The Australian Dollar Price Forecast: AUD/USD Threatens Reversal? is the latest in the FX markets that have threatened to bring Australia into a currency war with the United States and others. If the Australian dollar continues to be the de facto currency of choice for the majority of exporters, then it will definitely hurt the Australian economy. It is important to remember that Australia is not America and we have a very different economy.
We are a relatively small country that exports around 40% of our GDP. Most of what we export is manufactured goods and our trade deficit is around one third of the GDP. We import most of our fuel and electricity, as well as other items like grains, meats and other livestock.
The Australian dollar has been very strong over the last few years, especially since the global financial crisis. The US dollar has lost much of its value against the Australian dollar. The US dollar was strong when the Australian economy was doing very well due to the commodities boom, but as the economic recovery and economic slowdown took effect the Australian dollar lost value against the US dollar. The United States dollar has taken over as the number one trade currency for many exporters.
When the AUD/USD threat first arose, the Financial Services Association of Australia issued a report stating that AUD/USD Threatening Reversal was a negative thing for Australian exporters. This is a false statement as the Australian dollar is strengthening against the US dollar. There is more than enough liquidity in the market for Australian exporters. As the Australian dollar strengthens, the trade deficit will also start shrinking.
The AUD/USD Threat has been a major problem for several years now. It has caused the Australian dollar to depreciate against the US dollar which is causing a trade deficit which leads to less growth and less employment. The current slowdown in the Australian economy has also caused the AUD/USD threat.
Australia does not need to be a currency war participant; the Australian dollar is doing pretty well. As we get into the summer months and the economic recovery begins, the Australian dollar will start moving upwards again as the global economy recovers from the global crisis. This may make it more difficult for some businesses to survive in this global downturn but it does not mean that it can’t happen.
The government has been trying to get businesses to invest in infrastructure and the economic stimulus package has been very successful in increasing the economy in recent years. However, the market needs to be reeled in for some time so that the recovery continues. This is the main cause of the AUD/USD Threat because we are still at the early phases of the global recession.
With the global economy is doing well and unemployment at historic lows, it’s not surprising for the Australian dollar to move higher. As the recovery advances, there will be a greater demand for Australian dollars from global consumers and that will translate to higher prices. In the future, if the Australian dollar moves higher, this should also mean lower prices in Australia which should benefit Australian exporters.
The other major cause of the AUD/USD Threat is a slowing down of the global economy that will eventually force many economies to see a decrease in trade deficit. If Australia doesn’t start seeing a drop in the trade deficit soon, the AUD/USD Threat will be a problem for the Australian economy.
If you are an Australian exporter, you have probably already noticed that many Australian consumers like to shop online. The price of imported products is cheaper and if you do not have to pay the AUD/USD Threat, your profit margin would increase.
If the Australian dollar continues to rise, it could make it easier for Australian exporters to compete with imported goods. and that could cause a decrease in the AUD/USD Threat that will benefit Australian exporters who are experiencing tough times.
In conclusion, the AUD/USD Threat is something that is causing much worry for Australian exporters but it is actually a good thing. The Australian dollar could continue to rise as the global economy recovers but it is also a sign of strength as the global economy starts to improve and as we move into the summer months and the global recession is over.
