the dollar going under parity - again

[h0ughy (David)]

better buy up now - it might be a while before it goes back over the hurdle again, so much i want and so little money to get it with

[johnt (John)]

Originally Posted by h0ughy

better buy up now - it might be a while before it goes back over the hurdle again, so much i want and so little money to get it with

Well, I guess it's a bit of a balance. Those of us with a mortgage now have a bit more spare cash, only to pay it back some other way due to the drop in the dollar. (oh and that Medicare levy increase coming up!). Yes, that famous comment "so much i want and so little money to get it with" must be one of the most universally applicable statements, as it must be scalable to any level of income.

[bojan]

Strong AU dollar was (and still is) a disaster for our manufacturing industry.. we should all be very aware of this.

[Stardrifter_WA]

Originally Posted by johnt

Well, I guess it's a bit of a balance. Those of us with a mortgage now have a bit more spare cash, only to pay it back some other way due to the drop in the dollar. (oh and that Medicare levy increase coming up!). Yes, that famous comment "so much i want and so little money to get it with" must be one of the most universally applicable statements, as it must be scalable to any level of income.

Fortunately, some of us don't have a mortgage and back when I did, I was paying over 12%, but admittedly, on a lower amount of borrowing than most people have today.

Unfortunately, for self funded retirees, the interest rate drop is hurting them, badly.

Not much point in having money in the bank any more, which is why I am off to the states in July for 6 weeks (is it July yet ). Fortunately, I took a punt that the exchange rates would drop, so bought lots of US dollars. The very next day, they started dropping, so I was lucky.......for a change. Actually, luck had nothing to do with it really, it was an educated guess at the direction it was going. Just lucky I did when I did.

Cheers Peter

[Stardrifter_WA]

Originally Posted by bojan

Strong AU dollar was (and still is) a disaster for our manufacturing industry.. we should all be very aware of this.

Unfortunately Bojan, our dollar is going to stay relatively high, long term. But, if it does fall, it won't all be good, as we will be paying a lot higher fuel prices (aren't we paying enough now?) and the subsequent rises for utilities, freight etc. Farmers are already complaining about high fuel prices, so whilst gaining in one area, they face losses in another area.; and fuel is a high input in farming.

I just hope we don't see the lows the dollar has previously been at. As for manufacturing, it is pretty much doomed anyway, as we just cannot compete on wages. Cost of wages appears to be the greatest problem business faces today anyway, and that ain't gonna change any time soon.

Whilst Australia is powering along, not everyone is benefiting. In some sectors that I deal with, it is looking grim. However, it could be worse!

That's life!

Somebody once said, "despite the cost of living, have you noticed how living remains so popular."

Cheers Peter

[johnt (John)]

Originally Posted by Stardrifter_WA

Fortunately, some of us don't have a mortgage and back when I did, I was paying over 12%, but admittedly, on a lower amount of borrowing than most people have today.

Unfortunately, for self funded retirees, the interest rate drop is hurting them, badly.

Not much point in having money in the bank any more, which is why I am off to the states in July for 6 weeks (is it July yet ). Fortunately, I took a punt that the exchange rates would drop, so bought lots of US dollars. The very next day, they started dropping, so I was lucky.......for a change. Actually, luck had nothing to do with it really, it was an educated guess at the direction it was going. Just lucky I did when I did.

Cheers Peter

I guess one quickly realises that each persons situation is different, so a few simple & innocent statement can lead to quite a complicated and perhaps serious discussion with greatly different opinions, many dimensions, and situations depending on where each person is in their life etc. etc. I guess all these dimensions tend to balance each other out over the long term, but most people tend to look at their own situation over the short term. Getting too hot a topic for me, I'm out.

[gregbradley]

Currencies tend to trend strongly. Also there must be tons of traders with stop losses just under a dollar. So I expect it will go down for some time.

High interest rates compared to the rest of the world was a big reason it was up. So was the massive mining investment which has plateaued out.

Perhaps the dollar honeymoon is over. It will probably bounce back at some point but perhaps the days of it being over $1? I guess it depends on how the USA is doing. They actually had a tax surplus last month!

Greg.

