DOCSLIB.ORG

Australian Dollar: a High Beta to Global Risk Appetite, Along with a Close Correlation to Commodity Prices, May Cause Further Volatility for the Australian Currency

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Australian Dollar: a High Beta to Global Risk Appetite, Along with a Close Correlation to Commodity Prices, May Cause Further Volatility for the Australian Currency T. Rowe Price Investment dIalogue Australian Dollar: A high beta to global risk appetite, along with a close correlation to commodity prices, may cause further volatility for the Australian currency Rising interest rates, accelerating commodity prices, and relatively robust domestic economic data have helped the Australian dollar rise strongly versus other currencies, especially the U.S. dollar. With a close correlation to global risk appetite, investors should be aware of the positive and negative factors that could affect the currency going forward. Positive catalysts have caused the Australian dollar to rise below). Benchmark interest rates are 4.5% in Australia, compared strongly since early 2009 with just 0.1% in Japan and as low as zero in the U.S. This interest Australia’s currency has enjoyed strong gains over the past year rate differential remains a significant positive for the Australian (figure 1, below). The decision by the Reserve Bank of Australia currency, although this may diminish as expectations for rate (RBA) to begin tightening monetary policy in October 2009 (the rises in the rest of the world gather momentum. first developed world central bank to do so), along with a strong Figure 2: Large interest rate differentials compared with other recovery for its own domestic economy, has caused the currency central banks to rally strongly. However, the strength of the currency also reflects Short-Term Interest Rate Forecasts the close correlation that the Australian dollar has to global risk U.S. Euro Area U.K. Japan Australia appetite. Its strong rebound through much of 2009 (in an early Current 0.25% 1.0% 0.5% 0.1% 4.5% economic cycle environment) has been very much a response 2011 0.7 1.1 1.0 0.1 5.5 2012 1.8 1.5 2.0 0.3 5.8 to the rebound in Chinese demand and the resulting upgrades 2013 3.0 2.3 3.0 0.7 6.0 to commodity prices. These forces—rising interest rates, rising 2014 4.0 3.0 4.0 1.2 6.0 commodity prices, and a robust domestic economy—are still at Average Last 10 Years 3.2 3.0 4.4 0.1 5.3 play. However, the relative benefits of some may begin to fade, Average Last 20 Years 4.1 N/A 6.0 1.5 6.3 depending on how the global economy performs going forward. Source: Citigroup Figure 1: Australian dollar has risen strongly against the U.S. dollar The rally in the Australian dollar throughout 2009 can also Data to 17 September 2010 1.05 be attributed to the sustained depreciation of the U.S. dollar. A$ vs. U.S.$ However, there was evidence in the first quarter of 2010 that 0.95 this had started to show some signs of reversal as U.S. economic data improved and yields on U.S. Treasuries rose. Markets started 0.85 to consider the possibility of higher official interest rates and the 0.75 reversal of the significant market liquidity programs. 0.65 Recently, however, indications that the pace of the U.S. economy’s growth has lost momentum this summer, while the rate of 0.55 inflation has fallen sharply at the same time, have moderated these expectations. In fact, with the U.S. Fed stating that the 0.45 outlook was “unusually uncertain,” consensus for the first Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 interest rate hike has now been pushed out from early 2011 to Source: Bloomberg the fall of 2011. If that prediction is accurate, we may continue to see a strong Australian dollar versus its U.S. counterpart. Outlook: A mixture of factors may affect Australia’s currency going forward Australia is extremely advanced (and anomalous) in this particular interest rate cycle, with most other developed marketsSep-97Sep-98 maintainingSep-99Sep-00Sep-01 a verySep-02 looseSep-03 monetarySep-04Sep-05Sep-06 policySep-07 (figureSep-08 Sep-092 , Sep-10 We do, however, have to take into consideration that on an Current implications for Australian monetary policy historical basis, the Australian dollar has been trading at the 60 Following a period of unprecedented easing over eight short upper end of its trading band over the last year. This dovetails months, which brought official policy rates down to all time 40 well with the upturn in equity prices and global risk appetite. lows, the RBA has been