners .......

The problem is its the commodity prices that have fallen; FeO by 50%. And other cheaper sources are coming online.

 

[clazman]

How much of this can be blame on unions and the government tax's?

 

[Cruiser Elite]

How much of this can be blame on unions and the government tax's?

Falling commodity prices? Not a lot I would have thought but I might be wrong?

 

[leadman]

None (or maybe very little), we don't direct Chinese blast furnace production or power usage, Unions don't direct geologists to find deposits, etc, etc,

World metal prices are just that, world prices; and what does effect that is higher production. If you want to point some blame, look at the over production and over capacity brought on by Rio, BHP etc. Same analogy in the aviation industry, too many seats > cheaper and compete the budget airlines > cheap fares > go broke!

 

[Buzzard]

0.75c is a good balance for importers/exporters IMHO

 

[amaroo]

0.75c is a good balance for importers/exporters IMHO

+ 1 add manufacturing and tourism to the very long list of beneficiaries.

 

[leadman]

+ 1 add manufacturing and tourism to the very long list of beneficiaries.

What manufacturing? -1 car manufacturing, mining equip, batteries, etc, etc,

 

[amaroo]

What manufacturing? -1 car manufacturing, mining equip, batteries, etc, etc,

Plenty of SME struggling to compete.... it's not always about the corporations!

 

[TiredOldFlyer]

If I could could predict the value of the Aus dollar I would not be in my office, I would be in an Etihad Residence !

 

[cove]

Personally we have both US and English currency so what's that about a Residence on Etihad?
We are still enjoying SQ Suites and I tried Emirates Suites but they were too Hollywood for my taste.
Will the currency bounce or just go down in a straight line is the big question I think.

 

[robd]

0.75c is a good balance for importers/exporters IMHO

You're an exporter?????

 

[Buzzard]

You're an exporter?????

Exporter? Not me.
An ex Porter maybe

 

[JohnK]

0.75c is a good balance for importers/exporters IMHO

I doesn't help my retirement income one bit.

At 0.75c I get 25%-30% less in Thailand to raise my children.

 

[marki]

Hello Aussie dollar discussions "again" have not seen for some time my my have you changed a little less lately

 

[amaroo]

Another bad year for real estate in mining towns as commodity prices plummet - ABC Rural (Australian Broadcasting Corporation)

[TH="bgcolor: initial"]Mining town[/TH]
[TH="bgcolor: initial"]All houses: % change[/TH]
[TH="bgcolor: initial"]3-bedroom houses: % change[/TH]
[TH="bgcolor: initial"]All units: % change[/TH]

[TD="bgcolor: initial"]Port Hedland, WA[/TD]
[TD="bgcolor: initial"]16% decrease[/TD]
[TD="bgcolor: initial"]26% decrease[/TD]
[TD="bgcolor: initial"]17% decrease[/TD]

[TD="bgcolor: initial"]Karratha, WA[/TD]
[TD="bgcolor: initial"]14% decrease[/TD]
[TD="bgcolor: initial"]20% decrease[/TD]
[TD="bgcolor: initial"]6.1% decrease[/TD]

[TD="bgcolor: initial"]Muswellbrook, NSW[/TD]
[TD="bgcolor: initial"]9% decrease[/TD]
[TD="bgcolor: initial"]17% decrease[/TD]
[TD="bgcolor: initial"]18% decrease[/TD]

[TD="bgcolor: initial"]Cobar, NSW[/TD]
[TD="bgcolor: initial"]7.6% decrease[/TD]
[TD="bgcolor: initial"]2.7% increase[/TD]
[TD="bgcolor: initial"]57% increase[/TD]

[TD="bgcolor: initial"]Roxby Downs, SA[/TD]
[TD="bgcolor: initial"]6.8% decrease[/TD]
[TD="bgcolor: initial"]7.2% decrease[/TD]
[TD="bgcolor: initial"]6.9% decrease[/TD]

[TD="bgcolor: initial"]Moranbah, Qld[/TD]
[TD="bgcolor: initial"]23% decrease[/TD]
[TD="bgcolor: initial"]30% decrease[/TD]
[TD="bgcolor: initial"]9.8% decrease[/TD]

[TD="bgcolor: initial"]Roma, Qld[/TD]
[TD="bgcolor: initial"]11.3% decrease[/TD]
[TD="bgcolor: initial"]3.2% decrease[/TD]
[TD="bgcolor: initial"]6.9% increase[/TD]

 

[PLANT]

Page 100 is my call....looking on track.....I picked it first people!

 

[Reggie]

At 0.75c I get 25%-30% less in Thailand to raise my children.

Children? I didn't know you had kids JohnK.

 

[RAM]

Falling dollar helps the miners .......

Normal line trotted out by 'ceteris paribus' crowd.

Most costs, including some labour costs, are USD based.

Generally a falling AUD often coincides with falling commodity prices (not always but successful medium term fund mgmt FX hedging strategy).

So operating costs (energy, spares/supplies) rise as selling price falls in even in AUD terms.

Which is why we are seeing so many junior resource companies calling in the receivers currently.

 

[eastwest101]

Normal line trotted out by 'ceteris paribus' crowd.

Most costs, including some labour costs, are USD based.

Generally a falling AUD often coincides with falling commodity prices (not always but successful medium term fund mgmt FX hedging strategy).

So operating costs (energy, spares/supplies) rise as selling price falls in even in AUD terms.

Which is why we are seeing so many junior resource companies calling in the receivers currently.

Actually - I would clarify that a bit more and break it down into Junior Mining companies (whom are often not producers but are explorers) which have put up the shutters due to lower commodity prices and a risk adverse investor climate means that they can't attract capital - even if they do have a good story. This is the animal spirits or mindless herd mentality in action. A classic recent example was a Junior Company whom drilled a hole in the NT and got a reasonable intersection of copper at open pittable depth and the share price went down the next day! As always with these cyclical things such as commodity prices and sometimes exchange rates, the movements always overshoot and undershoot the fundamentals and that's where more long term or smarter investors buy in, when most in the market are running around like headless chooks selling at a loss. Lower AUD also encourages foreign buyers to buy Australian companies and their resources as the lower AUD starts to make acquiring Australian resource companies better value, when you start seeing the smart guys like Glencore and the Chinese acquiring Australian resources/stocks then you know the market is oversold and the exchange rate has made mergers and acquisitions a viable strategy for the next commodity upswing.

For the medium sized and larger producing companies - input costs comprise a lot of things from the ongoing price of labour, price of fuel, cost of energy to the one-off cost of new equipment, cost of construction materials and labour and other finance costs. In a lot of cases - provided most of the labour and goods can be sourced in Australia then a lower AUD is generally a good thing - as most final products like metallic ores, coal, oil, gas etc are sold and traded in US$ even though mostly going to China/Japan/Korea.

These equations change a lot with Australian companies listed here but with producing assets overseas - such as mines in Africa, PNG, South America and other overseas locations.

But I digress - the biggest single factor in the AUD exchange rate is still the money printing going on in various parts of the world, and the relatively high interest rates in Australia attracting all that funny money sloshing around the world.

The biggest factor in commodity prices are the larger iron ore producers trying to permanently put the high cost Chinese local iron ore miners out of business, and Saudi Arabia trying to put their higher cost competitors out of business like ISIS, Iran, Russia, Venezuela, US Shale etc