Invest
What does a higher Aussie dollar mean for the market?
The Australian dollar briefly broke past US$0.80 this week, and continues to hold its place above US$0.70, but the strength in our currency could be limiting performance in other aspects of the market.
What does a higher Aussie dollar mean for the market?
The Australian dollar briefly broke past US$0.80 this week, and continues to hold its place above US$0.70, but the strength in our currency could be limiting performance in other aspects of the market.
Strength in the Australian dollar has a flow-on effect to other sectors of the market, explained Shane Oliver, the chief economist at AMP Capital.
The country’s present high dollar value works against segments of the market that rely on trade, such as farming, higher education, and tourism, Mr Oliver said, making it difficult for businesses in these sectors to operate.
“Any tourist operator who was thinking of expanding must now be fearing that another run to parity [between the US and Australian dollars] is on the way, which will destroy the flow for foreign tourists and send locals back to Disneyland for their holidays rather than to North Queensland or Tasmania,” he said.
This is a particularly large problem at the present, Mr Oliver said, as mining investment is falling, consumers are under financial pressure, and housing construction looks close to reaching a peak – making the profits generated by trade-exposed businesses even more important to the nation’s performance.
“The rise in the Australian dollar is a big problem for the Australian economy and is likely contributing to the continuing underperformance of the Australian share market compared to global shares,” he explained.
Mr Oliver even predicts that the Reserve Bank is now more likely to attempt to “jawbone” the Australian dollar’s value back down than it previously has been, noting the high price of our currency is also likely stifling inflation.
However, the dollar’s current value is as likely related to weakness abroad as it is to domestic strength, according to Michael Judge.
Mr Judge, a senior staff member at foreign exchange and payments company OFX, said market trends and political noise were contributing greatly to the high Australian dollar.
“The USD is currently oscillating at a three-year low, and fund managers globally are favouring commodity-backed currencies ahead of any other – and they are not necessarily paying particular attention to economic data,” he said.
“The weakness of the US dollar is a result of uncertainty around the viability of President Trump’s economic initiatives.”
Stock market
All Ords set for new record by February, analyst predicts
The Australian market is likely to reach a new record in the early months of the year, with a win on the health front likely to offset geopolitical issues, an analyst has stated. ...Read more
Stock market
Aussies flock to fixed interest and ETP products for stable returns
Investors seeking stability during the COVID-19 pandemic have turned to fixed interest and cash exchange-traded products, new research has revealed. ...Read more
Stock market
Emerging market equities gain traction in post-pandemic world
Emerging market equities are making a comeback as technology-savvy consumers flock to capitalise on new opportunities that the 2020 pandemic may have made too attractive to ignore. ...Read more
Stock market
Is it too late to start investing in market index ETFs?
With the Australian market recovering its losses since the pandemic began, nestegg asked an industry expert if it was too late for investors to begin their investing journey. ...Read more
Stock market
Is it time to buy reopening stocks?
Investors are being advised to look into stocks that could benefit from markets reopening, an analyst has stated. ...Read more
Stock market
Stocks to watch in 2021
Easing political uncertainty, new vaccine hopes, central bank’s willingness to do all it takes and more, and new stimulus packages are likely to act as tailwinds for investors, an analyst has said. ...Read more
Stock market
Australia’s October stock picks revealed
Australian retail investors piled predominantly into high-growth industries such as electric vehicles stocks, cloud computing and recent third quarter IPOs during the month of October, new research ha...Read more
Stock market
The US election created a ‘goldilocks scenario’ for financial markets
As the votes continue and the results are collated, the US election is increasingly likely to create a “goldilocks scenario”, an industry expert has said. ...Read more
Stock market
All Ords set for new record by February, analyst predicts
The Australian market is likely to reach a new record in the early months of the year, with a win on the health front likely to offset geopolitical issues, an analyst has stated. ...Read more
Stock market
Aussies flock to fixed interest and ETP products for stable returns
Investors seeking stability during the COVID-19 pandemic have turned to fixed interest and cash exchange-traded products, new research has revealed. ...Read more
Stock market
Emerging market equities gain traction in post-pandemic world
Emerging market equities are making a comeback as technology-savvy consumers flock to capitalise on new opportunities that the 2020 pandemic may have made too attractive to ignore. ...Read more
Stock market
Is it too late to start investing in market index ETFs?
With the Australian market recovering its losses since the pandemic began, nestegg asked an industry expert if it was too late for investors to begin their investing journey. ...Read more
Stock market
Is it time to buy reopening stocks?
Investors are being advised to look into stocks that could benefit from markets reopening, an analyst has stated. ...Read more
Stock market
Stocks to watch in 2021
Easing political uncertainty, new vaccine hopes, central bank’s willingness to do all it takes and more, and new stimulus packages are likely to act as tailwinds for investors, an analyst has said. ...Read more
Stock market
Australia’s October stock picks revealed
Australian retail investors piled predominantly into high-growth industries such as electric vehicles stocks, cloud computing and recent third quarter IPOs during the month of October, new research ha...Read more
Stock market
The US election created a ‘goldilocks scenario’ for financial markets
As the votes continue and the results are collated, the US election is increasingly likely to create a “goldilocks scenario”, an industry expert has said. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
