Price of oil and reserve bank Deano
US has been for several years looking at alternate sources of oil to the Middle east. Canada Shale oil and a few off shore under water locations. Long story short they've started to commercialise this and there is now more supply, seen the oil price ?
Since Sept it's almost fallen by 50%
As the oil price drops, that impacts a raft of other things like gold price (down - currently at about $1200 an ounce from $1400 about 9 months ago).
Also the AUD as people move back to buying the greenback.
Note also that the reserve bank here has been saying for about 6 months now they really wanted the AUD to be in the 75c - 80c range against the USD. So they've done nothing to prop it up either. Reason they want to make us more favourable for exports. The reason for this has been the dropping Iron Ore price (for the last 4 yeas the price has been hovering between $150-200 a tonne (pellets) but in the last 6 months has dropped under $100. This has wiped massive massive amounts of our exports and in turn off the residual tax the Government earns. To the tune of BILLIONS. As a result the reserve bank needs to get the AUD down to make Australian Iron Ore more attractive that South American and US Iron Ore.
So there is no one factor but 2 primary ones:
1. US supplying more oil from non Middle East driving oil price down and USD more attractive to investors
2. Reserve Bank seeking a lower AUD to make exports more attractive, particularly Iron Ore, but if it helps other major industries like Wheat then that's upside
All the news I read says they want to hold it at around the 75-80c for some period of time so don't expect it to change anytime soon.
Light travels faster than sound. This is why some people appear bright until you hear them speak
Last edited by cluxford; 02-01-2015 at 05:37 PM..