Last resort options: Australia vs New Zealand
Those pesky New Zealenders seem to keep getting in our way.
First they beat Australia in the Rugby World Cup, then, as has been the case lately, they stand firm against the Australian dollar.
According to FXCM chief currency strategist, John Kicklighter the Australian Dollar is trying to keep the flame going from its jump on Thursday and through morning trade, the currency was up against all its major counterparts.
With the exception once again the New Zealand Dollar.
In analysing both the Aussie and Kiwi dollars, Kicklighter says, “A carry appetite seems to be the most concrete source of appetite for the Aussie and Kiwi Dollars. This isn’t necessarily derived from a tangible appetite for higher return assets in other corners of the market as we see shares and more extreme risk assets (like emerging market and high-yield fixed income) are struggling.
“Further, the RBA and RBNZ rate forecasts aren’t improving materially. The 12-month rate forecast for RBA still projects around a 50 per cent probability of another hike (though that is the least dovish in months) and the RBNZ is looking at a 50 per cent probability of a hike at its December meeting.
And, as stated already the Kiwi is outpacing the Aussie.
Kicklighter says of the Aussie dollar: “Technical boundaries have already fallen out of the Aussie’s way, but the fundamental drive is still coming up weak. From the economic calendar, there were no high-profile indicators to rouse the speculative ranks.”
And then there is the lurking concern surrounding China and its broader effect on the global economy.
“In China, the day’s data drop was the Conference Board’s leading economic index which showed a modest pickup. That said, the financial media continues to issue reports on a variety of perceived lurking risks in the world’s second largest economy.”
Adding to monetary policy concerns is the fact that commodities are still tipped heavily lower and a jump in WTI oil reflects futures contract rollover rather than a sudden flush of optimism.
It all adds up to a limited appetite for risk.
Despite the limited appetite for risk and the tepid view for local returns, Kicklighter says, “there is nevertheless an influx of capital seeking out harbor and income in Australian and New Zealand markets. As China and Japan pursue aggressively accommodative monetary policy regimes and drag many hangers-on with them, the AUD and NZD seem to be winning capital as last resort options.”
Short-term positions in small, early stage ASX companies,
with high potential and near term price catalysts.
Focusing on resource exploration, early-stage tech, and biotech.
Exceptional opportunities across a broad range of
early-stage growth sectors with strong management.
Seeking 1,000% plus returns across medium to long-term holds.
Longer-term positions in a variety of sectors.
Seeking strong management where traction is established and have entered into a growth phase.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.