$A At Record Highs, Heads Towards Parity

[Jollygoodfellow]

Good or bad for us Aussies??????$A at record highs, heads towards parityThe Australian dollar is heading towards parity after breaking through 99 US cents and reaching record highs on Thursday afternoon.The local unit reached an all time high of 99.00 US cents at 1843 AEDT, according to IRESS data.It is the highest point since the currency was floated on foreign exchange markets in 1983.The Australian dollar surged more than one and a half US cents after better than expected employment numbers led to an increased chance of an interest rate rise in November.At 1700 AEDT, the Australian dollar was trading at 98.37 US cents, up from Wednesday's close of 97.20 cents.But after European markets opened, the local unit continued to climb higher.Since 0700 AEDT, the local unit traded in a wide range between 97.59 US cents and 99.00 US cents, according to IRESS data.Australia's unemployment rate was a seasonally adjusted 5.1 per cent in September, compared with an unrevised 5.1 per cent in August, the Australian Bureau of Statistics (ABS) said on Thursday.Total employment rose by 49,500 to 11.324 million in the month, seasonally adjusted.The local unit jumped 0.8 of a US cent on the release of the local employment report at 1130 AEDT.National Australia Bank head of research Peter Jolly said the better than expected employment figures had put a November interest rate hike "back in play" for the Reserve Bank of Australia (RBA)."It seems that we are destined to have a crack at parity," Mr Jolly said."On Tuesday, the RBA surprised and the currency came off, and today we had a very strong employment report for September and that has seen the market price back in a much greater chance the RBA will hike in November".The futures market has now priced in a 65 per cent chance of a rate hike in November.At 1700 AEDT, the Australian dollar was at 81.49 Japanese yen, up from Wednesdays's close of 80.84 yen, and at 70.65 euro cents, up from its previous close of 70.20.The euro finished at 1.3922 US dollars, up from 1.3844 US dollars, and at 115.34 yen, up from 115.13.The US dollar was at 82.84 Japanese yen, down from 83.18 yen.The Australian bond market ended weaker as the chance of an interest rate hike next month increased on the release of the stronger than expected local employment figures.At 1630 AEDT on Thursday on the Sydney Futures Exchange, the December 10-year bond futures contract was at 94.925 (implying a yield of 5.075 per cent), down from 94.960 (4.040 per cent).The December three-year bond futures contract was at 95.020 (4.980 per cent), down from 95.150 (4.850 per cent).RBC Capital Markets senior economist Su-Lin Ong said traders were now pricing in a better than even chance of the RBA raising interest rates above the current level of 4.5 per cent at its next board meeting."There was a pretty sharp sell off in bond markets following that very strong employment data," Ms Ong said.She said the market ended about 17 points lower."The front end was leading the way, it was sharply flatter on the day."Markets moved pretty quickly to increase the odds of an interest rate hike in November."The 90-day bank bill closed at 4.810 per cent, up from Wednesday's close of 4.790, while the 180-day bank bill rate was at 5.040, up from 4.990.The trade weighted index from the RBA was 73.5, up from its previous close of 72.7.http://au.finance.yahoo.com/news/-A-record-highs-heads-towards-aap-415550386.html;_ylt=ApqSRSC0ECQLClKYdgKnjnfCWo9G;_ylu=X3oDMTE4cWxudXZ1BHBvcwMyBHNlYwN5ZmlUb3BTdG9yaWVzBHNsawNhYXRyZWNvcmRoaWc-?x=0

[Art2ro]

Yeah, the floating currency exchange rates sure are unpredictable! Luckily I turned 62 and will be collecting my Social Security pension next month! It's not much, but it'll help with the declining dollar rate and the local inflation in the Philippines, let alone here in the U.S.! We're currently on vacation in California and prices on everything except housing is still up there and employment is scarce! Life in the U.S. isn't as Rosy as it once was! Sad!Damn recession! Obama has his back against the wall with no where to go in improving the U.S. economy!

[softail]

Yeah, the floating currency exchange rates sure are unpredictable! Luckily I turned 62 and will be collecting my Social Security pension next month! It's not much, but it'll help with the declining dollar rate and the local inflation in the Philippines, let alone here in the U.S.! We're currently on vacation in California and prices on everything except housing is still up there and employment is scarce! Life in the U.S. isn't as Rosy as it once was! Sad!Damn recession! Obama has his back against the wall with no where to go in improving the U.S. economy!

I'll be collecting my SS in Feb, will sure take some of the pressure off. This bad economy really has us messed up. We have 2 homes to sell and nobody to buy them. Is really hard to compete with all the foreclosures up and down the street. This ecomomy hit just as I retired, we should be all set up in the PI by now. Everything is on hold right now.Doug and Sally

[Mr Lee]

Yeah, the floating currency exchange rates sure are unpredictable! Luckily I turned 62 and will be collecting my Social Security pension next month! It's not much, but it'll help with the declining dollar rate and the local inflation in the Philippines, let alone here in the U.S.! We're currently on vacation in California and prices on everything except housing is still up there and employment is scarce! Life in the U.S. isn't as Rosy as it once was! Sad!Damn recession! Obama has his back against the wall with no where to go in improving the U.S. economy!        

