Aussie dollar versus the euro
A leading US currency manager is favouring the euro as growth in Europe starts to improve, while the Australian economy is starting to show signs of a slowdown.
A leading US currency manager is favouring the euro as growth in Europe starts to improve, while the Australian economy is starting to show signs of a slowdown.
However, Bridgewater Associates portfolio strategy director Rob Zink says while he is bullish on the euro, there are still negatives — some of which favour the Australian dollar.
“Europe is running a positive current account and we are starting to see signs of growth,” Zink says.
“However, real yields are rising in Australia — which favours its dollar.”
Zink was speaking in Melbourne last week as part of the roadshow launching Lend Lease’s new international share trust with currency management. Bridgewater will be the currency manager for the new product.
While being bullish on the euro, Zink is neutral on the US dollar.
“The background to the US and Australian dollars are similar, as both countries have high growth rates,” he says. “The inflation rates are similar, but the real bond yield tends to support the Australian dollar.”
Zink believes the US could factor-in another rate rise before Christmas, but any weakness in the US share market may delay that move.
Zink does not believe the Reserve Bank will consider the US overcoming Y2K problem when it looks at using interest rate rises to slow US growth.
Zink is moderately bearish about the yen, but Australia’s stronger growth favours the dollar.
“The interest rate differential favours the Australian dollar. Any rating of the yen may cloud Japanese growth,” he says.
Recommended for you
WT Financial managing director Keith Cullen has become the latest advice licensee to describe how artificial intelligence is transforming its business as well as plans for two further Hubcos.
ASIC has temporarily suspended the AFSL of a Newcastle-based advice firm after discovering it had unknowingly provided financial services for two years without a key person.
The exit of as many as 1,600 advisers as a result of the education requirements will fundamentally redefine adviser capacity, Padua Wealth Data says, and leave clients facing longer turnaround times and reduced access to advice.
The Financial Advice Association Australia’s Advice Academy has formally launched, assisting Professional Year candidates and supervisors.
