Question 1: What do you think the Aussie dollar will do until the end of 2019?
Answer (by Paul Rickard): I think the Aussie is around “par value” or “fair value” at 70ish US cents. This seems to be consistent with the RBA’s long term research and middle of the trading range post de regulation – a low of about 50 US cents and a high of about $1.15.
While there is enormous support at 70 US cents (and it will take a lot of work to sustainably break below this level), my inclination is the Aussie will be weaker by year’s end – more like around 65 US cents. This assumes: Aussie interest rates stay at current levels or move down; an ALP Government in May; and a slowing global economy, which will take the shine off commodity prices, including iron ore. All these factors are “negatives” for the currency. Against this is the potential weakening of the US dollar. I think this is less likely as the US economy will still be the “powerhouse” of world (western ) economic growth.