I do not believe the great O's back is against the wall at all. Why is it that the FICA tax stops when a salary reaches a certain level? Seems to me that that tax should be paid all the way up to the top income of a persons salary and that might just fix social security or at the very least slow it from going broke. Of course not giving away millions and billions to every nation that has a disaster or cannot stop corruption on their own might also help to stop the deficit from ballooning to off the scale levels, and might then make the dollar worth more than the paper it is printed on. If the US government keeps spending at these record levels, the only thing dollars will be good for is to wipe our asses after a visit to the CR.     :( I wonder how many of you who did not have enough to feed your own families, would be giving away money like it grows on trees to strangers? That is basically what the US is doing. Maybe no one in government every heard the saying that charity begins at home, and only when we no longer have people sleeping on the streets and digging in garbage cans for food in the US, should we ever consider giving government money to other countries IMHO. If Filipinos can send money home, then so can other groups who find their countries in need, and charity should be given from people to people and not from governments IMHO, and why do I say that, the money they are giving away is not theirs to give, it belongs to the people who pay the taxes.  TAXES were meant to pay for services and improvements in the lives of those who pay it and possibly those who are less fortunate within the country doing the taxing. 

[Art2ro]

What pisses me off is the the for ever tax hikes imposed on the middle class as mush as 30 to 40% in some states and the the U.S. Government continues to spend, spend and spend our taxed dollars and continue borrowing from other countries! The military budget is hugh and must be reduced! Isn't there already so much spending on Research and Development of weapons of mast destruction as a last resort counter measure to illuminate the bad guys? So back off the ground troops and just nuke the bastards once and for all! All this sending of U.S. troops all over the world is all a big "cluster f__k" time and time again in MHO! Recall Vietnam and when the U.S. Army in secrecy double crossed Chang Ki Shek & his rebel army and let Mao regain power and then kicked the Japanese out of China without the help of the U.S. and continued his Communist rule after WWII? And now China is the world's economic giant in South East Asia!

[Art2ro]

I'll be collecting my SS in Feb,  will sure take some of the pressure off.  This bad economy really has us messed up.  We have 2 homes to sell and nobody to buy them.  Is really hard to compete with all the foreclosures up and down the street.  This economy hit just as I retired, we should be all set up in the PI by now.  Everything is on hold right now.Doug and Sally

I know what you mean! I know families and friends hit hard by the recession and down trend of the housing market where some had to give up their homes via quick sale, foreclosures or just walked away from it all because they got laid off from their jobs! It really saddens me to see my family and relatives in the U.S. struggling to survive the recession!     Edited October 9, 2010 by Mr. Lee
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[Jollygoodfellow]

