http://www.forexconspiracyreport.com/australian-to-us-dollar/
:
Title:
Australian to US
Dollar
By www.ForexConspiracyReport.com
The rate of exchange of the Australian to US Dollar has been moving in favor of the
US dollar. To a degree this is because the
US Federal Reserve is tapering its quantitative easing program of bond and
US Treasury purchases. This is driving up interest rates in the
USA and would tend to reduce the value of the Australian to US dollar. However, a major factor in the value of the
AUD is the strength of the
Chinese economy as
China is a major customer for raw materials as well as finished products from
Australia. For more insights into the Australian to US dollar ratio take a look at the following chart and continue reading the article.
Year
............................AUD = 1
USD..........
Chinese Growth Rate
1999 ...........................
..0.61 ............................ 7.6%
2000 .............................0.65 ............................ 8.4%
2001 ............................ 0.56 ............................
8.3%
2002 ............................ 0.52 ............................
9.1%
2003 ............................ 0.56 ............................ 10%
2004 ............................ 0.74 ............................ 10.1%
2005 ............................ 0.78 ............................ 1.3%
2006 ............................ 0.74 ............................ 12.7%
2007 ............................ 0.77 ............................ 14.2%
2008 ............................ 0.87 ............................ 9.6%
2009 ............................ 0.71 ............................ 9.2%
2010 ............................ 0.90 ............................
10.4%
2011 ............................ 1.03 ............................ 9.3%
2012 ............................ 1.02 ............................ 7.8%
2013 ............................ 1.03 ............................ 7.7%
2014 ............................ 0.89 ............................ 7.4%
Chinese
GDP growth rates are courtesy of the
World Bank web site and are updated through the end of 2012. Figures for 2013 and estimates for 2014 are from private sources.
Exchange rates are as of the first of each year and represent the amount in AUD required to purchase one USD.
Following the numbers we can see that in general a higher Chinese growth rate and especially the anticipation of a higher Chinese growth rate helps the AUD. A slowing Chinese growth rate hurts the AUD. We have noted that economic change in China may well be positive. To the extent that the
Chinese real estate bubble bursts, manufacturing numbers continue to drop or massive amounts of bad loans destroy banks in China the AUD will suffer.
Higher Interest
Rates in the USA
When interest rates go up money will follow.
Japan has been stuck with extremely low interest rates for years and investors habitually converted strong Yen to weak dollars and took advantage of high US interest rates. When rates in the US fell these folks simply took their money back home. Now, as rates promise to rise in the USA investment and
Forex capital is moving into dollars.
The Fed action is hurting currencies around the world as the USD rises in value. This affects the Australian to US dollar relationship as well. However, our primary concern with the Australian to US dollar relationship does not have to do with a transpacific relationship but rather with
Australia's reliance on the
Chinese market.
The
Sino Australian
Trade Relationship and the AUD
Australia commonly runs a trade excess with China of more than $20
Billion with total exports to China running well over $60 Billion. Both figures are in AUD. A trade excess is obviously good for Australia.
Having a large customer for coal, oil, liquefied natural gas and iron ore has helped Australia prosper in good times and has tempered the effects of the recession. However, what happens if the Chinese economy bottoms out?
Traders will be wise to avoid going long for too long on the AUD for the time being. Or traders can use Forex options to hedge risk and still prosper from the ups and downs of the Australian to US dollar.
http://youtu.be/9hIPDQIhHVU
- published: 16 Feb 2014
- views: 716