one of the first central banks to tighten With its peak in recent years being 0.9798 (15 July 2008), 20 monetary policy. However, despite six rate hikes since October coinciding with the peak in equity markets, it can be argued that 2009, the current cash rate is still slightly below what historically if we see both risk assets and equities prosper going forward,0 has been considered neutral (figure 5, below). then there could be further upside for the currency. But if we encounter a period of uncertainty, then you could see the -20 Going forward, however, the RBA is maintaining a more currency fall in line with sentiment. cautionary stance. At recent meetings, the RBA intimated that -40 Chinese economic growth was “moderating to a more sustainable rate as policies are now less accommodating,” indicating less Resurgence in domestic economic activity -60 Australia’s currency also has benefited from a resurgence in chance of upward risk from China. With monetary policy close to its own economy. Employment has rebounded strongly, rising more normalized levels, inflation “close to target,” and economic 4” difference job advertisements point to further gains in the short term growth likely to be close to trend, policy should remain relatively (figure 3, below), and wage growth has returned to pre-crisis stable4” differencein the short term. As for the crucial “medium-term,” the rates. Improved consumer confidence and the swing in Australia’s RBA has stated that inflation will be the crucial barometer to trade balance into surplus also have provided a fundamental flow monitor. Oct-00 Oct-02 Oct-04 Oct-06 Oct-08 Jun-10 of support for the Australian dollar. If this continues, it would Figure 4: Australian dollar cycle is closely aligned with the provide a positive backdrop for the currency. prospects for commodity prices 1.1 350 Figure 3: Australia’s labor market is recovering strongly 5% 60% 1.0 Employment, YoY% 275 Job Adverts, YoY%, 6m lag (Rhs) 4 40 0.9 3 20 0.8 200 2 0 0.7 125 1 -20 0.6 A$ vs. U.S.$ (Lhs) Westpac Commodity Futures Index (Rhs) 0 -40 0.5 50 “3.00” 4 Jul-10 -1 “3.25” 4 -60 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 “3.50” 2 Source: Bloomberg “3.75” 3 Oct-00 Oct-02 Oct-04“4.00” 1Oct-06 Oct-08 Jun-10 Source: Credit Suisse Figure 5: Australian monetary policy closer to historical averages “4.25” 5 45 “4.50” 7 Blue represents average range of cash rates. “4.75” 40 40 The outlook for commodities,“5.00” and26 subsequently economic Histogram of RBA Cash Rate growth in China, are key factors“5.25” for21 the Australian currency 35 “5.50” 20 “5.75” 8 Perhaps one of the most important factors to monitor in recent 30 “6.00” 13 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 years has been the future of“6.25” commodity 17 prices. Using the 25 Westpac Commodity Futures“6.50” Index, 4a measure of futures trade Oct-00 Oct-02 Oct-04“6.75” 4Oct-06 Oct-08 Current cash rate 20 commodities, we can see that“7.00” the Australian4 dollar’s relationship can be considered “7.25” 6 Dec-0515 “neutral”Dec-06 based on Dec-07 Dec-08 Dec-09 Jul-10 with its U.S. counterpart is closely“7.50” linked21 with the performance of lending rates “More” 0 commodities (figure 4, next column). Therefore, with China being 10 the main driver of commodity prices in recent years, the outlook observations Number of monthly 5 for the Chinese economy will be paramount in assessing the 0 prospects for the Australian currency. 3.00 3.25 3.50 3.75 4.00 4.25 4.50 4.75 5.00 5.25 5.50 5.75 6.00 6.25 6.50 6.75 7.00 7.25 7.50More Source: Citigroup 2 INVESTMENT dIALOGUE “3.00”“3.25”“3.50”“3.75”“4.00”“4.25”“4.50”“4.75”“5.00”“5.25”“5.50”“5.75”“6.00”“6.25”“6.50”“6.75”“7.00”“7.25”“7.50”“More” How does this impact global equity investors? Adopting a 50/50 split between a hedged and unhedged For those investors who have sought to diversify their positions by portfolio could also prove beneficial for investors, especially when the currency is trading in a relatively small trading range. This allocating money to global equity markets, any increase or decrease would also allow for the flexibility to make a strategic tilt when in the value of the Australian dollar will have a respective negative parameters for the currency are close to being reached, have been or positive impact on investment returns. This would argue for a reached, or have been breached. However, execution of this may global portfolio to be hedged against any fluctuations in the value prove difficult as currency markets can move very quickly. Therefore, of the currency.
