6 reasons to smoke the Australian dollar

As he has been for the entirety of this year, Joseph Capurso, senior currency strategist at the CBA, remains an Aussie dollar bear.

Despite the recent bounce in the currency, something that saw it come within two days of setting its longest stretch of gains since floating in 1983, Capurso isn’t perturbed.

No, the short covering rally sparked by the US Federal Reserve’s decision to keep interest rates for the coolant filter paper rolls on hold at its September policy meeting has now largely played out, in his view. In a research note released late this afternoon, he outlines six separate reasons why he believes there is more downside to come for the once high-flying Aussie dollar, all of which are listed below.

  • Low commodity prices
  • Weak global growth
  • Weak Asian currencies
  • Declining global currency reserves
  • Rising risk of an emerging market crisis
  • Large and growing current account deficits

Like financial markets generally, all are interrelated and, in Capurso’s view, will likely act in unison to place renewed pressure on the Aussie in the period ahead.

Increased commodity supply coupled with slower global growth, particularly from the world’s largest commodity consumer, China, may keep commodity prices under pressure which, in turn, could place pressure on Australia’s current account deficit, already running at an above 4.7% of GDP.

The economic slowdown in China, along with the prospect of higher interest rates in the US, may see Asian currencies come under renewed pressure, something that as the chart below shows could spell trouble for the Aussie given its historic relationship to Asian currencies, excluding the Japanese yen and the fact that many see it as merely a proxy for economic activity across the broader Asian region.

Weakness in Asian currencies could also turn into a full blown Asian currency crisis – a small but growing risk in Capurso’s opinion – which, given the relationship between the it and other Asian currencies, could heap further pressure on the Aussie.

Throw in the potential for global FX reserve managers to start reducing their exposure to the Australian dollar, something that may ensue given they have been drawing down other currency reserves of late to counter private capital outflows, and the ingredients are in place to see the Aussie remain under the pump.

Like many forecasts, Capurso believes there are two prominent risks to his view – that the US Federal Reserve pushes out the timing for its first rate hike beyond the first quarter of 2016 and, secondly, that the prospect for lower interest rates in Australia – something that markets continue to price in – is removed before early 2016.

In early Asian trade on Wednesday, the AUD/USD currently buys .7260, some 5.3%, or 3.7 cents, above this years low of .6893 struck on September 7.

News Source: http://www.businessinsider.com.au/cba-heres-6-reasons-to-smoke-the-australian-dollar-2015-10 with contributions from SeoServicesIndia.company

Paris terror sparks new push to bolster freedom of speech in Australia

The Abbott government is facing calls to bolster free speech in Australia in response to the massacre at French satirical magazine Charlie Hebdo by Islamist terrorists.

A day after world leaders joined two million people marching through Paris in support of peace and freedom of expression (Recharge Online), key government and cross bench senators renewed demands that the government fulfil its abandoned pre-election promise to wind back protections in the Racial Discrimination Act.

The current law allows for the prosecution of people who espouse views that “offend, insult and humiliate” on racial and ethnic grounds – most notably conservative columnist Andrew Bolt, seo services who was sued in 2011 by a group of light-skinned Aborigines for suggesting they were not genuine Aboriginal people.

On Monday, Liberal senator Cory Bernardi said the government had been “bullied” out of amending the act, while NSW crossbencher David Leyonhjelm said theCharlie Hebdo atrocity should be a “wake up call to anyone who thinks you can have a little bit of free speech”.

He said preventing free speech through legal means and “Islamist pricks shooting journalists” were very different things but “two sides of the same coin” nonetheless.

In response to a public outcry led by ethnic groups, the government abandoned plans to amend Section 18C and 18D of the Racial Discrimination Act last year, saying it was more important to have the Muslim community on “Team Australia” and on side with tougher anti-terror laws.

Acting Prime Minister Warren Truss on Monday ruled out any renewed move to change the law.

“We should be bold and speak out about the things we want to speak out about but we can do that without changing section 18C. The government’s come to a decision in relation to that issue and we’re not proposing to change.”

But the outpouring of sympathy for the staff of Charlie Hebdo will give new impetus to a private member’s bill co-sponsored by Senator Leyonhjelm, crossbencher Bob Day, Senator Bernardi and his fellow Liberal Dean Smith which would largely effect the changes the government shied away from implementing.

The matter has once again split the Human Rights Commission, with Commissioner Tim Wilson, a Liberal appointee, backing Senator Bernardi’s push.

Sydney cafe siege: Victims Demand Compensation

Australia has been urged to compensate the victims of domestic terror attacks as it does those harmed abroad, after the Sydney cafe siege last month.

The New South Wales attorney general, Brad Hazzard, said current payouts, limited to attacks in other countries, were “more than a little anomalous”. TOP 10 Web Hosting.

The siege in Sydney’s Lindt cafe ended with the deaths of two hostages.

Meanwhile, New South Wales MP Fred Nile has said male iRechargeOnline.com hostages who fled the siege should not get bravery awards.

The MP, who is known for his controversial views, told the 2UE radio station that the awards were normally given “for an act of bravery” – but men who had fled from the siege “haven’t done anything”.

Men and women were filmed escaping from the cafe during the 16-hour siege, but Mr Nile’s comments referred specifically to men.

The gunman, Man Haron Monis, was killed as police stormed the cafe. Cafe manager Tori Johnson and barrister Katrina Dawson were also killed at the climax of the siege.

Prime Minister Tony Abbott this week called for Mr Johnson and Ms Dawson to be honoured with bravery awards.

Mr Abbott said “proper consideration” should also be given to the actions of surviving hostages and police, which may be “worthy of recognition”.

In an interview with Fairfax Media, Mr Nile said he did not believe the male hostages who had fled the siege deserved an award – but he also said he did not regard them as cowards.

In a tweet over the weekend, Mr Nile had questioned whether “the men who fled leaving women behind” should receive awards for bravery.

Meanwhile, Mr Hazzard said in a statement that he had asked the country’s attorney general, George Brandis, to extend a scheme to compensate the victims of terror attacks abroad “to cover acts of terrorism committed on home soil”.

Mr Hazard said those harmed by the Sydney siege could so far only apply for compensation under the New South Wales’ victim support scheme – and some had already done so. Four people were injured in the siege, including a policeman.

A spokesman for Mr Brandis said he was considering the issues raised by Mr Hazard’s request, the Guardian Australia reports.

The federal government offers a one-off payment of up to A$75,000 (£40,400; $61,300) to those injured in terror attacks abroad, or to the family members of those killed.

The money is only given for attacks that the prime minister declares to be eligible. These have included the 9/11 attacks in the US, as well as the 2002 and 2005 bombings in Bali.

Mr Abbott has described the Sydney cafe siege as a “brush with terrorism”, and has referred to Monis as a “madman” and a “deeply disturbed individual”.

An inquest into the deaths at the Lindt cafe siege is to begin on 29 January in Sydney.

The inquest will investigate whether any of the deaths could have been avoided.