The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, September 27, 2010

Will the Aussie dollar hit parity in November (after touching 96c last night)?

I think it is now very likely the US Federal Reserve will announce another round of money printing--aka quantitative easing or QE2--at its next meeting in November. In short, the Fed will seek to buy vast quantities of long-term US government debt and 30 year home loans in order to push up their prices and reduce their implied yields (or interest rates). Combined with the RBA hiking in October and/or November, this will widen the interest rate differential between the two countries. In concert with greater optimism about China and the US, and the return of "risk-on" (as opposed to "risk-off") trades, this is presumably what has been propelling the recent appreciation of the AUD. Could November be the month in which the AUD hits parity with the USD? I would not bet against it.