OK likely QE in USA, the upcoming QE in Europe and rising...

OK likely QE in USA, the upcoming QE in Europe and rising probability of more QE in UK, all looks positive for the AUD and negative for QBE. But have we all forgotten that our strength has principally come from the economic growth in China, and more particularly the urbanisation of the Chinese population.

The AUD is defying gravity for now, but that cannot last and should it do so then we can expect RBA intervention - lets be clear the AUD needs to fall for Australia's sake. When it does that will make a positive difference for QBE. I don't buy this stock for that sole reason, but also because I believe that they will restore their underwriting margins ( thru lower claims and premium rate rise) and that in time investment yields will improve. I also believe that this company is well managed, a top tier global underwriter, and provides a service that is seen as a necessity not a luxury.

I loved, and subscribe to, the views expressed in SMH article today which sums up the AUD position as follows;

The high dollar is bedevilling economic management.
Normally when resource prices climb, the dollar climbs to spread some of the benefits (via lower import prices) and move labour and capital away from competing trade-exposed industries (by making them less competitive).
When resource prices slide, the opposite is supposed to happen. The lower dollar is supposed to spread the pain via higher import prices and make previously uncompetitive trade-exposed industries competitive again.
That's the theory. This time, the Aussie has stayed resolutely high in defiance of convention. Since July 1, the iron ore price has slid from $US127 a tonne to less than $US87. The Aussie remains about where it was on July 1, at a touch about US102¢ (although, in the meantime, it had climbed as high as US105¢). Not only is Australia being denied the government spending shock absorber, it is also being denied the exchange rate shock absorber.
It's been happening because foreigners love our high interest rates and our triple-A credit rating. McKibbin is among those urging the RBA to buy foreign assets with Australian dollars in order to nudge the Aussie down, although there were signs emerging this week that it might not need to bother.
Foreign buying of Australian government bonds fell to its lowest point in three years in the June quarter. The proportion held by foreigners slipped from 79 per cent to 77.5 per cent. Although the iron ore slide itself hasn't hurt the dollar, if foreigners start to believe it will, they could desert it en masse, leaving little holding it up.
Brian Redican of Macquarie Group says it could be the Aussie's ''Wile E. Coyote moment''.
''What we are referring to here is the well-known cartoon character who, when he's chasing the Road Runner, frequently runs off the edge of a cliff,'' he wrote to clients.
''Initially, at least, he doesn't fall. His legs are still running as if he is on land and he remains suspended in midair. But then he looks down and realises that there is nothing supporting him and it is only then that he succumbs to the forces of gravity and plunges towards the valley floor.''
On Thursday, the chief economist at AMP Capital, Shane Oliver, spoke of an US80¢ dollar. He said, if needed, it would fall to US60¢.


Read more: http://www.smh.com.au/business/china-slowdown-turns-off-swans-money-tap-20120907-25kb7.html#ixzz25rbm12mp