The Dollar Continues to Slide

Australian Dollar softens

The chart below, borrowed from our sister site Exfin,  looks at how the Australian dollar has performed against 4 major currencies - the USD, GBP, Euro and JPY - over the past two months to the end of July, 2013. After a period of relative stability during July the market reacted abruptly to some comments from the Reserve Bank about potential interest rate moves and sharply moved down again.

The pattern is evident against all major currencies, the AUD has weakened against all of them by more than 10% over the period.  It is not just a "US Dollar  Story" as some commentators would suggest - with the AUD weakening against an apparently strengthening US economy. Looking back over twenty years or so, the AUD is still at historically high levels against most of these currencies, and it should be given the amount of money they have all printed under the guise of "quantitative easing".

"Where to from here ?" We haven't a clue, but on fundamentals, barring some major hiccups in China and some concerns we have that the forex market is not truly rational, we believe that there will be some relative stability.  However, Australia is not a "market maker" and our widely traded currency means that volatility is probably here to stay again and the upside is that this probably respresents an opportunity for many Australian expats and migrants to bring some of their money into Australia on markedly better terms than they have seen for some years.