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
Could this bull market be losing steam?
There’s an old investment adage that bull markets never die of old age, with the current market showing signs of cracking just months after the recovery, an industry expert warns. ...Read more
Stock market
Super fund investors bid to acquire Sydney Airport
A group of super fund investors has lodged a non-binding takeover bid for Sydney Airport, valuing the company at over $22 billion. ...Read more
Stock market
10 most globally held stocks revealed
Australian investors remain bullish on electric vehicles and technology stocks, according to their long-term held positions, new research has shown. ...Read more
Stock market
How ‘gamer investors’ are pushing a new wave of social responsibility
A new generation of younger retail investors are pushing a new social movement, yielding a distributive impact on the markets, most notably through the GameStop saga, two researchers have revealed. ...Read more
Stock market
ASX tipped for record high despite inflation fears
The market is tipped to shake off fears of rising inflation, with the ASX 200 now tipped to close the year at a new record high, an economist has revealed. ...Read more
Stock market
‘Commission-free propaganda’: Warning issued for retail investors
The phrase “if you’re not paying for it, you’re the product” applies just as much to stock trading apps as it does to social media networks. ...Read more
Stock market
Is the tech sell-off creating opportunities for investors?
A tech sell-off sparked by inflation concerns has seen world markets crash. But is it creating an opportunity for investors to ‘buy the dip’? ...Read more
Stock market
Government opens arms to Wall Street
In its bid to maintain Australia’s global competitiveness, albeit its firmly shut borders, the Australian government has included a measure in its recent budget to allow foreign financial services p...Read more
The Olympic effect on property and equity investors; COVID-19 Disaster Payments and super
Listen now
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Stock market
Could this bull market be losing steam?
There’s an old investment adage that bull markets never die of old age, with the current market showing signs of cracking just months after the recovery, an industry expert warns. ...Read more
Stock market
Super fund investors bid to acquire Sydney Airport
A group of super fund investors has lodged a non-binding takeover bid for Sydney Airport, valuing the company at over $22 billion. ...Read more
Stock market
10 most globally held stocks revealed
Australian investors remain bullish on electric vehicles and technology stocks, according to their long-term held positions, new research has shown. ...Read more
Stock market
How ‘gamer investors’ are pushing a new wave of social responsibility
A new generation of younger retail investors are pushing a new social movement, yielding a distributive impact on the markets, most notably through the GameStop saga, two researchers have revealed. ...Read more
Stock market
ASX tipped for record high despite inflation fears
The market is tipped to shake off fears of rising inflation, with the ASX 200 now tipped to close the year at a new record high, an economist has revealed. ...Read more
Stock market
‘Commission-free propaganda’: Warning issued for retail investors
The phrase “if you’re not paying for it, you’re the product” applies just as much to stock trading apps as it does to social media networks. ...Read more
Stock market
Is the tech sell-off creating opportunities for investors?
A tech sell-off sparked by inflation concerns has seen world markets crash. But is it creating an opportunity for investors to ‘buy the dip’? ...Read more
Stock market
Government opens arms to Wall Street
In its bid to maintain Australia’s global competitiveness, albeit its firmly shut borders, the Australian government has included a measure in its recent budget to allow foreign financial services p...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