Load more

Recommended publications
  • Explainer: Exchange Rates and the Australian Economy
    rba.gov.au/education twitter.com/RBAInfo facebook.com/ ReserveBankAU/ Exchange Rates and the youtube.com /user/RBAinfo Australian Economy An exchange rate is the value of one currency in Together these effects also have implications for terms of another currency. Exchange rates matter the balance of payments. This Explainer describes to Australia’s economy because of their influence the effects of exchange rate movements and on trade and financial flows between Australia highlights the main channels through which and the rest of the world. Changes in exchange these changes affect the Australian economy. rates affect the Australian economy in two If the exchange rate between the Australian dollar main ways: and the US dollar is 0.75 then one Australian 1 There is a direct effect on the prices of dollar can be converted into US75c. An increase goods and services produced in Australia in the value of the Australian dollar is called relative to the prices of goods and services an appreciation. A decrease in the value of the produced overseas. Australian dollar is known as a depreciation. 2 There is an indirect effect on economic activity and inflation as changes in the relative prices of goods and services produced domestically and overseas influence decisions about production and consumption. Exchange rates and economic activity Trade prices Economic activity and inflation GDP Export Export prices volumes Exchange Domestic Unemployment Inflation rate demand Import Import prices volumes RESERVE BANK OF AUSTRALIA | Education Exchange Rates and the Australian Economy 1 Australian goods and services, leading to an Direct Effects increase in the volume (that is, quantity) of The direct effect of an exchange rate movement Australian exports.
    [Show full text]
  • Modelling Australian Dollar Volatility at Multiple Horizons with High-Frequency Data
    risks Article Modelling Australian Dollar Volatility at Multiple Horizons with High-Frequency Data Long Hai Vo 1,2 and Duc Hong Vo 3,* 1 Economics Department, Business School, The University of Western Australia, Crawley, WA 6009, Australia; [email protected] 2 Faculty of Finance, Banking and Business Administration, Quy Nhon University, Binh Dinh 560000, Vietnam 3 Business and Economics Research Group, Ho Chi Minh City Open University, Ho Chi Minh City 7000, Vietnam * Correspondence: [email protected] Received: 1 July 2020; Accepted: 17 August 2020; Published: 26 August 2020 Abstract: Long-range dependency of the volatility of exchange-rate time series plays a crucial role in the evaluation of exchange-rate risks, in particular for the commodity currencies. The Australian dollar is currently holding the fifth rank in the global top 10 most frequently traded currencies. The popularity of the Aussie dollar among currency traders belongs to the so-called three G’s—Geology, Geography and Government policy. The Australian economy is largely driven by commodities. The strength of the Australian dollar is counter-cyclical relative to other currencies and ties proximately to the geographical, commercial linkage with Asia and the commodity cycle. As such, we consider that the Australian dollar presents strong characteristics of the commodity currency. In this study, we provide an examination of the Australian dollar–US dollar rates. For the period from 18:05, 7th August 2019 to 9:25, 16th September 2019 with a total of 8481 observations, a wavelet-based approach that allows for modelling long-memory characteristics of this currency pair at different trading horizons is used in our analysis.
