3 Sep 2013
Flash: AUD acting as a global shock absorber - HSBC
FXstreet.com (Barcelona) - Today, the RBA commodity price index, came at +1.2% in August (in USD), with base metals and iron ore prices up, supported by rising demand from China, notes Paul Bloxham, Chief Economist for HSBC.
Key Quotes
"Interestingly, while the Australian commodity price index was still down by -7% y-o-y in USD terms, it has actually risen by +8% in AUD terms y-o-y, as the currency is now doing its job and acting as a global shock absorber. The rise in AUD denominated commodity prices should support local incomes."
"We continue to see the mining story as slowing down, rather than collapsing. As mining investment starts to become a drag on growth, in coming quarters, we expect it to be offset by a ramp up exports."
"As long as any further fall in commodity prices is matched by a decline in the AUD, the drag on incomes from lower commodity prices could have a limited impact on local incomes."
"Other parts of the economy need to pick up and growth needs to rebalance away from the mining sector. Housing prices and dwelling construction are two areas where this rebalancing does appear to be occurring, though a broader rebalancing of the economy is still in the forecast horizon."
Key Quotes
"Interestingly, while the Australian commodity price index was still down by -7% y-o-y in USD terms, it has actually risen by +8% in AUD terms y-o-y, as the currency is now doing its job and acting as a global shock absorber. The rise in AUD denominated commodity prices should support local incomes."
"We continue to see the mining story as slowing down, rather than collapsing. As mining investment starts to become a drag on growth, in coming quarters, we expect it to be offset by a ramp up exports."
"As long as any further fall in commodity prices is matched by a decline in the AUD, the drag on incomes from lower commodity prices could have a limited impact on local incomes."
"Other parts of the economy need to pick up and growth needs to rebalance away from the mining sector. Housing prices and dwelling construction are two areas where this rebalancing does appear to be occurring, though a broader rebalancing of the economy is still in the forecast horizon."