65 million

Australian Dollar Gains for 4th Week as Commodity Prices Rise
Oct. 9 (Bloomberg) -- The Australian dollar rose for a fourth week, reaching its highest in more than five months, after prices of some raw materials the nation sells overseas climbed to records.

Copper gained to a 15-year high in New York and aluminum in London reached a nine-year high as manufacturers tapped shrinking metal inventories. Australia is the world's fourth-largest exporter of copper ore concentrate and the biggest exporter of alumina, the material used to make aluminum. About two-thirds of exports, which make up a fifth of the economy, are commodities.

``The Australian dollar should continue to do pretty well,'' said John Horner, senior strategist at SG Australia Ltd. in Sydney. ``The strength in metals is a key factor for strength in the commodity currencies.''

The Australian dollar rose to 73.49 U.S. cents at the close of trading in New York yesterday from 72.62 cents a week earlier, a gain of 1.2 percent. It rose to 73.66 U.S. cents, the strongest since April 27.

The Reuters Commodity Research Bureau index of 17 futures contracts rose as much as 2.08 to 287.62, the highest since May 1981. The index closed at 287.60. Crude oil rose to a record $53.31 a barrel in New York after U.S. inventories increased less than expected.

Higher commodity prices boost the revenue Australia's biggest exporters of raw material repatriate. Shares of BHP Billiton Ltd., the world's biggest mining company, have gained 22 percent this year.

Election

The Australian dollar will continue its advance next week should Prime Minister John Howard's ruling Liberal-National coalition win a national election today, said John Kyriakopoulos, a currency strategist at National Australia Bank Ltd. in Sydney.

Howard is leading the coalition against the Labor Party, led by Mark Latham.

The coalition is level with Labor heading into today's election and retains a winning margin in key seats, a Newspoll found. Government support fell 0.5 percentage points to 50 percent and Labor rose the same amount in the past week, according to the poll, which was published in the Australian newspaper.

``If the government is returned this will be positive for the Australian dollar,'' said Kyriakopoulos. ``The Australian dollar has received a little bit of a tail-wind'' after the coalition was returned to power in the last two elections.

The Australian dollar may fall should the environment-based Greens obtain the balance of power in the Senate, said Kyriakopoulos.

Howard and Latham both have warned the election may not deliver the major parties enough seats to govern, forcing them to rely on support from independent lawmakers. Three independents and one representative from the Greens Party hold seats in the 150-member lower house.

`Look to Buy'

``Most people will be looking to buy the Australian dollar going into the weekend,'' said Alex Sinton, an Auckland-based senior dealer of foreign exchange at ANZ Investment Bank.

Australian government bonds fell. The 6.25 percent bond maturing in April 2015 fell 0.156, or A$1.56 per A$1,000 face amount, to 105.476, pushing the yield up 2 basis point to 5.55 percent. A basis point is 0.01 percentage point.

The Reserve Bank of Australia will lift its benchmark interest rate for the first time this year after the election, Trevor Rowe, chairman of investment banking at Citigroup Global Markets Australia Ltd., said in an interview yesterday.

The move will help push the Australian dollar toward 80 U.S. cents, Rowe, 61, said from Citigroup's office in Sydney. Lifting rates will help stave off inflation and undo cuts that brought the central bank's benchmark to 5.25 percent from 6.25 percent in 2001.

``We will see an increase as the central bank tries to get rates back to some sort of equilibrium,'' Rowe said. ``It is quite possible to see the currency in the high-70-cent area in the next 12 months.''



To contact the reporter on this story:
Chris Young in Sydney at [email protected]

To contact the editor responsible for this story:
Beth Thomas in Tokyo [email protected]
or Dan Moss at at [email protected]
Last Updated: October 8, 2004 20:48 EDT

steveyp

True that the AUD is in good form, but what counts is how well sterling does against the US dollar. For us all it needs to do is perform better than the AUD.

I think the market had pretty much given up hope on another rate rise. Factory gate inflation hit 3.1% today which is above expectations. A big factor is oil.

All the time the market sees a change interest rates have not peaked is good for the pound.

Up over 0.5% today, the real test is tomorrow as the US markets were closed today.

noosawannabees

Hi,
can anyone shed some light on a little problem I have,I'm Australian and not been back for 10 years,and my wife has now got a permanent visa is it best to put most of the money in my name (once we get the best rate we can) with me being a aussie,we have just opened a c w bank acc.

Cheers
Cameron

65 million

I think so, otherwise the money may be subject to a 50% tax on any interest. I think you may find further relavent details further back on this thread.

good luck,

65KK

Alan Collett

Nope, I don't agree with that.

Once both move to Australia they will both be tax residents, and therefore subject to the same tax regime in respect of their income and capital gains. The aim of the game is then to ensure the overall tax paid is as low as possible - that might mean putting the capital in her name, or in yours, or in both names, depending on your overall assessable income position.

Best regards.

Alan Collett

Also, check the rates on offer on your savings ... this site is as good as any for starters:
http://www.infochoice.com.au/banking...gs/default.asp

Best regards.

65 million

Thanks for putting us straight with that one Alan.

Some more news on the exchange rate for anyone interested from today's bloomberg...