    [Show full text]
  • View Currency List
    Currency List business.westernunion.com.au CURRENCY TT OUTGOING DRAFT OUTGOING FOREIGN CHEQUE INCOMING TT INCOMING CURRENCY TT OUTGOING DRAFT OUTGOING FOREIGN CHEQUE INCOMING TT INCOMING CURRENCY TT OUTGOING DRAFT OUTGOING FOREIGN CHEQUE INCOMING TT INCOMING Africa Asia continued Middle East Algerian Dinar – DZD Laos Kip – LAK Bahrain Dinar – BHD Angola Kwanza – AOA Macau Pataca – MOP Israeli Shekel – ILS Botswana Pula – BWP Malaysian Ringgit – MYR Jordanian Dinar – JOD Burundi Franc – BIF Maldives Rufiyaa – MVR Kuwaiti Dinar – KWD Cape Verde Escudo – CVE Nepal Rupee – NPR Lebanese Pound – LBP Central African States – XOF Pakistan Rupee – PKR Omani Rial – OMR Central African States – XAF Philippine Peso – PHP Qatari Rial – QAR Comoros Franc – KMF Singapore Dollar – SGD Saudi Arabian Riyal – SAR Djibouti Franc – DJF Sri Lanka Rupee – LKR Turkish Lira – TRY Egyptian Pound – EGP Taiwanese Dollar – TWD UAE Dirham – AED Eritrea Nakfa – ERN Thai Baht – THB Yemeni Rial – YER Ethiopia Birr – ETB Uzbekistan Sum – UZS North America Gambian Dalasi – GMD Vietnamese Dong – VND Canadian Dollar – CAD Ghanian Cedi – GHS Oceania Mexican Peso – MXN Guinea Republic Franc – GNF Australian Dollar – AUD United States Dollar – USD Kenyan Shilling – KES Fiji Dollar – FJD South and Central America, The Caribbean Lesotho Malati – LSL New Zealand Dollar – NZD Argentine Peso – ARS Madagascar Ariary – MGA Papua New Guinea Kina – PGK Bahamian Dollar – BSD Malawi Kwacha – MWK Samoan Tala – WST Barbados Dollar – BBD Mauritanian Ouguiya – MRO Solomon Islands Dollar –
    [Show full text]
  • Currency Internationalization This Page Intentionally Left Blank Currency Internationalization: Global Experiences and Implications for the Renminbi
    Currency Internationalization This page intentionally left blank Currency Internationalization: Global Experiences and Implications for the Renminbi Edited By Wensheng Peng Chang Shu Introduction, selection, editorial matter, foreword, chapters 5 and 10 © The Monetary Authority appointed pursuant to section 5A of the Exchange Fund Ordinance 2010 Other individual chapters © contributors 2010 Softcover reprint of the hardcover 1st edition 2010 978-0-230-58049-7 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2010 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries ISBN 978-1-349-36848-8 ISBN 978-0-230-24578-5 (eBook) DOI 10.1057/9780230245785 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources.
    [Show full text]
  • Australian Dollar/Euro Australian Dollar/Japanese Yen Australian Dollar/Swiss Franc Australian Dollar/U.S. Dollar Austrln Dollar
    Indexes - The Globe and Mail - December 29, 2017 Company Symbol Last Price 52W 52W 1 Year Vol. Yr High Low % Chg (000) Australian Dollar/Euro AUD/EUR 0.650 0.732 0.635 -5.55 0 Australian Dollar/Japanese Yen AUD/JPY 87.950 90.360 81.480 4.43 0 Australian Dollar/Swiss Franc AUD/CHF 0.761 0.780 0.715 2.97 0 Australian Dollar/U.S. Dollar AUD/USD 0.780 0.810 0.716 8.05 0 Austrln Dollar/British Pound AUD/GBP 0.578 0.628 0.557 -1.85 0 Austrln Dollar/Canadian Dollar AUD/CAD 0.981 1.035 0.958 .72 0 Bloomberg Agriculture BCOMAG 47.509 57.517 46.793 -11.82 0 Bloomberg Aluminum BCOMAL 36.091 36.446 27.549 29.71 0 Bloomberg Commodity Index BCOM 88.167 89.448 79.420 .47 0 Bloomberg Energy BCOMEN 38.016 40.496 29.919 -5.66 0 Bloomberg ExEnergy BCOMXE 92.072 94.942 87.357 4.21 0 Bloomberg Gold BCOMGC 158.595 165.548 141.495 10.90 0 Bloomberg Grains BCOMGR 32.640 40.760 32.396 -12.00 0 Bloomberg Industrial Metals BCOMIN 138.510 138.528 107.058 28.29 0 Bloomberg Livestock BCOMLI 30.524 33.513 28.215 5.38 0 Bloomberg Petroleum BCOMPE 312.977 312.977 312.977 .00 0 Bloomberg Precious Metals BCOMPR 174.049 182.964 158.178 8.80 0 Bloomberg Softs BCOMSO 41.824 53.657 38.082 -15.32 0 British Pound/Austrln Dollar GBP/AUD 1.731 1.795 1.593 1.88 0 British Pound/Canadian Dollar GBP/CAD 1.699 1.783 1.585 2.62 0 British Pound/Euro GBP/EUR 1.125 1.203 1.075 -3.75 0 British Pound/Japanese Yen GBP/JPY 152.260 152.870 136.200 6.41 0 British Pound/Swiss Franc GBP/CHF 1.317 1.341 1.224 4.89 0 British Pound/U.S.
