US$ falling on its ass?

[rhys 0]

Hi,

I have been watching the US$, AUS$ and the NZ$ quite closely over the last couple of months because i am going to be in all 3 countries for varous reasons over the next few months.

The US$ was NZ$2.02(quite extraordanary) a couple of weeks ago now it is $1.78 and falling, 1 aus$ was US$0.63 a week or two ago now it is $0.70 and growing.

The difference between the AUS and NZ has been about the same so the US$ is falling quite rapidly.

it has been quite high for that last while so probably losing it's ground, but so fast!

Any economists out there know what is likely to happen over the next month or so? I'll be juggling AUS$, NZ$ and US$ and kinda wouldn't mind not losing too much.

Any thoughts?

"When the power of love overcomes the love of power, then the world will see peace." - 'Jimi' Hendrix

[philh 0]

I a currency trader, but I don't have easy news for you. Unfortunetly currencies and other financail commodities are best modelled by following a random walk. That means it's new information that changes the price, as we don't have new information, by definition we can't tell you where these currencies wil be in 1 month from now.
However there is a fwd market for all these currencies , they are not predicitons by the market of the future spot rate. Instead they are calculated from the relative interest rates between the two currencies.
What's interesting is that studies show fwd prices are the best unbiased predictor of future spot prices.
The currenct prices are:
us$/Aud$ spot 1.4447 1m fwd 1.4484 3m fwd 1.4530
us$/NZ$ spot 1.7803 1m fwd 1.7846 3m fwd 1.78845

[CornishChris 5]

Clearly a good grasp of English grammar isn't required to be a currency trader!

CJP

Gods don't kill people. People with Gods kill people

[dreamdancer 0]

doesn't look good...

Quote

The experience of the 1970s in both the United States and Britain demonstrates that the Fed’s theory that inflation won't co-exist with economic slack is wrong. Thus an over-inflationary monetary or fiscal policy could quickly produce accelerating inflation even while recession persists.

The Fed’s proposed purchase of $300bn of long-term Treasury bonds, when combined with the Obama administration’s record budget deficits, is particularly risky. Running large budget deficits and monetising them through central bank purchases of debt is a highly inflationary policy that has got plenty of emerging markets into trouble.

Broad money growth, whether by the M2 metric or by the St. Louis Fed’s MZM figure, has been running at over 15pc annually since last September. The $1trillion further expansion of the Fed’s balance sheet is very likely to accelerate this. The effect may not be obvious in the short term. But at some point, it is almost inevitable inflation will return, probably with force.

The Fed will then need to reverse policy with the speed and verve of a racing driver. Unfortunately, the odds are against it doing so before inflation has taken hold.

http://www.telegraph.co.uk/finance/breakingviewscom/5014284/Federal-Reserve-is-now-playing-a-high-risk-game-with-inflation.html

stay away from moving propellers - they bite
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[metalslug 31]

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doesn't look good...

doesn't look good... if you're an American

I'll be visiting Miami and the Caribbean next month. Perfect time for me to buy $US for that trip.
Well... until our own politicians say something irresponsible again to make the Rand slide.

[Gawain 0]

Same thing as always....

The Fed is dumping paper into the system:
http://news.yahoo.com/s/ap/20090319/ap_on_bi_ge/fed_economy;_ylt=AmWVA0Sh3SxdoHPLh0Panotu24cA

[AdamLanes 1]

The truth is that all three of those currencies that you mention are losing value, and they will continue to lose value. It is the future, and history, all fiat money.

[rhys 0]

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The truth is that all three of those currencies that you mention are losing value, and they will continue to lose value. It is the future, and history, all fiat money.

Losing value compared to what?

"When the power of love overcomes the love of power, then the world will see peace." - 'Jimi' Hendrix

[Andrewwhyte 1]

The US is a bit different from other currencies as it is the reserve currency of the planet. When uncertainty is high people gravitate towards it, swamping the inherent weakness in the economy underpinning the currency. As things settle down the actual strength (weakness) in the economy dominates and so we see the U$D falling. I think the medium term will see the U$D fall a lot. The only thing that will prevent it is an increase in quantitative easing (printing money) by all the other central banks so we can all have inflation together. US inflation is coming, of that I am sure.

[AdamLanes 1]

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Losing value compared to what?

The things that you exchange your fiat money for.

[cliffwhite 0]

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The truth is that all three of those currencies that you mention are losing value, and they will continue to lose value. It is the future, and history, all fiat money.

__________________________________________________

Are they "losing value" or was their "value" an illusion all along?

Blues,
Cliff

2muchTruth

[jgoose71 0]

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Same thing as always....

The Fed is dumping paper into the system:
http://news.yahoo.com/s/ap/20090319/ap_on_bi_ge/fed_economy;_ylt=AmWVA0Sh3SxdoHPLh0Panotu24cA

You forgot to highlight the biggest part-

"Federal Reserve's sudden decision to print $1.2 trillion and pump it into the economy, a move that also triggered warning signs of inflation — a weaker dollar and the highest oil prices of the year"

This kind of move will send inflation out of control. China will no longer buy our bonds because it's a loosing deal and the US will go bankrupt. The next thing to happen will be interest rates will take off in an effort to control our plummeting dollar. We saw a lot of this all ready happen with Carter.

Don't blame me, I voted for McCain

"There is an art, it says, or, rather, a knack to flying. The knack lies in learning how to throw yourself at the ground and miss."
Life, the Universe, and Everything

[speuci 0]

Go look at the forward currency contracts for the period you are concerned about. Thats your best indicator of where the currency exchange is likely to be going.

[philh 0]

Vague predictions aren't very useful. To say that a currency is losing value is meanignless unless you specify what it is losing value against. Genrally one might consider its value aginats another currency or against goods and services , the latter can be measured by increasing rates of inflation.
Inflation in Australia appears to be on the way down:


http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=AUD

and in New Zeland the Cpi turned negative:

http://www.marketwatch.com/news/story/new-zealands-quarterly-inflation-rate/story.aspx?guid=%7BBFF98BAF-0064-49EA-BB3C-1DC103BDC46C%7D&siteid=rss

[AdamLanes 1]

Wow, government statistics based on government data telling people a favorable outcome. Can't you see the blatant misrepresentation of information?!? The article says CPI is down, but wait a minute, its still at a positive 3.7%. So CPI is actually up! Lets move on to your second link. Wow inflation is down 0.5% for the quarter!! Oh wait its still up over 3% for the year. I bet inflation is up over the lifespan of the New Zealand dollar also. Why don't you prove me wrong!

[philh 0]

No I dont see any mis representation here at all, what are you on about?
Are you suggetsing the Australian government Bureau of Statistics is faking their CPI data?
No one is claiming that 3.7% cpi is not a positive number, but a move from 5% to 3.7% is a welcome deveolpment.

As for the New Zeland data , again no one is suggesting that this currency has not experinced positive inflation over its lifespan, why is this relevant?
Currencies fluctuate in response to new information, not old information.