Despite higher interest rates in the United States and ongoing weakness in commodity prices, the Australian dollar has broadly trended sideways since late 2015. This note updates our model estimates of fair-value for the $A against the US dollar in light of recent interest rate developments and the December quarter terms of trade results. Although we find that the $A is now closer to fair value (based on current fundamentals), it still seems likely to eventually break below its recent range as fundamentals continue to evolve.
The recent rebound in the price of gold in light of heightened financial market volatility should serve as a reminder to investors of the “safe haven” properties that this precious metal can offer. What’s more, should more central banks resort to negative interest rate policy (NIRP) in the face of slowing global growth, gold’s safe haven status could take on added lustre.
The holiday is definitely over! The markets have experienced a horror start to 2016. While losses were sustained across global share markets, it was an opportunity for the exchange traded fund industry to display its resilience amongst the turmoil.
The industry recorded a contrary position to the overall market and saw positive inflows for the month with just over $100m of new money entering the market, although the overall value of the exchange traded fund contracted by -4.3%.
