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the3rdeye

326 Posts.

34

12/07/19

18:31

Post #: 39500643
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Originally posted by StefanF: ↑

I'm not sure I understand how you link a lower AUD or an AUD being the same level as 10 years ago to the economy taking a beating. The forex market is a complex mechanism and the reason why the AUD went to USD$1.1 in the first place is because the US economy took a hammering and the monetary policy became much more accommodating out of necessity which impacts the exchange rate. At the same time you had China ramping up stimulating fiscal policy via infrastructure projects that increased demand for Australian commodities such as iron ore and coal which drove the AUD up further.

As you've said, Australia isn't in control of it's economy without outside influence, especially since our exchange rate is floating but just because the US economy is ramping up after 10 years of stimulus and China's growth is experiencing some slowing does not mean that the lower AUD is a sign that the Australian economy is taking a beating. In fact the long-run average AUD is around USD0.75.

In regards to APT, I need to stress again that members of hotcopper have suggested a recession would see APT do well and I'm simply saying that this is far from reality. It's a very simple comment and doesn't require us going into in-depth macroeconomic analysis and forex dynamics.

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So are you trying to say that the level of the AUD is not a reflection of our economy? I thought that is how currency works

APT Price at posting: $24.48 Sentiment: Hold Disclosure: Held
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