Why has the US Dollar gained so much ground against the Australian Dollar?

[aphex]

I don't pretend to understand how currency exchange rates work, but I'm curious as to why the USD has skyrocketed against the AUD over such a short period of time? Has their economy tanked more than ours?

http://www.x-rates.com/d/AUD/USD/graph120.html

Can anyone explain how it works and why the USD -> AUS was so drastic?

 

[dmcowen674]

Originally posted by: aphex
I don't pretend to understand how currency exchange rates work, but I'm curious as to why the USD has skyrocketed against the AUD over such a short period of time? Has their economy tanked more than ours?

http://www.x-rates.com/d/AUD/USD/graph120.html

Can anyone explain how it works and why the USD -> AUS was so drastic?

There are Aussies in he that should chime in.

I believe they just got around to lowering interest rates.

 

[Michael]

Well, a lot of exchange rates are moving rapidly now. For the Aussie Dollar, the perception was that they had a very strong and stable economy that was based on high commodity prices that were expected to remain high. They had a fair amount of growth pressure and had higher interest rates than many other countries to try and curb some of the growth and that resulted in a higher Aussie dollar (coupled with downwards pressures on the US Dollar).

Other than the current panic/adjustment that is happening, some of the assumptions supporting a higher Aussie Dollar have reversed. It is not unusual for currency moves to be fairly rapid (technical trading reasons due to leverage and mnay people arriving at the same changed conclusions at the same time when some information becomes public).

Michael (not an Aussie)

 

[RocksteadyDotNet]

Our ecomony hasn't tanked at all.

Our banks are probably the strongest in the world.

However our Fed dropped our interest rates 1% to 6% this week. Everyone pulled out a stack of cash out after that.

 

[RocksteadyDotNet]

And like Micheal said, commodity prices have dropped 30%, so our dollar fell.

Our ecomony will go into recession after yours does. And it may be worse.

We have nearly twice the private debt you have. Per capita.

Our housing boom was was bigger, we now at 9x average income for the average house. So when that bubble burst we could be in some serious trouble.

 

[StageLeft]

Originally posted by: RocksteadyDotNet
And like Micheal said, commodity prices have dropped 30%, so our dollar fell.

Our ecomony will go into recession after yours does. And it may be worse.

We have nearly twice the private debt you have. Per capita.

Our housing boom was was bigger, we now at 9x average income for the average house. So when that bubble burst we could be in some serious trouble.

Are you sh*ting me? The median household price in the US is $200k or maybe it hit 250k, who can keep track. I think it's like 200k now or just dipped south of that. Average per capita income is 45k, so about 4X. Yours according to CIA factbook is 37k-- average house is still over 300k? That will indeed be a precipitous crash.

 

[Viditor]

Originally posted by: aphex
I don't pretend to understand how currency exchange rates work, but I'm curious as to why the USD has skyrocketed against the AUD over such a short period of time? Has their economy tanked more than ours?

http://www.x-rates.com/d/AUD/USD/graph120.html

Can anyone explain how it works and why the USD -> AUS was so drastic?

The main reason is the reversal of the interest rates here in Oz...
The first drop coincided with the change in sentiment on the Fed rates (i.e. people changed their mind and expected the interest rates to drop instead of rise). The drop in the dollar went from AUD $0.98/USD $1 down to AUD $0.87 even before the drop was announced (in other words, just on the rumour).

Skoorb -
The median price in Sydney right now is $650k. The problem in Oz is that we don't have a large middle of the country for cheap housing...95% of the population is within 100 miles of the coast which is more expensive property.
BTW, the median house price in LA is also in the $650k range...

 

[Auric]

Everything else being equal, the US currency is considered a relative safe haven (dominant empire, duh). Since commodities are out of favour due to decreased demand from recession or depression, and since interest rates are being reduced globally, the USA is the best of the worst to park moolah, despite the otherwise inflationary bailout. In addition, since it lead (indeed originated) the financial crisis and reactionary steps to counter it, then it is presumed to be the first to recover.

 

[quikah]

Originally posted by: Viditor
Skoorb -
The median price in Sydney right now is $650k. The problem in Oz is that we don't have a large middle of the country for cheap housing...95% of the population is within 100 miles of the coast which is more expensive property.
BTW, the median house price in LA is also in the $650k range...

Well, depends what you mean by LA I guess. LA is kind of huge. The median for all of LA is now $420k if you can believe it. http://www.housingtracker.net/...California/LosAngeles/

Is that Oz median AUD or USD?

 

[JJChicken]

Originally posted by: dmcowen674

Originally posted by: aphex
I don't pretend to understand how currency exchange rates work, but I'm curious as to why the USD has skyrocketed against the AUD over such a short period of time? Has their economy tanked more than ours?

http://www.x-rates.com/d/AUD/USD/graph120.html

Can anyone explain how it works and why the USD -> AUS was so drastic?

There are Aussies in he that should chime in.

I believe they just got around to lowering interest rates.

You are very correct (I'm from Australia)

 

[JJChicken]

Originally posted by: Skoorb

Originally posted by: RocksteadyDotNet
And like Micheal said, commodity prices have dropped 30%, so our dollar fell.

Our ecomony will go into recession after yours does. And it may be worse.

We have nearly twice the private debt you have. Per capita.

Our housing boom was was bigger, we now at 9x average income for the average house. So when that bubble burst we could be in some serious trouble.

Are you sh*ting me? The median household price in the US is $200k or maybe it hit 250k, who can keep track. I think it's like 200k now or just dipped south of that. Average per capita income is 45k, so about 4X. Yours according to CIA factbook is 37k-- average house is still over 300k? That will indeed be a precipitous crash.

That's pretty reasonable but it won't be precipitous crash or anything since we have a small population and have people from overseas coming to settle here in Australia. Hence the steady demand for properties. I think rental occupation in sydney is near 100%.