[Stardrifter_WA]

Originally Posted by johnt

I guess one quickly realises that each persons situation is different, so a few simple & innocent statement can lead to quite a complicated and perhaps serious discussion with greatly different opinions, many dimensions, and situations depending on where each person is in their life etc. etc. I guess all these dimensions tend to balance each other out over the long term, but most people tend to look at their own situation over the short term. Getting too hot a topic for me, I'm out.

I didn't think it was a hot topic. One would have to expect there would be a variety of opinions, as you say, we are not all alike. I know I am like no other I wouldn't want to be!

Cheers Peter

[Stardrifter_WA]

Originally Posted by gregbradley

Currencies tend to trend strongly. Also there must be tons of traders with stop losses just under a dollar. So I expect it will go down for some time.

High interest rates compared to the rest of the world was a big reason it was up. So was the massive mining investment which has plateaued out.

Perhaps the dollar honeymoon is over. It will probably bounce back at some point but perhaps the days of it being over $1? I guess it depends on how the USA is doing. They actually had a tax surplus last month!

Greg.

Greg, it is to be expected, with nine months above parity it has remained stubbornly strong. Nobody expected that to last. But then, there has been a lot of stimulus in the US and we will have to wait and see how that plays out. The underlying problems of debt isn't going away any time soon. Hey, we may even be in more debt that we realise, just have to wait for tomorrows budget to find out. I doubt it will be good news.

But then, look on the bright side.....any day you wake up still sucking in air is a great day!

Cheers Peter

[johnt (John)]

Originally Posted by Stardrifter_WA

I didn't think it was a hot topic. One would have to expect there would be a variety of opinions, as you say, we are not all alike. I know I am like no other I wouldn't want to be!

Cheers Peter

Ok Peter,
Last one...
I was replying as a pleasant break while I was working on a document, so I guess what I really meant is that now that the topic may have taken off, I probably should bail out and continue working on that document. How else will I eventually be able to save up for the Takahashi!! (OK, I could have said Astro-Physics, but by the time I make it to the top of their lists, I could be retired, living on savings, and wanting the interest rates to increase myself ).

[Stardrifter_WA]

Originally Posted by johnt

Ok Peter,
Last one...
I was replying as a pleasant break while I was working on a document, so I guess what I really meant is that now that the topic may have taken off, I probably should bail out and continue working on that document. How else will I eventually be able to save up for the Takahashi!! (OK, I could have said Astro-Physics, but by the time I make it to the top of their lists, I could be retired, living on savings, and wanting the interest rates to increase myself ).

I sure hope you are not retiring any time soon then

[JB80 (Jarrod)]

I wish the dollar was as high as it is now when I moved here and spent most of my AUD. I'd have much more left now or maybe just a bit more at least.

I'm genuinely shocked at the cost of living back home now, it just means we will have to work harder and invest wiser before coming back.

[mithrandir (Andrew)]

When we left home the $ was about 1.02. Today - 6 days later - it's 0.97. In effect the price of SWMBO's birthday present rose about 50 CHF overnight.

[Gem (Grant)]

I have sympathy for retirees. However, generally I would prefer the dollar to go down a bit more to help our exporters who have done it tough recently.

[gary]

Originally Posted by mithrandir

When we left home the $ was about 1.02. Today - 6 days later - it's 0.97. In effect the price of SWMBO's birthday present rose about 50 CHF overnight.

Hi Andrew,

Currencies are always traded in pairs.

In the last week, the Aussie had only fallen less than 1 cent against the Swiss Franc (CHF).

By way of further example, over the past week, it has been almost steady against the Yen.

What we are currently seeing is more a case of the US Dollar rising against other
major currencies it is trading against rather than the Aussie weakening against
them.

For example, by comparison in the past week, the US Dollar gained about US0.03
against both the Swiss Franc and the Yen.

Traders are starting to go long on the US Dollar on the back of announcements
that Quantitative Easing would be slowing and on indicators that the US economy is
improving.

Enjoy your trip!

[astroron (Ron)]

Originally Posted by bojan

Strong AU dollar was (and still is) a disaster for our manufacturing industry.. we should all be very aware of this.

Could you tell me what Australia manufactures in any great volume to make any difference
We have a very small manufacturing sector, and have had for a very long time, and it is only getting smaller IMHO.
If we invent,make anything of value, we sell the design and production to an over seas company then buy the product of them
PS The ARGO NAVIS is an exception.
Cheers

[gary]

Originally Posted by astroron

Could you tell me what Australia manufactures in any great volume to make any difference

Hi Ron,

I might be able to partly answer that.

