Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

British Pound GBP Australian Dollar AUD Currency Analysis and Forecast 2010

Currencies / British Pound Mar 02, 2010 - 06:08 PM GMT

By: Nadeem_Walayat

Currencies

Best Financial Markets Analysis ArticleIn response to a number of requests for an analysis of the Australian Dollar, this article seeks to conclude towards a forecast trend for the British Pound against the Australian Dollar for 2010. Thought readers should note that I neither track nor trade this currency cross and nor do I have the time to spend several weeks performing an in depth analysis of the Australian economy, therefore I am instead will relying upon existing analysis of the U.S. Dollar and GBP as a relative guide in terms of currency trends.


U.S. Dollar Bull Market - Current analysis suggests that the U.S. Dollar is in a bull market that targets USD 84.

GBP Bear Trend - The current analysis concludes towards Sterling being short-term oversold and could bounce higher to £/$1.52-53. However any bounce would be temporary as sterling continues to target a break of £/$1.40 which looks set to occur before the end of March. Further out, the technical picture of support at £/$1.40-37 could yet be blasted in a meltdown towards sterling hitting parity with the DOLLAR, never mind the EURO!

Therefore the above implies relative dollar strength and relative sterling weakness that is manifesting in the forex markets.

Aussie Dollar / U.S. Dollar Cross

The trend in the Aussie dollar is very strong, with the most recent price action resembling a corrective pattern. This is as a consequence of a stronger Australian economy and higher interest rates as illustrated by the metals and mining industry. At this point there is no sign of an end to the correction which looks set to continue to correct within the channel indicated. However it does suggest that ultimately the trend should resolve to the upside to target the 98.50 peak.

Aussie Dollar / British Pound Cross

It would not be an exaggeration to say that the British Pound has crashed against the Aussie Dollar given the move from 0.37 to 0.60 or a 60% drop. I am sure holders of Aussie dollars must be drooling over the relative gain in purchasing power in such a short space of time. i.e. for Australians UK houses are now some now 60% cheaper in a little over a year. Which is a manifestation of the Inflation Mega-trend that I have been warning off as nominal house price falls are replaced by real terms house price falls so as to delude home owners that UK house price are rising when they have in fact crashed at a far greater pace than that witnessed during the nominal house price fall period.

Fundamentals - UK's engine for growth was the financial sector that is now crippled for many years. Australia's is the commodities sector that continues to boom. UK has now passed £1 trillion of official debt with another £3+ trillion of unofficial debt in part as a consequence of bailing out the bankrupt banks that Australia never had to do. the UK economy crashed, Australia's just spluttered, UK economy is experiencing an anaemic economic recovery, Australia's is racing ahead. UK interest rates stand at just 0.5%, Australia has just raised rates to stand at 4%.

Technical Analysis - I see nothing on the chart that indicates an imminent reversal to the strong trend, as the up-trend line is expected to contain corrections during 2010. The breakout above 0.58, has triggered a strong Aussie dollar rally that could carry for some more weeks to probably as high as 0.65, however it will likely retrace back to 0.60 later in the year.

Investing - Clearly the long-term trend continues to favour sterling holders diversifying into australian companies such as large miners i.e. BHP Billinton to benefit both from corporate profits AND the currency advantage. For more on how to profit from the inflationary sterling bear market, see the New FREE 100 page Inflation Mega-trend ebook.

Migration - Sterling's collapse strongly favours migration from Australia to the UK and acts as a disincentive for Brit's to migrate to Australia.

Australian House Prices - Just as the crash in sterling is masking the real terms house price falls in the UK, however the strong Aussie dollar trend also suggests that Australian house prices should be heading for a large fall despite the stronger economy, as in real-terms they have become significantly more expensive over he past 12 months. Furthermore a strong currency should have a deflationary impact on the Australian economy as inflation is exported abroad, this also means australian wages should be under pressure and therefore further depress Australian house prices in terms of affordability. So I would conclude that many Australians must be eyeing selling their properties to lock in any gains, as the outlook should be for weakening Australian house prices.

Your inflation mega-trends investing analyst.

Source: http://www.marketoracle.co.uk/Article17611.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

antonio
03 Mar 10, 01:19
Sorry, i will explain

Just to finish up on my earlier point. I live in a small city of 100 thousand, our lord mayor just annouced we are looking at doubling this figure over the next 20 years, and we happen to be one of the most conservative cities i have ever witnessed. Not to mention the large city i just come from, which expects to more than double growth. These happen to be real figures and not made up, i happen to be experiencing this growth.

When a building firm can win a contract to build 10 thousand houses, you need to be on top of whats happening in oz to understand the huge boom that is about to be undertaken in Australia. Its real, its happening now. Like you mentioned, buy Mineral stocks, Cant go wrong, but any stocks really. They are all moving off-shore, and will make a killing over the next 30 years (big 4 banks). Asia is our white knight, and we are on top of it like a pile of bricks.

You dont spend 78 million on a expo building just for fun. The government will turn that into 78 billion return. The government is looking at a population of 35 million, i think this is conservative in this huge continent, i would surgest that 70 million would be more comfitable in this huge land. The smart money is on aussie, you would be a fool not to take it.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules