AUSTRALIA FOCUS : GREEKS LANDING

AUD UPDATE

A new 6 year low in the AUDUSD at 0.7509  (note the outdated fx rates in the table above), iron ore prices sliding and unspectacular economic data – big drop in the June Manufacturing Index and poor retail sales. http://www.bloomberg.com/news/articles/2015-07-03/aussie-approaches-6-year-low-as-weak-retailing-adds-to-iron-woes

Australians cannot complain too much about their 8% loss against the USD when we have the  NZD down 15% on the year just because of dairy prices and we have AUDSGD at its lowest since 2009.

Some 6 year perspectives against the USD since 2 Mar 2009 :

1. Korean Won +40%
2. NZD +36%
3. Gold +26%
4. Swiss Franc +21%
6. AUD +19%
7. SGD +15%

1. Turkish Lira -36%
2. Brazilian Real -22%
3. JPY -21%
4. Indian Rupee -18%
5. EUR -12%
6. Norwegian Krone -10%
7. Indonesian Rupiah -10%

And the Australian monthly median residential price change adds up to a 36% gain since 2009 as CBRE reported that Australia took 25% of China’s 1Q global property investment.

corelogic australia ppty price mom incr

Of course, you will not be as happy if you had locked in your AUDSGD at the high of 1.36 back in 2012 or anytime in the past 6 years because we are at the 6 year low but the chances are that you have been compensated in their asset bubble.

Let no one complain about Australia when we have thousands of Greeks begging at her shores as we see a wave of migration to one of the biggest offshore Greek population in the world even as Greece is being inundated with thousands of asylum seekers herself.

The Economist has put Australia as top 3 best positioned to handle another economic crisis with her low govt debt load and high interest rates even as bond prices struggle to hang in for the week.

 

And we have RBA to the rescue next week – 7 July (1230 PM SG TIME) where they are probably not going to act after April’s cut but will no doubt stick to their usual script.

As far as I am concerned, Greece and China will decide the AUD’s fate on Monday, 6 year low or not.

In the medium term, we will have to face the prospect that Australia is turning into a mature economy and mature economies typically have comfortable levels of inflation and all that.

Thus, a friendly environment for bonds, especially bonds that have suffered their worst loss in 21 years.

“Bloomberg : The benchmark Bloomberg AusBond Composite Index, which includes both government and corporate securities, recorded its worst quarterly result since mid-1994 with a 2 percent loss since March 31.”

The other scoop would be the talk of a potential recession which is more alarming than it sounds because this is their 25th recession free year and it would be unfamiliar territory indeed. http://www.bloombergview.com/articles/2015-06-30/a-first-recession-for-australian-millennials

I wrote that Australia is recession proof last year and I suspect it will still take a lot of Greeks to bring her down.

Leaving with the indicative prices.

aud bonds