Australian Dollar - Will it continue to improve?

[Aquamarinejewel]

The Aussie Dollar continues to improve it has closed at a 23 year high, the strongest level since June 1984 - can it continue to improve further?

1 Australian dollar = 0.8917 U.S. dollars

 

[Pornstar]

The dollar got thumped yesterday afternoon. It sunk like a stone for about 45 minutes, dropping by about 150 pips. I made a quick 30 pip profit on the recovery.

I have heard Clifford Bennett say that he believes we will reach parity with the US next year at $1US, and possibly hit $1.08 a little further down the track. I just jumped onto it this morning at 0.8865, am looking to hold it for the long term.

 

[mdc]

Does anyone know if there's any way to hedge against an improving AUD-USD rate?

I have to hold quite a bit of money in US currency, and it doesn't look like I'll be recovering my 10-15% any time soon...but is there any product that would curb further losses?

 

[Pornstar]

Does anyone know if there's any way to hedge against an improving AUD-USD rate?

I have to hold quite a bit of money in US currency, and it doesn't look like I'll be recovering my 10-15% any time soon...but is there any product that would curb further losses?

All you have to do is buy the AUDUSD currency pair. That way when the aussie dollar improves against the US you will lose money on your $US holdings, but will make it up again on your AUDUSD trade.

So if you are holding $100k US, buy 100,000 AUDUSD with an FX dealer.

 

[mdc]

All you have to do is buy the AUDUSD currency pair. That way when the aussie dollar improves against the US you will lose money on your $US holdings, but will make it up again on your AUDUSD trade.

So if you are holding $100k US, buy 100,000 AUDUSD with an FX dealer.

Thanks for this, exactly what I was looking for. Would there be a particular FX dealer that would be best to go with for something like this?

 

[Pornstar]

I received this info today from Clifford Bennett:

The US dollar is about to have a very sharp fall indeed.

While everyone is of the view that the US dollar should be firm going into the G7 meeting this weekend, the proof is in the pudding, in the price action, and it is clear the US dollar is struggling to stay afloat.

If the US dollar is heavy going into the G7, what happens next week when nothing material develops from the extensive behind closed doors conversations over the weekend.

The price action is compelling, the Euro looks set to break to fresh new highs at any moment. A move above 1.4250 is likely to see panic buying ensue as everyone who desperately needs to sell the once might greenback, realises the G7 rally may already be over. A lot of very large institutions and global corporations are going to have dump the US dollar while they can, and even chase it lower. It is possible the Euro, the world’s new reserve currency may achieve our year end target of 1.5200, by the end of this month.

The US dollar has been at the edge of an accelerated decline for the past week. The run of data is as expected, below consensus expectations, especially on housing. Chairman Bernanke has already suggested the current data does not fully capture the crisis. With the actual data already spinning to the negative of consensus, and the dawning realisation that the Fed sees the real picture on the ground as worse than that data, a Fed cut of 25 points at the next FOMC is almost a certainty, and 50 points a real possibility. Hang onto to your hats, this could be the biggest fall in the US dollar we have seen yet.

The Australian dollar can strike 93 cents by the end of next week if the G7 meeting does not come up with some strong language about the falling US dollar, and the G7 probably won’t. The so far steadily falling US dollar has to be left to natural markets forces as part of the solution to the worlds primary economic imbalance, an under-performing US economy and the US deficits.

 

[Leper]

The Aussie $ will >US$1 by about March next year, possibly sooner.

Thank Christ I get paid with it pegged at 78 cents, otherwise I'd be outa here.

 

[finrod]

Yes I am also interested in the Aussie vs US $ rate. I was going to invest in some US stocks but it might not be worth it if the aussie dollar keeps rising.

 

[Guido]

Yes I am also interested in the Aussie vs US $ rate. I was going to invest in some US stocks but it might not be worth it if the aussie dollar keeps rising.

Also looking at investing in the US, but more because this surge has their stocks representing good value in comparison to a few stocks here. Also think that long, long term, all things being equal (good leadership, economic stability, both countries sharing similar interest rates), that the aussie dollar should sit at between US$0.60c-US$0.80c, which would have a multiplying effect on any rises in US stocks.

Looking to get a margin loan (50/50) to do it - preferably US based, though it's going to be a bitch to organise - but never been down the international investment road before (at least not directly), so plenty of bedside reading on currency conversions, US index funds and lending overseas coming up. Oh joy.

 

[rooboy_88]

If the cash rate continues to rise and the commodities boom continues, I would think we wont see any sharp drops.

If anything it might continue to increase as the US cash rate is falling as well.