Australian Dollar May Fall on Concern Metals Prices Will Drop
Oct. 12 (Bloomberg) -- The Australian dollar may fall for the first day in five on concern gains in prices of metals the nation sells overseas that have helped the currency advance 5.6 percent in the past month, won't be sustained.

The Australian dollar was the second-best performing currency over the past month behind the Uruguayan peso as metals prices soared. Copper sank from a 15-year high in New York on concern surging oil prices will slow economic growth and curb demand for the metal. Gold, of which Australia is the world's third-biggest producer, fell yesterday from a six-month high.

``The speculative element of the commodity market will drop out, prices will fall and the Australian dollar will pull back,'' said Joanne Masters, a currency strategist at Macquarie Bank Ltd. in Sydney.

The Australian dollar bought 73.38 U.S. cents at 12:24 p.m. in Sydney, down from 73.47 cents yesterday, when the currency rose to a 5 1/2-month high of 73.82 cents following an election victory by the ruling Liberal-National Party.

Australia's currency will trade between 73.10 cents and 73.50 cents today and will decline to 70 cents when commodity prices end their rally, said Masters.

Sales of commodities overseas contribute a fifth to the economy. Australia is the world's fourth-largest exporter of copper ore concentrate and the biggest exporter of zinc, iron ore and alumina, the material used to make aluminum.

Speculative Investors

Demand for copper, aluminum and other base metals used in manufacturing and construction will rise less next year than 2004 as global economic growth cools, said Societe Generale SA in a report released yesterday.

OAO GMK Norilsk Nickel, the world's largest nickel producer, said prices for the metal used to make stainless steel has surged close to a 14-year high because of speculative investors rather than demand.

Prime Minister John Howard's Liberal-National coalition victory this week means investors should buy Australia's dollar versus the euro, according to Bear Stearns Cos., the sixth largest U.S. Securities firm.

Howard's Liberal-National party coalition is also set to win control of the upper house Senate. A government hasn't controlled the upper house since 1981.

`Overwhelming Victory'

``Sunday's overwhelming victory for the Liberal-National government in Australia has paved the way for more'' strength in the currency, Steven Barrow, Bear Stearns's chief currency strategist in London, wrote in a note to clients. ``The robustness of the economy, the prospect of tighter monetary policy and the strength of commodity prices'' will boost demand for Australia's dollar as well, he wrote.

Australia's dollar rose to A$1.6889 per euro from A$1.6887 late yesterday. Versus the euro, it is up 5.1 percent since reaching its weakest in three months at A$1.7747 on Sept. 9.

Barrow said investors should buy Australia's dollar at $1.6870 per euro with a target of A$1.65. The firm recommended exiting the trade to limit further losses should the currency fall to A$1.7050.

Australia's dollar and government bonds were little changed after a report showed business confidence rose in September to a one-month high, according to a National Australia Bank Ltd. survey of 400 businesses released in Melbourne.

The 6.25 percent Australian government bond maturing in April 2015 fell 0.051, or 51 cents per A$1,000 face amount, to 106.168. The yield was little changed at 5.47 percent.



To contact the reporter on this story:
Chris Young in Sydney at [email protected]

To contact the editor responsible for this story:
Beth Thomas in Tokyo [email protected]
or Dan Moss at at [email protected]

noosawannabees

Thanks guys,
you all no your stuff very well, I can see I've got lots of bedtime reading to do,once again many thanks.
Cameron

noosawannabees

sorry I mean know your stuff, just got in from work and brain is now dead.

steveyp

Pound is up 2 cents today.....it reached 2.48 at one point.
I cant see a good reason for it apart from a couple of comments re oil from the Oz government.

GLR

The Australian economy is dominated by commodity exports, particularly metals. As a result the Aussie dollar is seen as a "commodity currency" and will tend to track commodity prices. The price of metals fell yesterday so hitting the Aussie. There was also a feeling after the election that the Aussie had been overtraded to an unsustainable high which led to a bout of profit-taking which again forced the currency lower.

Cheers

GLR

Below is the latest currency report from Ozforex.com.au:
OZFOREX DAILY COMMENTARY

:: Australian Dollar: A further weakening in base metal prices overnight was the catalyst for a fall in the value of the Aussie dollar. The Aussie which had started to push higher in late local trade, ended the session at 0.7294 against the US dollar, but following a 10-15 percent drop ion the prices of copper, aluminium and nickel the Aussie was pushed lower, as were most commodity based currency's. The AUD traded to a low of 0.7215 before finding its mark at around 0.7256 where it is trading this morning.

OzTennis

And further news which could weaken the dollar (because its recent strength has adversely affected competitiveness:

http://www.theage.com.au/articles/20...607349148.html

OzTennis

GLR

Hi Syndey
Thanks for the tip about Barclays, however I gave them a call and it turns out that whilst they will do "no deposit" forward contracts they're only for Barclays customers. They look at your account history and assess your credit risk in deciding whether to ask for a deposit or not. If you're not a Barclays customer then you have to provide the usual 10%.

Thanks anyway, worth a try

Cheers

GLR

itsasecret

Its because the Bank of enlgand said its not over yet. (maybe more interest rate rises.) They said the slow down in spending and the economy was due to the pound £ loosing on average 4% against most currency recently. so he said time will tell with interest rates. most say no rises this year, but when the bank of england say something it has an effect.

Sydney The Dog

Ohwell in 10 days time my credit rating will be back to 0%!!!!