    [Show full text]
  • Countries Codes and Currencies 2020.Xlsx
    World Bank Country Code Country Name WHO Region Currency Name Currency Code Income Group (2018) AFG Afghanistan EMR Low Afghanistan Afghani AFN ALB Albania EUR Upper‐middle Albanian Lek ALL DZA Algeria AFR Upper‐middle Algerian Dinar DZD AND Andorra EUR High Euro EUR AGO Angola AFR Lower‐middle Angolan Kwanza AON ATG Antigua and Barbuda AMR High Eastern Caribbean Dollar XCD ARG Argentina AMR Upper‐middle Argentine Peso ARS ARM Armenia EUR Upper‐middle Dram AMD AUS Australia WPR High Australian Dollar AUD AUT Austria EUR High Euro EUR AZE Azerbaijan EUR Upper‐middle Manat AZN BHS Bahamas AMR High Bahamian Dollar BSD BHR Bahrain EMR High Baharaini Dinar BHD BGD Bangladesh SEAR Lower‐middle Taka BDT BRB Barbados AMR High Barbados Dollar BBD BLR Belarus EUR Upper‐middle Belarusian Ruble BYN BEL Belgium EUR High Euro EUR BLZ Belize AMR Upper‐middle Belize Dollar BZD BEN Benin AFR Low CFA Franc XOF BTN Bhutan SEAR Lower‐middle Ngultrum BTN BOL Bolivia Plurinational States of AMR Lower‐middle Boliviano BOB BIH Bosnia and Herzegovina EUR Upper‐middle Convertible Mark BAM BWA Botswana AFR Upper‐middle Botswana Pula BWP BRA Brazil AMR Upper‐middle Brazilian Real BRL BRN Brunei Darussalam WPR High Brunei Dollar BND BGR Bulgaria EUR Upper‐middle Bulgarian Lev BGL BFA Burkina Faso AFR Low CFA Franc XOF BDI Burundi AFR Low Burundi Franc BIF CPV Cabo Verde Republic of AFR Lower‐middle Cape Verde Escudo CVE KHM Cambodia WPR Lower‐middle Riel KHR CMR Cameroon AFR Lower‐middle CFA Franc XAF CAN Canada AMR High Canadian Dollar CAD CAF Central African Republic
    [Show full text]
  • New France (Ca
    New France (ca. 1600-1770) Trade silver, beaver, eighteenth century Manufactured in Europe and North America for trade with the Native peoples, trade silver came in many forms, including ear bobs, rings, brooches, gorgets, pendants, and animal shapes. According to Adam Shortt,5 the great France, double tournois, 1610 Canadian economic historian, the first regular Originally valued at 2 deniers, the system of exchange in Canada involving Europeans copper “double tournois” was shipped to New France in large quantities during occurred in Tadoussac in the early seventeenth the early 1600s to meet the colony’s century. Here, French traders bartered each year need for low-denomination coins. with the Montagnais people (also known as the Innu), trading weapons, cloth, food, silver items, and tobacco for animal pelts, especially those of the beaver. Because of the risks associated with In 1608, Samuel de Champlain founded transporting gold and silver (specie) across the the first colonial settlement at Quebec on the Atlantic, and to attract and retain fresh supplies of St. Lawrence River. The one universally accepted coin, coins were given a higher value in the French medium of exchange in the infant colony naturally colonies in Canada than in France. In 1664, became the beaver pelt, although wheat and moose this premium was set at one-eighth but was skins were also employed as legal tender. As the subsequently increased. In 1680, monnoye du pays colony expanded, and its economic and financial was given a value one-third higher than monnoye needs became more complex, coins from France de France, a valuation that held until 1717 when the came to be widely used.