$A hits parity with US dollarWell it seems our Aussie has hit the US dollar mark,not sure what benefit if any for me though.On Saturday 16 October 2010, 0:42 EST The Australian dollar has reached parity with the US dollar for the first time since the currency was floated in December 1983.The local current rose to $US1.00 about 2318 AEDT in overseas trading.It was the first time since July 28, 1982 that the Australia dollar has traded for one US dollar.Earlier on Friday the local currency was hovering around 99 US cents ahead of the release of US CPI data, retail figures and a Federal Reserve speech that could indicate how much quantitative easing will take place.Quantitative easing is a process whereby the US Federal Reserve increases the amount of US dollars in the economy by buying US Treasuries.The Australian dollar touched a fresh 27-year high of 99.94 US cents overnight, the closest it has been to parity with the US dollar since it was floated in December 1983.At 1700 AEDT on Friday, the Australian dollar was trading at 99.28 US cents, down from Thursday's close of 99.61 cents.Since 0700 AEDT, the local unit traded between 98.92 US cents and 99.46 cents.Nomura Australia economist Stephen Roberts said traders had been waiting patiently throughout the domestic session in the absence of any local data."It might be a bit of a patient wait for parity, but we will get there," Mr Roberts said.He said the release of the US economic data and a speech by US Federal Reserve chairman Ben Bernanke would drive the momentum of the local currency."Those factors will certainly have some influence," Mr Roberts said.During the offshore session on Friday night, US retail sales for September are expected to have increased 0.5 per cent and the official measure of US inflation for September is expected to show a 0.2 per cent increase.Mr Roberts said there could be an initial adverse reaction to the CPI data."But then probably we'll go back to the same groove over the next week or two," he said."Running towards the next FOMC (US Federal Open Markets Committee) meeting, people are still thinking there's a reasonable chance the Fed's going to start the next process of QE."Mr Roberts said it was possible the Australian dollar would reach parity with the US dollar mid-way through the European session.At 1700 AEDT, the Australian dollar was at 80.71 Japanese yen, down from Thursday's close of 80.92 yen, and at 70.61 euro cents, down from its previous close of 70.75.The euro finished at 1.4059 US dollars, down from 1.4079 US dollars, and at 114.30 yen, down from 114.36.The US dollar was at 81.30 Japanese yen, up from 81.24 yen.Australian 10-year bonds sold off on Friday after a softer bond auction weakened US Treasuries overnight.At 1630 AEDT on Friday on the Sydney Futures Exchange, the December 10-year bond futures contract was at 94.905 (implying a yield of 4.095 per cent), down from 94.950 (5.050 per cent).The December three-year bond futures contract was at 95.110, (4.890 per cent), down from Thursday's close of 95.140 (4.860 per cent).National Australia Bank head of Research Peter Jolly said Australian bonds moved down in line with US Treasuries."The weakness was really triggered by Treasuries and we had a softer US auction," he said.He said 10-year bonds had weakened more than the three-year bonds, ahead of the release of US CPI figures during the upcoming offshore session.The 90-day bank bill closed at 4.820 per cent, up from Thursday's close of 4.790, while the 180-day bank bill rate was at 5.040, up from 5.030.The RBA's trade weighted index (TWI) was at 73.6, down from Thursday's close of 73.8.Treasurer Wayne Swan said this milestone reflects the stark difference in the strength of our economy relative to other nations, record prices for our commodities and the effects of diverse and dynamic international currency markets."The government supports a floating currency, which has served our nation well as a shock absorber against global events for more than a quarter of a century," Mr Swan said."But we know that there are swings and roundabouts, and while the dollar has beneficial impacts for consumers through cheaper imports, it also makes life tougher for some sectors of our economy such as manufacturing and tourism."The government has an agenda to strengthen and broaden our economy to increase economic capacity and competitiveness, including by cutting the corporate tax rate."We have a fiscal position which is the envy of the developed world, and any suggestion from the Liberal Party that it has anything to do with what we have seen today reinforces their complete lack of understanding of how the international economy works."

[Tom in Texas]

Why is it that the FICA tax stops when a salary reaches a certain level? Seems to me that that tax should be paid all the way up to the top income of a persons salary and that might just fix social security or at the very least slow it from going broke.

Hello Lee,I agree 100%. This step alone would nearly resolve the ss liquidity problem. Allowing the Bush tax cut for the top 2% to expire and return to 2002 levels would almost alone fund true health reform. And just a few other things.... ... restore inheritance taxes for estates valued over $10,000,000 to 1980 levels...... make income tax rates on passive income, capital gains and all other earnings equal to the rates that wage earners pay...... make U.S. Corporations pay U.S. taxes on all of their net profits no matter where they set up foreign subsidiaries...... just to name a few easy ones --- would balance the federal budget......... Why hasn't Obama thought of these things ? Why haven't those liberal tree-hugging Dems done these things ???Oh yeah.... now I remember.But --- It's still a happy day -- we agree on the first one.Tom in Texas

[Jake]

Why is it that the FICA tax stops when a salary reaches a certain level? Seems to me that that tax should be paid all the way up to the top income of a persons salary and that might just fix social security or at the very least slow it from going broke.

Hello Lee,I agree 100%. This step alone would nearly resolve the ss liquidity problem. Allowing the Bush tax cut for the top 2% to expire and return to 2002 levels would almost alone fund true health reform. And just a few other things.... ... restore inheritance taxes for estates valued over $10,000,000 to 1980 levels...... make income tax rates on passive income, capital gains and all other earnings equal to the rates that wage earners pay...... make U.S. Corporations pay U.S. taxes on all of their net profits no matter where they set up foreign subsidiaries...... just to name a few easy ones --- would balance the federal budget......... Why hasn't Obama thought of these things ? Why haven't those liberal tree-hugging Dems done these things ???Oh yeah.... now I remember.But --- It's still a happy day -- we agree on the first one.Tom in Texas

Hey Counsel,You have my vote for the next US president. Excellent points to implement but it's too logical, don't you think?Respectfully -- Jake

[Jim Sibbick]

From the discussion here, it must be the Australian dollar causing all the tax and other problems in the USA.Back to the original discussion.It is good if you are going overseas on holiday. It is good if you are importing goods but it is ultimately bad for the Australian economy as everything will get imported instead of manufactured in Australia.When the USA was in recession 7 or 8 years ago, it was an exchange rate of 50 us cents for aud$1 that helped Australia avoid the recession. Everyone wanted what we had to sell because it was so affordable and exports boomed.These days it is China helping us to avoid recession while everyone else is teetering on the edge of recession again. China needs what we have got. Boosting us along even further soon will be wheat. There is a world shortage and we have record crops in the paddocks waiting to be stripped. So long as the locusts don't get it first! Regards; Jim