Open trading account 
The Australian dollar peaked in the early beginning of 2012 at the level of 1.11 USD. After almost two years of consolidation between in the range between 0.97 and 1.08 the trend down commenced in the spring of 2013. This development is rather befuddling, especially when compared to NZD that stayed in bullish mode over the same period of time. Considering that both currencies have the highest yields among developed nations such unusual dynamics for AUD is noticeable.
It looks that the AUD is going down the same path, trodden by the Japanese yen. Alas, the same path leads exactly to the same place – persistent trade deficit, inflation in prices of consumer goods, contraction of GDP and lowering quality of life for many Australians. Unlike Japan, the country with very strong industry, Australian main export is raw materials – the product vulnerable to vicissitudes of commodity price dynamics, that in its turn greatly depends not only on the state of world economy but also on presence of inflationary or deflationary forces induced by central banks. It seems that the Australian economy faces the worst of two worlds – diminishing demand for raw materials, exerting downward pressure on commodity prices, is exacerbated by falling national currency. Since Australia is net oil importing nation, falling in USD terms oil prices do not help domestic raw material producers but rather lowering the profit margins for them – production of raw materials is energy consuming.
The obvious conclusion to be made is that lowering AUD does not support the Australian mining sector and whole economy but exacerbates stagnation. Alas, any further slump in nominal GDP numbers will be greeted as a sign of the forthcoming interest rate cut that cannot help but push aussie further down. This positive back-feed loop for AUD implies more inflation for consumers, less production for domestic enterprises and shrinking economy.
It looks that the AUD is going down the same path, trodden by the Japanese yen. Alas, the same path leads exactly to the same place – persistent trade deficit, inflation in prices of consumer goods, contraction of GDP and lowering quality of life for many Australians. Unlike Japan, the country with very strong industry, Australian main export is raw materials – the product vulnerable to vicissitudes of commodity price dynamics, that in its turn greatly depends not only on the state of world economy but also on presence of inflationary or deflationary forces induced by central banks. It seems that the Australian economy faces the worst of two worlds – diminishing demand for raw materials, exerting downward pressure on commodity prices, is exacerbated by falling national currency. Since Australia is net oil importing nation, falling in USD terms oil prices do not help domestic raw material producers but rather lowering the profit margins for them – production of raw materials is energy consuming.
The obvious conclusion to be made is that lowering AUD does not support the Australian mining sector and whole economy but exacerbates stagnation. Alas, any further slump in nominal GDP numbers will be greeted as a sign of the forthcoming interest rate cut that cannot help but push aussie further down. This positive back-feed loop for AUD implies more inflation for consumers, less production for domestic enterprises and shrinking economy.
