Aussie Dollar expected to hit US85¢ low

LBargain4U on 26/05/2013 - 00:15
Last edited 26/05/2013 - 01:23

The Aussie is in a bit of trouble at the moment, dropping to finish last week at lowest level in close to a year. Whilst good for export businesses, it's not so great for OzBargainers buying from overseas.

I've just bought an AMEX GlobalTravel Card from Australia Post to lock in the exchange rate, to use when the dollar moves lower. I'd rather loose 3% now (get 94¢) when the A$ is forecast to hit 85¢ US Cents in the near future. Of course I won't be using my GlobalTravel Card until the dollar reaches 94¢ or less plus I can cash-out the card at any time and no fees. Check GlobalTravel Card rates

Brokerage Credit Suisse is the most bearish on the outlook for the Australian dollar, with the global investment bank predicting it to shift to a low of US85¢ by next May.

HSBC said it was strength in the US dollar that would be the key driver for the direction of the local unit, and lowered its year-end estimate for the Australian dollar to US90¢ from US95¢.

UBS, meanwhile, revised down its year-end and mid-2014 forecasts to US95¢ and US90¢ respectively.

Source: theage.com.au - "Dollar tipped to hit US85¢ low"

“While a rebound remains possible, we think there is clear evidence that the Aussie is undergoing a structural downshift,” said the bank’s London-based Ric Deverell, noting that in previous dips to about US97c in recent years the Aussie had quickly rebounded above parity.

Source: theaustralian.com.au - "Australian dollar's decline is structural, says Credit Suisse"

Meanwhile Goldman Sachs last week cut its 12-month forecast for the Aussie to US90¢, down from US98¢. And Thomson Reuters predicts drop as low as US90¢.

CMC markets trader Tim Waterer said a fall to below US95¢ is looking more likely than a return to parity unless growth indicators improve and commodity prices have a reason to push higher.

ForexCT head of research Steven Dooley could continue to fall over the next week.

"Our view is that we could go as low as US94¢," he said.

Source: businessspectator.com.au - "Aust dollar feels heat as banks slash forecasts"

Is the dropping dollar going to affect you? Is there a better product other than the AMEX GlobalTravel Card?

Financial

Comments

  • nubix on 26/05/2013 - 00:32

    :'(

  • Aceboy884 on 26/05/2013 - 00:42

    Yippee to exporters

    • cheepwun on 27/05/2013 - 01:29
      +2

      3 mining CEOs are heard clapping.

  • Dockit on 26/05/2013 - 00:56

    Time to hit flippa and sell up!

  • outlander on 26/05/2013 - 01:15

    Sounds like a good plan. I read the auspost document. Fees seem to be $15 to initialize the card + 1% of the reload amount up to $10. The rates (here)[http://www.oanda.com/convert/classic] seem to be 2c lower than the spot rate. Any other fees for it?

    If not, you should be able to pick up a AU$1000 for around US$930.

  • linz88 on 26/05/2013 - 01:17
    +2

    Not so long ago, analysts predicted the $A to remain above parity for a couple of years. There are many analyst or expert predictions these days, it's only useful for references, I wouldn't completely rely on those reports.

    http://au.news.yahoo.com/nsw/latest/a/-/article/16857345/cri…

    • wharlie on 26/05/2013 - 08:03

      I agree, picking exchange rates (and interest rates, house prices, share prices etc) is like predicting the weather. Most forecasters have a pretty good record for about a week out, the longer the timeframe the less accurate. Any prediction that is looking at months or years is nothing more than an "educated guess". There are too many variables.

  • bpdoz on 26/05/2013 - 07:58

    AUD is expected to go lower, meaning the petrol price will go up.
    And guess what, if the petrol price up, it means goods & services will also go up.
    This will leads to increase in inflation and the economy should be back on track (since the RBA will increase the rate).

    • chrisburnett on 26/05/2013 - 09:01

      If the RBA increase the rate the dollar will go higher.

      • Bargain4U on 26/05/2013 - 13:30

        There are no forecasts for that happening in the foreseeable future. Another factor that's going to push the Aussie down significantly is the winding back of economic stimulus in the coming months in America.

    • aaronaldo on 27/05/2013 - 16:05

      but petrol prices didn't come down when the AUD went up….

      • Macgyver on 27/05/2013 - 23:52
        +2

        Prices do not go down only up!

  • Pacify on 26/05/2013 - 15:02
    +1

    Good. We need a lower dollar and lower interest rates. Ours are still one of the highest in the world, meaning everyone else is getting cheap money where as we still paying far higher rates, with no reason for it (only the old ridiculous claim that you need higher rates to combat inflation, that idea is so out-dated imo)

    • ferguscan on 26/05/2013 - 17:58

      Artifically low rates = printing money. It's a fact. If rates are low, and more people are wanting to borrow than lend, where does the difference come from? The RBA has to print it. A greater supply of money chasing a given quantity of goods = higher prices for everyone.

      It's not rocket surgery.

  • KLoNe on 26/05/2013 - 18:47

    puts on tin-foil hat

  • wtfnodeal on 26/05/2013 - 23:54

    Just buy up usd or other currencies now you think is stable and sell them for aud when aud goes down to e.g. us0.85

  • SkMed on 27/05/2013 - 11:52

    Does anyone know a way I can lock in exchange rates while traveling!? I just started traveling 2 weeks ago and will be travelling for 12 months! Had to happen now didn't it :(

    • tasty-falafel on 27/05/2013 - 16:41

      I'd recommend getting a cash passport from http://www.travelex.com.au/.

      It allows you to buy currency at the current exchange rate and leave it on the card for when you travel. The obvious advantage is that any fluctuations to the exchange rate won't affect you as you've already prepaid for the cash up front. You use the card like a debit / credit card and in many places there are no ATM fees for withdrawal. I used one for my NZ trip and had no issues.

      • SkMed on 27/05/2013 - 17:14

        As far as I can tell you have to be in Australia to get one though. I am already traveling! Also the exchange rates are pretty terrible on those… I was actually thinking maybe I could use travellers Checks to lock in the exchange rate, but the exchange rate on those sucks too!

        Its all a gamble really. I might as well take a few grand to the casino and try my luck there. At least I might have some fun losing/gaining money.

        • wtfnodeal on 27/05/2013 - 23:45

          Don't know about the fun part but you certainly have more chance loosing money in a casino. Speculating/hedging is slightly different from gambling.

  • BlitzR on 27/05/2013 - 16:47

    this blows!

  • Bargain4U on 30/05/2013 - 01:22

    More rate cuts, softening economic data, a dwindling trade surplus and weaker China growth story, and a renewed appetite for US equities are all working against the AUD these days.

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