Here are two sets of percentages I could find by searching, the first set for exports and
the second as percentages of Australian GDP for the period around 2011.

Exports (2011)
Minerals and fuels : 50.6%
Services : 16%
Manufacturing : 13.3%
Rural : 10.8%

Source -
http://www.dfat.gov.au/publications/...ance-2012.html

Activity as contribution to Australian GDP (2010-11)

Mining : 7.23%
Manufacturing : 8.17%

Source -
http://www.abs.gov.au/ausstats/abs@....20Industry~240

We have a very small manufacturing sector, and have had for a very long time, and it is only getting smaller IMHO.
If we invent,make anything of value, we sell the design and production to an over seas company then buy the product of them.

As you know, I am a big supporter of manufacturing in Australia but you are
right in that worryingly the manufacturing sector has been contacting over time.

As you rightly point out, many Australian companies have succumbed to
off-shoring.

Nevertheless, manufacturing still makes a considerable contribution to the Australian economy,
as the percentage of GDP figures reflect. As at this moment, indications I
have read are that the manufacturing and mining contributions to GDP are about the
same, around 7%.

However, the export figures are the most relevant for this thread as far as
their exposure to the weaknesses of other currencies.

As you will be aware, the Americans, British Swiss, Japanese and so on have been
"printing money" in recent periods, keeping their currencies artificially low.
As a result, the Australian Dollar has certainly defied gravity of late and is not
as strongly correlated to commodity prices as it once was. One recent result of this
levitation act is that it caught Treasury bureaucrats by surprise with tax revenues
lower than expected, contributing to this year's deficit.

Wildcard manufactures electronics here in Sydney and we're proud of the fact that
we are a net exporter.

[astroron (Ron)]

Thanks Gary.
Quote)
Nevertheless, manufacturing still makes a considerable contribution to the Australian economy,
as the percentage of GDP figures reflect. As at this moment, indications I
have read are that the manufacturing and mining contributions to GDP are about the
same, around 7%.
end)
I would hazard a guess that the biggest percentage of the 7% would be small busyness's such as your self.
Cheers

[gary]

Originally Posted by astroron

Thanks Gary.
I would hazard a guess that the biggest percentage of the 7% would be small busyness's such as your self.

Hi Ron,

Your are welcome.

I would have to dig deeper to find what percentage of total exports do small businesses
contribute. It is an interesting question.

DFAT statistics shed some light on the amount of manufactured goods Australia exports
and their breakdowns.

The Australian Bureau of Statistics defines manufacturing in these terms -

Originally Posted by Australian Bureau of Statistics

Manufacturing broadly relates to the physical or chemical transformation of materials or components into new products, whether the work is performed by power-driven machinery or by hand.
Manufacturing covers a range of production techniques ranging from computer-assisted production using robots to production of fine jewellery by hand.

However, manufacturing can be divided into simply transformed goods, such as
steel and some chemicals and elaborately transformed goods, such as clothing
or computers.

Of the $41.6 billion of manufactured exports in 2011-12, $15.7 billion were engineering
products. The mix of these were -

Machinery for specialised industries $4.2 billion
Office & telecommunication equipment & parts $2 billion
Road motor vehicles & parts $2.6 billion
Other transport equipment & parts $1.8 billion
Professional, scientific & controlling instruments & apparatus $2.1 billion
Other engineering products $3 billion

Some examples of other elaborately transformed goods include --
Pharmaceutical products $6.4 billion
Essential oils, perfume & cosmetic products $490 million
Plastics and articles of plastic $617 billion

Source -
http://www.dfat.gov.au/publications/...ts-2011-12.pdf

Here are a selection of some random small businesses from the AusIndustry web site that showcase just a few of the types of things people are doing out there -

http://www.maptek.com/
http://www.rubiconwater.com/
http://www.catavolt.com.au/
http://www.podmx.com/

[Steffen]

Isn't it a bit too early to call the end of the world? After its record high in July 2011 the AUD dipped below today's rate three times – in October 2011, November 2011 and June 2012. It always came back, albeit not to the record high of US$1.10 or thereabouts.

Cheers
Steffen.