Attachments: AUD/USD

AUD/USD

#75,781
Apr 3, 2014 7:27pm Apr 3, 2014 7:27pm

zew
| Joined Oct 2013 | Status: Trader | 421 Posts

Quoting Neqrotik

Disliked

Rate rise in AUD wont be a good thing for them. Seems the only key driver is household prices. Spending is nowhere it should be. Couple that with weak export demand and suppressed commodity prices in the middle of a structural shift in the economy. A rate rise seems to be nothing more than another slowdown for them as things stand. Like I said many times before, fiscal stimulus will have to come to make up for the private sector shortfall. When Ben Bernanke said "Monetary policy cannot work in a vacuum". He was so right. This won't be just the case...

Ignored

Even worse!!!

AU is a very high cost and low efficiency country. High tax or high rates will push cost even higher. In this country, big manufacturers are about leaving this country or already left. China is slowing down their crazy infrastructure investment due to high debt and low efficiency

In mid-long term, AUD will be much lower than current level. But Gov needs money to invest in infrastructure and meantime Japanese Yen is a real cheap money and becoming even cheaper, Uridashi bonds selling well. That's the reason why we see AUD at this level and probably even a little bit higher.

#75,782
Apr 3, 2014 7:28pm Apr 3, 2014 7:28pm

Neqrotik
| Joined Jun 2013 | Status: Trader | 980 Posts

Quoting lasty

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When you have foreign cash buyers for housing coming into the market a rate rise will only present the foreigners with cheaper property and the locals with pain. What needs to be done is to restrict the foreign buyers .. the currency will fall and the economy will grow. A nice foreign buyers property tax would be nice ... {quote}

Ignored

Yep. That sounds like a good discreet policy. A lot of hot money flowing out of China it seems..

The coincidental success is more dangerous than the expected failure

#75,783
Apr 3, 2014 7:34pm Apr 3, 2014 7:34pm

zew
| Joined Oct 2013 | Status: Trader | 421 Posts

Quoting Neqrotik

Disliked

{quote} Yep. That sounds like a good discreet policy. A lot of hot money flowing out of China it seems..

Ignored

Nah... real hot money flowing out of Japan.

Borrow money from Japanese bank at very low rates and invest in AU, In JAN, Japan bought 5B+ AUD assets in australia.

#75,784
Apr 3, 2014 7:34pm Apr 3, 2014 7:34pm

Neqrotik
| Joined Jun 2013 | Status: Trader | 980 Posts

Quoting zew

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{quote} Nah... real hot money flowing out of Japan. Borrow money from Japanese bank at very low rates and invest in AU, In JAN, Japan bought 5B+ AUD assets in australia.

Ignored

Yeah good point Zew. But anyone not just for Japanese this has been a good proposition for a while now. It looks like China is trying to stomp that right now with the CNY depreciation...

The coincidental success is more dangerous than the expected failure

#75,785
Apr 3, 2014 7:44pm Apr 3, 2014 7:44pm

zew
| Joined Oct 2013 | Status: Trader | 421 Posts

Quoting Neqrotik

Disliked

{quote} Yeah good point Zew. But anyone not just for Japanese this has been a good proposition for a while now. It looks like China is trying to stomp that right now with the CNY depreciation...

Ignored

If EU and USA allow china to do it, China CNY will be depreciated quickly to help export and debts. But China can't do it right now and it will bring negative impact on CNY internationalization. China also want CNY to be one of major reserve currency to get SDR(special drawing rights)

#75,786
Apr 3, 2014 7:49pm Apr 3, 2014 7:49pm

Neqrotik
| Joined Jun 2013 | Status: Trader | 980 Posts

Speaking of the devil...

http://www.macrobusiness.com.au/2014...hopping-block/

So yeah I guess a Tax would be a bit more detrimental to the growth interests of the Aussie

The coincidental success is more dangerous than the expected failure

#75,787
Apr 3, 2014 7:56pm Apr 3, 2014 7:56pm

zew
| Joined Oct 2013 | Status: Trader | 421 Posts

Quoting Neqrotik

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Speaking of the devil... http://www.macrobusiness.com.au/2014...hopping-block/ So yeah I guess a Tax would be a bit more detrimental to the growth interests of the Aussie

Ignored

When a country put its hope on real estate and construction, this country is walking into a deep dark alley.