    [Show full text]
  • Road Freight
    Research Report 46 International Performance Indicators – Road Freight Australian Government Publishing Service ii Canberra iii © Commonwealth of Australia 1992 ISBN This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission from the Australian Government Publishing Service. Requests and inquiries concerning reproduction and rights should be directed to the Manager, AGPS Press, Australian Government Publishing Service, GPO Box 84, Canberra, ACT 2601. The Bureau of Industry Economics, a centre for research into the manufacturing and commerce sectors, is formally attached to the Department of Industry, Technology and Commerce. It has professional independence in the conduct and reporting of its research. Inquiries regarding this and all other BIE publications should be directed to: The Publications Officer Bureau of Industry Economics GPO Box 9839 Canberra ACT 2601 (06) 276 2347 iv Contents Page Foreword xi Executive summary xiii Chapter 1 Introduction 1 1.1 Background 1 1.2 Project outline 2 1.3 Consultation with industry and users 3 1.4 Structure of report 3 Chapter 2 The road freight industry 4 2.1 Road freight in the Australian economy 4 2.2 Road freight as an industry input 6 2.3 Some key features of the Australian road freight industry 9 2.4 The road freight industry overseas 14 Chapter 3 The road freight industry regulatory environment 15 3.1 The current regulatory environment 15 3.2 Proposals for regulatory reform and the potential gains
    [Show full text]
  • THE COMMODITY-CURRENCY VIEW of the AUSTRALIAN DOLLAR: a MULTIVARIATE COINTEGRATION APPROACH I. Introduction
    Journal of Applied Economics, Vol. VIII, No. 1 (May 2005), 81-99 THE COMMODITY-CURRENCY VIEW OF THE AUSTRALIAN DOLLAR 81 THE COMMODITY-CURRENCY VIEW OF THE AUSTRALIAN DOLLAR: A MULTIVARIATE COINTEGRATION APPROACH * DIMITRIS HATZINIKOLAOU University of Ioannina and METODEY POLASEK Flinders University Submitted November 2002; accepted October 2003 Using Australian quarterly data from the post-float period 1984:1-2003:1 and a partial system, we identify and estimate two cointegrating relations, one for the interest-rate differential and the other for the nominal exchange rate. Our estimate of the long-run elasticity of the exchange rate with respect to commodity prices is 0.939, which strongly supports the widely held view that the floating Australian dollar is a ‘commodity currency’. We also find that the PPP and UIP cannot be rejected so long as commodity prices are included in the cointegrating relations. Our model outperforms the random walk model in forecasting the exchange rate in the medium run. JEL classification codes: F31, F41 Key words: Australian dollar, commodity currency, cointegration I. Introduction In the Australian setting, extraneously determined terms of trade have long been recognized as a variable playing a central role in influencing the country’s economic outcomes (Salter, 1959; Swan, 1960; Gregory, 1976). * Dimitris Hatzinikolaou (corresponding author): University of Ioannina, Department of Economics, 45110 Ioannina, Greece; e-mail: [email protected]. Metodey Polasek: Flinders University, School of Business Economics, Adelaide, GPO Box 2100, S.A. 5001, Australia. We are grateful to an anonymous referee of this journal for his/her constructive comments on an earlier version of the paper.
    [Show full text]
  • Country Profile: Australia Note: Representative
    Country Profile: Australia Introduction Australia or the Commonwealth of Australia is located in the Oceania region, consisting of the mainland of the Australian continent, the island of Tasmania, and several other smaller islands. Australia or the Commonwealth of Australia is the world's sixth-largest country by total area.Located between the Indian and Pacific oceans, the country is approximately 4,000 km from east to west and 3,200 km from north to south, with a coastline 36,735 km long. Australia has maintained a stable liberal democratic political system that functions as a federal parliamentary democracy and constitutional monarchy comprising six states and several territories. Note: Representative Map 1 Country Profile: Australia Population Australians come from a rich variety of cultural, ethnic, linguistic and religious background. While Aboriginal and Torres Strait Islander peoples are the original inhabitants of the land, immigrants from about 200 countries also call Australia home. Until the 1970s, the majority of immigrants to Australia came from Europe. These days Australia receives many more immigrants from Asia, and since 1996 the number of immigrants from Africa and the Middle East has almost doubled1. As per the census of 2015, the total population of Australia was around 23,856,200. The most populous states are New South Wales and Victoria, with their respective capitals, Sydney and Melbourne, the largest cities in Australia. Economy Known as one of the great agricultural, mining and energy producers, Australia has one of the world’s most open and varied economies, with a highly educated workforce and an extensive services sector.