#75,788
Apr 3, 2014 8:55pm Apr 3, 2014 8:55pm

Aich
| Joined Jan 2008 | Status: Trader | 189 Posts

Quoting zew

Disliked

{quote} When a country put its hope on real estate and construction, this country is walking into a deep dark alley.

Ignored

Where does this statement come from!
In Australia, the manufacturing industry is shrinking with a subsequent loss of jobs.
These jobs need to be replaced somehow.
Construction is the ideal industry to transfer to as it is one industry that can not be easily taken offshore - it creates local jobs.

If the government has the balls to change the rules of negative gearing away from pre-existing dwellings to new houses, more houses will be built, genuine jobs will be created, there will be a movement towards putting more money in the hands of the lower earners, house ownership will increase and everybody will win.
It will have little impact on forex though.

#75,789
Apr 3, 2014 9:09pm Apr 3, 2014 9:09pm

seaman2
| Joined Feb 2013 | Status: Trader | 1,365 Posts

Quoting Aich

Disliked

{quote} Where does this statement come from! In Australia, the manufacturing industry is shrinking with a subsequent loss of jobs. These jobs need to be replaced somehow. Construction is the ideal industry to transfer to as it is one industry that can not be easily taken offshore - it creates local jobs. If the government has the balls to change the rules of negative gearing away from pre-existing dwellings to new houses, more houses will be built, genuine jobs will be created, there will be a movement towards putting more money in the hands of...

Ignored

it works until new immigrants arrive & get handed well paid jobs. when no jobs to hand out, music stops.

next recession will look real ugly.

#75,790
Apr 3, 2014 9:29pm Apr 3, 2014 9:29pm

Neqrotik
| Joined Jun 2013 | Status: Trader | 980 Posts

Quoting Aich

Disliked

{quote} Where does this statement come from! In Australia, the manufacturing industry is shrinking with a subsequent loss of jobs. These jobs need to be replaced somehow. Construction is the ideal industry to transfer to as it is one industry that can not be easily taken offshore - it creates local jobs. If the government has the balls to change the rules of negative gearing away from pre-existing dwellings to new houses, more houses will be built, genuine jobs will be created, there will be a movement towards putting more money in the hands of...

Ignored

The coincidental success is more dangerous than the expected failure

#75,791
Apr 3, 2014 10:53pm Apr 3, 2014 10:53pm

TheTopBloke
| Joined Sep 2007 | Status: Forex God | 1,492 Posts

Quoting Aich

Disliked

{quote} Where does this statement come from! In Australia, the manufacturing industry is shrinking with a subsequent loss of jobs. These jobs need to be replaced somehow. Construction is the ideal industry to transfer to as it is one industry that can not be easily taken offshore - it creates local jobs. If the government has the balls to change the rules of negative gearing away from pre-existing dwellings to new houses, more houses will be built, genuine jobs will be created, there will be a movement towards putting more money in the hands of...

Ignored

What you're saying is nice, but it's not going to happen. The Australian housing market is odd. There are homes built all over the place that only investors can afford. Fortunately rent is really cheap. I was a home owner in Australia, and I can tell you if I went back I would rent. There's no point in owning. The only hot houses are in the inner city, close to work. But those prices have been high for a long long time.

It simply costs too much to build a house and too few people can afford it. The negative gearing thing works well for renters, and the whole economy would grind to a halt if rents were to match housing mortgage payments as they do in the US. In the US, there is incentive to buy because you're just paying someone else's mortgage, and often times it's cheaper to own, if you can put up a down payment and jump through the banker's hoops to get a mortgage.

#75,792
Apr 3, 2014 11:32pm Apr 3, 2014 11:32pm

Flipper58
| Commercial User | Joined Nov 2013 | 89 Posts

I totally agree TTB. We live in Queensland and unfortunately we just about lost the lot back in 2003 through a failed business so I had to sell the house and rent. Prior to that we had a rental property and from memory I think we used to get about a 7% annual gross return in rent, I'm currently paying our Landlord less than 3%. Even though things are much better 10 years on we've looked at it and thought why bother. There's been no capital gain here for quite a few years, although it did improve somewhat last year apparently but I'm sat on 5 acres over looking Fraser Island and the ocean every morning for $330 a week. If I wanted to buy this place I'd be paying $700 a week with a $150,000 deposit and 3 grand a year in rates plus maintenance. It just didn't add up for us.