    [Show full text]
  • How One Dollar Grew Over Time
    MFS ADVISOR EDGESM INVESTING BASICS How One Dollar Grew Over Time mfs.com Stocks — historically, a good place for long-term investors Worldwide Despite the many national and international crises throughout the past 30 years, COVID-19 investing in stocks has kept investors on track in pursuing their long-term goals. pandemic N. Korea STOCK defies $21.11 world with missile testing Oil prices Oil prices War plunge at record to 5-year with Iraq levels 9/11 begins Looming US low Y2K terrorist S&P 500 and “Fiscal Cliff” concerns attacks Hurricanes Dow fall to crisis on US Corporate Katrina and 10-year lows Wilma Dow Asian accounting breaks economic scandals President turmoil US BONDS 5000, $5.53 Bush Soviet market signs Union “too high” CASH NAFTA $2.14 collapses INFLATION $1 $1.95 1/91 1/96 1/01 1/06 1/11 1/16 12/20 Source: SPAR, Bureau of Labor Statistics. Important risk considerations MARKET SEGMENT REPRESENTED BY IMPORTANT RISK CONSIDERATIONS Stocks Standard & Poor’s 500 Stock Index1 Stocks: Common stocks generally provide an opportunity for more capital appreciation than fixed-income investments US Bonds Bloomberg Barclays U.S. Aggregate Bond Index2 but are also subject to greater market fluctuations. US Bonds and Cash: Corporate bonds, US Treasury bills, and US Cash FTSE 3-month Treasury Bill Index3 government bonds fluctuate in value, but if held to maturity, offer a fixed rate of return and a fixed principal value. Inflation Consumer Price Index4 Keep in mind that all investments, including mutual funds, carry a certain amount of risk including the possible loss of the principal amount invested.
    [Show full text]
  • 2018-BBDXY-Index-Rebalance.Pdf
    BLOOMBERG DOLLAR INDEX 2018 REBALANCE 2018 REBALANCE HIGHLIGHTS • Euro maintains largest weight 2018 BBDXY WEIGHTS Euro 3.0% Japanese Yen • Canadian dollar largest percentage weight 2.1% 3.7% Canadian Dollar decrease 4.5% 5.1% Mexican Peso • Swiss franc has largest percentage weight increase 31.5% British Pound 10.5% Australian Dollar 10.0% • Mexican peso’s weight continues to increase Swiss Franc 18.0% (2007: 6.98% to 2018: 10.04%) 11.4% South Korean Won Chinese Renminbi Indian Rupee STEPS TO COMPUTE 2018 MEMBERS & WEIGHTS Fed Reserve’s BIS Remove pegged Trade Data Liquidity Survey currencies to USD Remove currency Set Cap exposure Average liquidity positions under to Chinese & trade weights 2% Renminbi to 3% Bloomberg Dollar Index Members & Weights 2018 TARGET WEIGHTS- BLOOMBERG DOLLAR INDEX Currency Name Currency Ticker 2018 Target Weight 2017 Target Weights Difference Euro EUR 31.52% 31.56% -0.04% Japanese Yen JPY 18.04% 17.94% 0.10% Canadian Dollar CAD 11.42% 11.54% -0.12% British Pound GBP 10.49% 10.59% -0.10% Mexican Peso MXN 10.05% 9.95% 0.09% Australian Dollar AUD 5.09% 5.12% -0.03% Swiss Franc CHF 4.51% 4.39% 0.12% South Korean Won KRW 3.73% 3.81% -0.08% Chinese Renminbi CNH 3.00% 3.00% 0.00% Indian Rupee INR 2.14% 2.09% 0.06% GEOGRAPHIC DISTRIBUTION OF MEMBER CURRENCIES GLOBAL 21.47% Americas 46.53% Asia/Pacific 32.01% EMEA APAC EMEA AMER 6.70% 9.70% 9.37% Japanese Yen Australian Dollar Euro Canadian Dollar 46.80% 11.67% South Korean Won 22.56% 56.36% British Pound 53.20% 15.90% 67.74% Mexican Peso Chinese Renminbi Swiss Franc
    [Show full text]