Per Ardua Ad Astra - Through Adversity To The Stars

#75,793
Apr 3, 2014 11:53pm Apr 3, 2014 11:53pm

Aich
| Joined Jan 2008 | Status: Trader | 189 Posts

Let me say that neither of us will make any more money as a result of this conversation.

Quoting TheTopBloke

Disliked

{quote}
........... There are homes built all over the place that only investors can afford. ......

.......It simply costs too much to build a house and too few people can afford it.....

Ignored

I don't get this.
1) Investors will only build homes if they can see that there is a profitable return on them.
The figures say that most negative gearing is used on pre-existing homes. This is investors (often mums and dad investors) getting into residential property as an investment. They prolly own their home and are now moving forward. That's fine but it says that the government is subsidising their investment.
BTW I am not suggesting government removes negative gearing, simply tweaks it to be more beneficial to build rather than buy pre-existing. This would keep the rental market fluid and create more new homes and more jobs.

2) The free market system takes care of this. If houses are too expensive, builders will build smaller or less expensive homes that will sell. That is the way business gets done.
The economy ebbs and flows... business ebbs and flows ..... to suit changing conditions.
Have a little faith in your fellow human.

Cheers, H

#75,794
Edited 12:41am Apr 4, 2014 12:30am | Edited 12:41am

zew
| Joined Oct 2013 | Status: Trader | 421 Posts

Quoting Aich

Disliked

Let me say that neither of us will make any more money as a result of this conversation. {quote} I don't get this. 1) Investors will only build homes if they can see that there is a profitable return on them. The figures say that most negative gearing is used on pre-existing homes. This is investors (often mums and dad investors) getting into residential property as an investment. They prolly own their home and are now moving forward. That's fine but it says that the government is subsidising their investment. BTW I am not suggesting government...

Ignored

Very Very good question.

Why the rental is so low compare to house price? This is a common happening everywhere.
Very low P/E ratio only happens in hot market when property's price is going north or is expected to be going north.

In past ten years, real estate price in Shanghai surged up to 9 times. Au, about 2- 3 times. When people expecting the price must be going north, they actually don't care about the rental return, the can accept very high P/E. Just like stock market, if that company growing fast people give it very high price (high P/E). People call this bubble.

As long as money supply is beyond normal quantity, the real estate price always go north.

All currency' value are dropping, but at different speed.

Immigration policy, negative gearing, incoming money from oversea, population growing and RBA releasing fresh money at low rates, the real estate market must booming regardless most of normal people can afford it or not. When price hit a ceiling, it drop really fast, because those real estates supplying already far exceed actual and real needs(living in not investment). Even worse, when manufacturing can't survive, money will go to real estate more than usual to boost bubble.

Just like you don't care about AUD's real value, when it go up you buy regardless how high, when it going down regardless how low, u sell. because you don't really need AUD. For AU local, they always hold AUD, that's real need.

#75,795
Apr 4, 2014 4:02am Apr 4, 2014 4:02am

Didgeridoo
| Joined Oct 2012 | Status: Eating potato chips | 629 Posts

Quoting TheTopBloke

Disliked

{quote} What you're saying is nice, but it's not going to happen. The Australian housing market is odd. There are homes built all over the place that only investors can afford. Fortunately rent is really cheap. I was a home owner in Australia, and I can tell you if I went back I would rent. There's no point in owning. The only hot houses are in the inner city, close to work. But those prices have been high for a long long time. It simply costs too much to build a house and too few people can afford it. The negative gearing thing works well for renters,...

Ignored

An 'asset price bubble' is what I've heard. While the everyday crap we buy has become dirt cheap, housing prices are unjustifiable - via mere inflation.

#75,796
Edited 7:28am Apr 4, 2014 7:15am | Edited 7:28am